NEW YORK (TheStreet) -- Chesapeake Energy (CHK) was tumbling Thursday after announcing plans to cut capital expenditure by 20% over 2014. The natural gas producer, second-largest in the U.S., said it expects a full-year capex budget of $5.2 billion to $5.6 billion.
Adjusting for 2013 asset sales, 2014 production growth will likely be in the range of 8% to 10%. This consists of 8% to 12% oil production growth, 44% to 49% natural gas liquids growth, and 4% to 6% natural gas growth.
In a conference call Thursday, management told analysts December's average daily production was around 649,000 barrels of oil equivalent (boe), far below this year's guidance range of 680,000 to 695,000 boe. The lower-than-expected production was attributed to wintry weather and freezing temperatures.
Fourth-quarter and first-quarter production will be weaker than forecast but is expected to improve in the second quarter.
"Our improving capital efficiency has made it possible for us to forecast similar adjusted production growth in 2014 compared to 2013, despite a substantial reduction in capital expenditures and approximately 8% fewer operated wells expected to be connected to sales," said CEO Doug Lawler in a statement.
Chesapeake projects lower per-unit production and general and administrative (G&A) expenses over the year. Production expenses are expected to fall 10% year-over-year to $4.25 to $4.75 per boe. G&A expenses are anticipated to drop 25% year-over-year to between $1.35 and $1.60 per boe.
By early afternoon, shares had taken off 7.2% to $24.33, and 25.8 million shares had changed hands, more than three times its three-month average daily volume.