Chesapeake profit tops Street estimate, review underway
(Reuters) - Chesapeake Energy Corp's (CHK.N) new Chief Executive Doug Lawler on Thursday said a comprehensive review of the company's partnerships and assets is underway as the second largest U.S. natural gas provider seeks to simplify its structure and improve financial discipline.
The company, which experienced a severe liquidity crunch in 2012 after spending heavily for years to acquire drilling acreage, also reported a better-than-expected quarterly profit on Thursday as it produced more crude oil than Wall Street targeted.
Investors, who have for a long-time lobbied the company to streamline its operations, pushed the company's shares up 7 percent in late morning trading. The stock rose the highest level in more than a year.
Mark Hanson, oil analyst with Morningstar said Chesapeake's oil volumes where hiweregher-than-expected on both a year-over-year and sequential basis. He also noted the company reduced its capital spending plans for 2013 and has only spent $100 million on undeveloped land so far this year.
"New Chesapeake wouldn't recognize old Chesapeake if they passed each other on the street," he said.
This is the first quarter that Chesapeake has reported earnings under Lawler, who was named to replace former CEO Aubrey McClendon in May. McClendon left the company he co-founded earlier this year after a series of Reuters investigations triggered civil and criminal probes of the company.
Lawler, a former executive with Anadarko Petroleum Corp (APC.N), declined to provide many details about the review that he and other senior managers are conducting. But he said that everything will get a comprehensive look.
The general aim is to "reduce the complexity and provide better clarity on where we are getting our best returns," Lawler told analysts on a conference call. He said we would refrain from saying any asset is untouchable.
Shares of Chesapeake rose $1.55 to $24.85 in late morning New York Stock Exchange trading.
Chesapeake, said oil production in the quarter rose 44 percent to 116,000 barrels per day (bpd), with much of the growth coming from its properties in the Eagle Ford Shale in south Texas. It raised its crude output forecast for the full year.
Analysts at Bernstein Research had estimated Chesapeake's oil production at 105,000 bpd in the quarter.
Second-quarter profit at the Oklahoma City-based company fell to $457 million, or 66 cents per share, from $929 million, or $1.29 per share, a year earlier.
But adjusting for one-time items, Chesapeake had a profit of 51 cents per share. Analysts, on average, expected 41 cents per share, according to Thomson Reuters I/B/E/S.
(Reporting by Anna Driver; Editing by Gerald E. McCormick, Jeffrey Benkoe and Sofina Mirza-Reid)