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By Anna Driver
Aug 6 Chesapeake Energy Corp on Wednesday reported a lower-than-expected quarterly profit on higher costs, but the second-largest U.S. producer of natural gas said it expected increased year-end output as more wells are connected to pipelines.
Chesapeake has several hundred wells in the Marcellus and Utica fields in the U.S. Northeast and Midwest. The wells have been drilled but are waiting for pipelines and other infrastructure to be built so gas and oil can be transported to market.
The company raised the midpoint of its production outlook for the year by 1.5 percent. That new forecast reflects a 35 percent increase in planned well connections during the second half of the year, Chief Executive Officer Doug Lawler told investors on a conference call.
The Oklahoma City company reported a second-quarter profit of $145 million, or 22 cents per share, compared with $467 million, or 66 cents a share, a year earlier.
Excluding a loss on the repurchase of debt and gains on the sale of fixed assets, earnings were 36 cents per share. Analysts on average had expected 44 cents, according to Thomson Reuters I/B/E/S.
Analysts said the earnings miss stemmed mainly from higher-than-expected costs and a rise in production taxes to $1.14 per barrel of oil equivalent from 95 cents per boe a year earlier.
Oil and natural gas production, adjusted for asset sales, was 695,000 barrels of oil equivalent per day, up 13 percent from a year earlier.
Chesapeake said it expected to end the year pumping 730,000 boed, a figure that surpassed analysts' estimates and suggested expectations for 2015 are "far too conservative," Sterne Agee analyst Tim Rezvan said in a note to clients.
The company said its production of natural gas liquids like butane and ethane rose 72 percent in the quarter, but the average price it received fell 13 percent to $21.03 per barrel.
NGL prices have been hurt by seasonal weakness for propane and butane, the company told investors.
Shares of Chesapeake unchanged at $26.06 in late morning New York Stock Exchange trading. (Reporting by Anna Driver; Editing by Lisa Von Ahn)
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