(Reuters) - Chesapeake Energy Corp (CHK.N), the No. 2 U.S. natural gas producer, reported a third-quarter profit on Wednesday, but its shares fell more than 6 percent after it said its oil production would be lower this quarter.
Chesapeake and other U.S. exploration and production companies are trying increasingly to get more higher-priced crude oil output from shale formations like the Eagle Ford in South Texas as natural gas prices remain depressed.
Higher-than-expected oil production in the third quarter helped Chesapeake’s results meet analysts’ expectations, but weather disruptions and asset sales will cut output in the fourth quarter by about 9,000 barrels per day, Chesapeake said on a conference call with investors.
Analysts pointed to the lower oil forecast as a reason for weakness in the stock, which had traded as much as 3 percent higher before the market opened.
Under new Chief Executive Officer Doug Lawler, Chesapeake has slashed 10 percent of its workforce and is spending less on exploration and production. The company also expects to sell more than $4 billion in assets this year to raise cash.
Lawler took the top job at Chesapeake in June after investors pushed out CEO Aubrey McClendon in April following a fiscal squeeze and governance practices that resulted in probes at the state and federal level. Lawler has promised to cut costs and reduce debt to improve returns.
“Although we have reduced our drilling and completion activities in the second half of 2013 and we are planning for a lower capital expenditure budget next year, we expect to continue delivering organic production growth in 2014,” Lawler said in a statement.
The company will release its spending plan for 2014 early next year, it said.
The expected growth in output, which will exclude the effect of asset sales, will be fueled by a rise in oil production from Eagle Ford and an increase in natural gas and natural gas liquids output from the Utica shale in Ohio and Marcellus shale in the U.S. Northeast, Lawler said.
Profit came to $156 million, or 24 cents per share, in the third quarter, compared with a year-earlier loss of $2.1 billion, or $3.19 per share, that included write-downs of the value of some natural gas assets.
Excluding asset sales and restructuring charges, earnings of 43 cents per share matched the analysts’ average estimate, according to Thomson Reuters I/B/E/S.
Daily production of oil and gas dipped 2 percent in the third quarter due to asset sales, but daily oil output alone rose 23 percent, the company said.
This quarter, Chesapeake plans to operate an average of 59 rigs and to complete about 14 fewer wells than in the third quarter. Based on that plan, the company is reducing its 2013 full-year outlook for drilling and well completion costs to a range of $5.5 billion to $5.8 billion from $5.7 billion to $6 billion.
Chesapeake operated an average of 67 rigs in the third quarter.
Shares of Chesapeake fell 6.3 percent to $26.36 in late morning New York Stock Exchange trading.
Reporting by Anna Driver and Swetha Gopinath; Editing by John Wallace, Chizu Nomiyama and Lisa Von Ahn