Chesapeake Energy Corporation Reports Financial and Operational Results for the 2006 Third Quarter
Categorías:
CHK
Utilizado en Chesapeake (CHK), im-presionante
Three Months Ended:
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9/30/06 6/30/06 9/30/05
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Natural gas production (in bcf) 133.8 129.8 108.8
Average realized natural gas price ($/mcf) 8.39 8.04 6.64
Operating cash flow ($ in millions) (d) 988.6 914.2 634.6
Operating cash flow ($/mcfe) 6.73 6.41 5.27
Adjusted net income to common shareholders
($ in millions) (f) 373.1 339.8 234.1
Adjusted earnings per share - assuming
dilution ($) 0.83 0.82 0.65
Oil and Natural Gas Production Sets Record for 21st Consecutive Quarter. Over these 21 quarters, Chesapeake's U.S. production has increased 308%, for an average compound annual growth rate of 30.5%.
Chesapeake began 2006 with estimated proved reserves of 7.521 trillion cubic feet of natural gas equivalent (tcfe) and ended the third quarter with 8.433 tcfe, an increase of 912 bcfe, or 12%. During the first three quarters of 2006, Chesapeake replaced its 426 bcfe of production with an estimated 1.339 tcfe of new proved reserves, for a reserve replacement rate of 314%. Reserve replacement through the drillbit was 825 bcfe, or 194% of production and 62% of the total increase. Reserve replacement through the acquisition of proved reserves was 514 bcfe, or 120% of production and 38% of the total increase. Chesapeake's exploration and development costs through the drillbit were $1.76 per mcfe during the first three quarters of 2006 while reserve replacement costs through acquisitions of proved reserves were $1.99 per mcfe.
Realized gains and losses from natural gas hedging activities during the quarter generated a $2.33 gain per mcf, for a 2006 third quarter realized hedging gain of $301 million, or $2.05 per mcfe.
Through the third quarter of 2006, the company realized hedging gains of approximately $807 million from its 2006 hedges, or $1.89 per mcfe. Recently, Chesapeake lifted a portion of its fourth quarter 2006 and full-year 2007, 2008 and 2009 hedges and, as a result, has secured gains of $540 million (including $407 million that has been received in cash from the company's hedging counterparties). Together with the current $672 million mark-to-market value of our open hedges, $2.019 billion of value has been created for shareholders from Chesapeake's recent hedging activities. This further demonstrates Chesapeake's ability to secure premium price realizations and achieve substantial risk mitigation through its hedging programs.
Open Swap Positions as of October 26, 2006
Natural Gas Oil
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Quarter or Year % Hedged $ NYMEX % Hedged $ NYMEX
================================ ========= ======== ========= ========
2006 4Q 57% 9.10 88% 65.64
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2007 1Q 74% 10.68 82% 70.21
2007 2Q 55% 8.89 69% 72.16
2007 3Q 53% 8.97 69% 71.92
2007 4Q 50% 9.60 69% 71.62
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2007 Total 57% 9.61 72% 71.42
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2008 Total 51% 9.37 59% 71.45
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Open Swap Positions as of July 27, 2006
Natural Gas Oil
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Quarter or Year % Hedged $ NYMEX % Hedged $ NYMEX
================================ ========= ======== ========= ========
2006 4Q 87% 9.54 86% 65.64
================================ ========= ======== ========= ========
2007 1Q 84% 11.12 83% 70.21
2007 2Q 70% 9.18 70% 72.16
2007 3Q 69% 9.25 69% 71.92
2007 4Q 68% 9.90 69% 71.62
================================ ========= ======== ========= ========
2007 Total 72% 9.91 73% 71.42
================================ ========= ======== ========= ========
2008 Total 57% 9.37 63% 71.45
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Gains From Lifted Natural Gas Hedges as of October 26, 2006
Assuming Natural Gas
Total Gain Production of: Gain
Quarter or Year ($ millions) (bcf) ($ per mcf)
======================= ============= ==================== ===========
2006 4Q 215 140 1.54
======================= ============= ==================== ===========
2007 1Q 109 143 0.76
2007 2Q 55 151 0.37
2007 3Q 56 159 0.35
2007 4Q 70 166 0.42
======================= ============= ==================== ===========
2007 Total 290 619 0.47
======================= ============= ==================== ===========
2008 Total 31 701 0.04
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2009 Total 4 750 0.01
======================= ============= ==================== ===========
Chesapeake Increases Cost Inflation Hedges through Additional Oilfield Service Investments
To further hedge its exposure to oilfield service costs and achieve greater operational efficiencies, Chesapeake recently invested approximately $250 million to acquire a 19.9% interest in a rapidly growing privately-held provider of well stimulation and high pressure pumping services, with operations currently focused in Texas (principally in the Fort Worth Barnett Shale) and the Rocky Mountains. This service company also has expansion efforts underway in other key regions in which Chesapeake operates.
This investment complements Chesapeake's direct and indirect drilling rig investments that have served as an effective hedge to higher service costs and have also provided competitive advantages in making acquisitions and in developing the company's own leasehold on a more timely and efficient basis.
Chesapeake has continued to significantly strengthen its technical capabilities by increasing its land, geoscience and engineering staff to approximately 800 employees. Today, the company has approximately 4,600 employees, of which approximately 65% work in the company's E&P operations and approximately 35% work in the company's oilfield service operations.
Management Comments
Aubrey K. McClendon, Chesapeake's Chief Executive Officer, commented, "We are pleased to report outstanding financial and operational results for the 2006 third quarter. The company delivered attractive production and reserve growth and generated impressive profit margins that were enhanced by the company's timely and well-executed hedging strategy. Our focused business strategy, value-added growth, tremendous inventory of undrilled locations and valuable hedge positions clearly differentiate Chesapeake in the industry.
"In light of continued strong returns available through the drillbit on our extensive prospect inventory, we continue to increase our industry-leading U.S. drilling activity to accelerate development of our substantial proved undeveloped and unproved reserve base. We currently have 120 operated rigs working, up from an average of 73 operated rigs in 2005 and an average of 89 operated rigs to date in 2006. We anticipate increasing our drilling activity to approximately 133 operated rigs by year-end 2006 and up to 150 operated rigs in 2007.
"We are clearly transitioning from the past six years of resource inventory capture to many more years of resource inventory conversion. We believe the result of this transition will be significant increases in proved reserves and production levels in 2007 and beyond. This shift in focus is best evidenced by the increases in future production growth rate ranges that we are announcing today, 14-18% for 2007 and 10-14% for 2008.
"Our business strategy continues to feature delivering growth through a balance of acquisitions and organic drilling, focusing on clean-burning, domestically-produced natural gas to take advantage of strong long-term natural gas supply and demand fundamentals, building dominant regional scale to achieve low operating costs and high returns on capital and mitigating financial and operational risks through opportunistic hedging. We believe Chesapeake's management team can continue the successful execution of the company's distinctive business strategy and continue to deliver significant value to the company's investors for years to come."
September 30, September 30,
THREE MONTHS ENDED: 2006 2005
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$ $/mcfe $ $/mcfe
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REVENUES:
Oil and natural gas sales 1,493,226 10.16 720,928 5.99
Oil and natural gas marketing sales 398,114 2.71 361,915 3.01
Service operations revenue 38,071 0.26 -- --
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Total Revenues 1,929,411 13.13 1,082,843 9.00
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OPERATING COSTS:
Production expenses 124,045 0.84 80,765 0.67
Production taxes 40,562 0.28 53,102 0.44
General and administrative expenses 37,382 0.25 15,785 0.13
Oil and natural gas marketing expenses 384,473 2.62 353,510 2.94
Service operations expense 18,821 0.13 -- --
Oil and natural gas depreciation,
depletion and amortization 343,723 2.34 231,145 1.92
Depreciation and amortization of other assets 27,016 0.18 12,902 0.11
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Total Operating Costs 976,022 6.64 747,209 6.21
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INCOME FROM OPERATIONS 953,389 6.49 335,634 2.79
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OTHER INCOME (EXPENSE):
Interest and other income 5,132 0.03 2,428 0.02
Interest expense (74,112) (0.50) (58,593) (0.48)
Loss on repurchases or exchanges
of senior notes -- -- (747) (0.01)
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Total Other Income (Expense) (68,980) (0.47) (56,912) (0.47)
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Income Before Income Taxes 884,409 6.02 278,722 2.32
Income Tax Expense:
Current -- -- -- --
Deferred 336,074 2.29 101,734 0.85
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Total Income Tax Expense 336,074 2.29 101,734 0.85
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NET INCOME 548,335 3.73 176,988 1.47
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Preferred stock dividends (25,753) (0.17) (10,204) (0.08)
Loss on exchange/conversion of preferred stock -- -- (17,725) (0.15)
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NET INCOME AVAILABLE TO COMMON SHAREHOLDERS 522,582 3.56 149,059 1.24
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CHESAPEAKE ENERGY CORPORATION
ROLL-FORWARD OF PROVED RESERVES
NINE MONTHS ENDED SEPTEMBER 30, 2006
(unaudited)
Mmcfe
----------------------------------------------------------- ----------
Beginning balance, 01/01/06 7,520,690
Extensions and discoveries 671,691
Acquisitions 513,667
Divestitures (117)
Revisions - performance 540,988
Revisions - price (387,452)
Production (426,318)
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Ending balance, 9/30/06 8,433,149
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Reserve replacement 1,338,777
Reserve replacement rate 314%
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