Chesapeake Energy posted a sharp uptick in second-quarter earnings as it benefited from the sale of assets in Chesapeake Midstream Partners, as well as one-time non-cash gains from hedging activities. The nation's second-largest natural gas producer earned $929 million, or $1.29 per share, compared with $467 million, or $0.68 per share, a year ago.
Excluding those one-time items, Chesapeake's adjusted net income was $3 million, or $0.06 per share. Revenue rose 2% to $3.39 billion. Analysts, on average, predicted earnings of $0.08 per share on revenue of $2.5 billion.
During the second quarter, Chesapeake sharply ramped up production for natural gas and also for oil, but had to contend with low gas prices. Its production for the second quarter totaled 347 billion cubic feet of natural gas equivalent, or bcfe, up from 277 bcfe in the prior year. Daily production increased 25% from last year despite natural gas production curtailments. This was mostly offset by a decline in natural gas equivalent realized price to $3.77 from $6.07 last year.
Chesapeake's long-term debt climbed 9.5% to $14.3 billion, though the company affirmed its commitment to pare it to $9.5 billion by the end of this year.
Looking ahead, the company forecast 2013 liquids production will increase 32% and natural gas production will decline by 7%. For the third quarter, Chesapeake expects proceeds of about $7 billion from asset sales, including plans to sell three Permian Basin asset packages.
The company has been selling non-core assets under pressure from its largest shareholders, Southeastern Asset Management and Carl Icahn. It now anticipates full year 2012 asset sales of $13.0-14.0 billion, compared to prior estimation of $11.5-14.0 billion.
Chesapeake Energy (CHK : NYSE : US$19.40), Net Change: 1.70, % Change: 9.58%, Volume: 40,481,771