Shares of Chesapeake Energy Corporation (NYSE: CHK) fell 12.19 percent on Wednesday after the company reported a second-quarter net loss of ($0.11) per share, in line with consensus estimates, on revenue of $3.03 billion (down 41.1 percent year-over-year), which surpassed consensus of $2.8 billion.
Despite the results, investors seemed worried.
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Editor's note: Shares were trading 10 percent higher on Thursday morning.
Chesapeake is the Citigroup of the energy sector, discuss.
— Downtown Josh Brown (@ReformedBroker) August 5, 2015 But what exactly is upsetting investors? Below are five issues to take into account from Chesapeake Energy’s earnings report.
1) The oil and gas producer retrieved a net loss of $4.15 billion, or $6.27 per share, for the quarter. These figures imply a marked decline from the profit of $145 million, or $0.22 per share, reported a year ago. The drop was mainly driven by a $3.67 billion tumble in the carrying value, which responded to low oil and natural gas prices.
2) Revenue fell 41.1 percent year-over-year, from $5.152 billion to $3.03 billion. Quarter-over-quarter, sales declined 17.6 percent, from $3.68 billion.
3) Chesapeake took a $4.02 billion write-down on several properties amid soft oil and gas prices. Doug Lawler, the company’s CEO, said that, while management strives to “remain flexible in the face of lower commodity prices,” it continues to focus on driving costs lower.
“We have reduced our guidance for production and general and administrative expenses due to the outstanding job our employees have done in managing our controllable costs,” he added.
4) Capital spending decreased 39 percent, both sequentially and year-over-year, to roughly $787 million. Consequently, the average operated rig count tumbled 51.8 percent quarter-over-quarter, from 54 to 26. Year-over-year, the decline was even larger; in the second quarter of 2014, the company had an average of 65 operating rigs.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.