Oklahoma-based Chesapeake Energy reported a second quarter net loss of $4.15 billion on Wednesday after taking a $5 billion impairment charge on its oil and natural gas properties.
Chesapeake reported a second quarter net loss of $4.15 billion, or a loss of $6.27 per fully diluted share, down from a net income of $145 million, or $0.22 per fully diluted share, in the 2014 second quarter.
The company booked an adjusted second quarter net loss of $126 million, or $0.11 per fully diluted share, down from an adjusted net income of $235 million, or $0.36 per fully diluted share, in the same quarter of last year.
Net income attributed to Chesapeake sunk to a $4.10 billion loss, down considerably from $191 million in net income booked during the second quarter 2014.
Despite the income drop, the company still managed to beat out analysts earnings targets that had expected a $0.12 loss per share, Zacks said.
The company also booked a $5.015 billion impairment charge tied to its oil and natural gas properties.
“The primary source of this reduction was an impairment in the carrying value of Chesapeake’s oil and natural gas properties largely resulting from significant decreases in the trailing 12-month average first-day-of-the-month oil and natural gas prices as of June 30, 2015, compared to March 31, 2015,” the company said.
Total revenues fell to $3.03 billion in the second quarter from $5.15 billion in the previous year quarter, while total sales revenues slid down to $728 million from $1.70 billion in the second quarter of 2014.
According to Zack’s, analysts had expected revenue to reach $971 million.
Adjusted ebitda dropped to $600 million in the second quarter from $1.277 billion in the 2014 second quarter.
Operating cash flow fell to $606 million in the second quarter, down from $1.269 billion during the same quarter last year.
“The year-over-year decreases in adjusted ebitda and operating cash flow were primarily the result of lower realized oil, natural gas and natural gas liquid prices, partially offset by increases in realized hedging gains and lower production and general and administrative costs,” Chesapeake said.
Production averaged about 703,000 barrels of oil equivalent per day in the second quarter, 13 percent year over year jump, adjusted for asset sales.
The company raised its total 2015 production to between 667 to 677 million barrels of oil equivalent per day, up 4 percent from the midpoint of its prior guidance.
“The downturn in commodity prices has presented a severe test to our industry. Despite the challenges, we remain focused on lowering costs and improving operational efficiencies in our portfolio of high-quality assets…. 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,” CEO Doug Lawler said.