I realize this is a beat and the stock is ripping, higher by 10% in the pre-market. But look at these numbers. Fucking ouch.
Reports Q1 (Mar) adjusted loss of $0.10 per share, $0.01 better than the Capital IQ Consensus of ($0.11); revenues fell 39.3% year/year to $1.95 bln vs the $1.02 bln Capital IQ Consensus.
Average production expenses during 1Q16 were $3.36 per boe, a decrease of 31% from 1Q15.
Average operated rig count for 1Q16 was 8 compared to 54 in year ago period.
Average realized oil price per bbl was $37.74 vs. $65.73 in 1Q15.
Average realized natural gas price per mcf was $2.29 vs. $3.67 in 1Q15.Asset Divestiture Update: In 2016, CHK has closed or has under signed sales agreements approximately $1.2 bln in gross proceeds from asset divestitures, or approximately $950 mln in net proceeds after certain related repurchases of Volumetric Production Payment obligations are met. Transactions signed since Feb 2016 include the sale of a portion of the company’s acreage and producing properties in its STACK play in northern Oklahoma for approximately $470 mln to Newfield Exploration (NFX). Included in the sale are approximately 42,000 net acres and 400 producing wells which are currently producing 3,800 boe per day (approximately 55% liquids), net to CH. Substantially all of the company’s announced asset divestitures are expected to close by the end of Q3. For the expected $950 mln in net proceeds currently closed or signed in 2016, the net impact to the company’s production is projected to be a reduction of approximately 35,000 boe per day (approximately 60% natural gas).
It’s amazing to me that this company is still around doing business. They did, however, put up the entire company as collateral to get a line of credit from the bank a few month’s ago. Let’s not forget that. Rigs went from 54 to 8, year over year. Wow.
The company is divesting assets, in an attempt to get control of the balance sheet. Long term, this is bad for the company. But they have to do it.
Oil production is UP over last year. Big surprise. Everyone is greedily drilling as fast as they can. This is absurd.
2016 first quarter production averaged approximately 672,400 boe per day, an increase of 1% year over year, adjusted for asset sales
“Our cash costs continue to decline, and we remain sharply focused on improving our margins through continued progress with our midstream and downstream partners. As a result, we have recognized incremental improvements in both our production expense and our total gathering, processing and transportation expenses and revised our 2016 guidance accordingly. Additionally, since January 1, 2016, we have reduced debt that matures or can be put to us in 2017 by approximately $282 million. Our recently amended revolving credit facility agreement gives us sufficient liquidity and capacity to pursue additional reductions of our near-term maturities as opportunities arise.”
All in all, this was a horrible quarter. It really was. But people expected worse, so the stock is running. This is idiot-wavelength thinking. Before you buy the stock, answer this question: would you want to own CHK as a business now, with all of its debt, having to deal with this crazy commodity environment?
No way.
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