The $2.06 billion write-down of the value of its oil and gas assets due to low O&G prices was the major force behind Chesapeake Energy’s $2.23 billion fourth-quarter loss, the independent producer reported this morning.
For all of 2015, the Oklahoma City, Oklahoma-based company reported a net loss of $14.86 billion, with again the write-down of the value of its oil and gas assets due to prices contributing the bulk of the red ink, $14.53 billion for the year.
Chesapeake’s profit in 2014’s fourth quarter was $586 million, while the full-year profit was $1.27 billion.
“In light of the challenging commodity price environment, our focus for 2016 is to improve our liquidity, further reduce our cost structure and address our near-term debt maturities to strengthen our balance sheet,” Chesapeake CEO Doug Lawler said.
Chesapeake’s fourth-quarter daily production averaged roughly 661,100 barrels of oil-equivalent (BOE), a year-over-year increase of 1% adjusted for asset sales, Kallanish Energy finds.
Average daily production consisted of roughly 100,700 barrels (Bbls) of oil, 2.9 billion cubic feet (Bcf) of natural gas and 75,600 Bbls of natural gas liquids.
Chesapeake’s daily production for 2015 averaged 679,200 BOE, a year-over-year increase of 8% adjusted for asset sales.
Average daily production consisted of approximately 114,000 Bbls of oil, 2.9 Bcf of gas and 76,700 bbls of NGLs.
Chesapeake is budgeting total capital expenditures (including capitalized interest) of $1.3 to $1.8 billion for 2016, a 57% reduction using the midpoint from 2015”s CAPEX total of $3.6 billion.
More completions and less drilling is the plan for this year, as Chesapeake focuses on “shorter cash cycle projects that generate positive rates of return in today’s commodity price environment and in mitigation of the company’s commitment obligations.”
“Our tactical focus areas remain asset divestitures, of which we are pleased to have approximately $500 million in net proceeds closed or under signed sales agreements, liability management and open market purchases of our bonds,” Lawler said.
“We are also renegotiating gathering, transportation and processing contracts to better align with our current development plans and market conditions, aggressively working to minimize the decline of our base production and making shorter-cycle investments with our 2016 capital program.”