Chesapeake Energy Corp. (CHK - Analyst Report) reported third-quarter 2014 adjusted earnings of 38 cents per share, beating the Zacks Consensus Estimate of 32 cents. The upside came mainly from higher production. However, the reported figure deteriorated from the year-earlier profit of 43 cents.

Chesapeake Energy Corporation - Earnings Surprise | FindTheBest

Total revenue rose to $5,703.0 million in the quarter from approximately $4,867.0 million in the year-ago quarter.

Operational Performance

Chesapeake’s daily production for the reported quarter averaged approximately 725,600 barrel of oil equivalent (Boe), reflecting an increase of 11% from 2013 third quarter. Average daily production consisted of approximately 118,900 barrels per day (Bbl/d) of oil, 95,900 Bbls of NGL and 3.1 billion cubic feet of natural gas.

Oil equivalent realized price was $25.74 per Boe, down from $28.67 in the year-earlier quarter. Average realizations for natural gas were $2.09 per Mcf compared with $2.26 per Mcf in the year-earlier quarter. Oil was sold at $84.81 per barrel, down from the year-ago price of $92.09.

On the cost front, quarterly production expenses were $5.37 per Boe, reflecting a decrease of 17.0% year over year. Chesapeake spud a total of 296 gross wells and connected 311 gross wells to sales during the reported quarter.

Financials

At the end of the quarter, Chesapeake − the largest U.S. natural gas producer after ExxonMobil Corp. (XOM - Analyst Report) − had a cash balance of $90 million. Long-term debt stood at $11,592.0 million, representing a debt-to-capitalization ratio of 39%.

Guidance

Chesapeake raised the low point of its expected 2014 daily production rate by 10,000 Boe, to between 695,000 boe and 705,000 boe per day. The rise is attributable to better production trends in the first nine months of the year, coupled with an increase in forecast well connections during the first three quarters of 2014. Of the production, oil would account for 11–15%, NGL for 63–68% and natural gas for 4–6%. Total capital expenditure for full-year 2014 is now expected at $5,000 million to $5,400 million.

Zacks Rank

Chesapeake currently carries a Zacks Rank #5 (Strong Sell). Investors interested in the oil and gas sector could, however, consider stocks like Cobalt International Energy Inc. (CIE - Snapshot Report) and Murphy USA Inc. (MUSA - Snapshot Report). Both carry a Zacks Rank #1 (Strong Buy).