Chesapeake Energy exceeded Wall Street’s projections for third-quarter profits, leveraging reduced overall costs to counter the impact of declining natural gas prices. This success propelled its shares up by 3.4% in extended trading. Notably, the company managed to cut production expenses to 23 cents per thousand cubic feet of gas equivalent, performing even better than its anticipated 2023 levels. While natural gas prices experienced a substantial 60% drop in the third quarter compared to the previous year, Chesapeake navigated this challenge admirably. The decline in prices was due to increased U.S. production and a reduction in concerns regarding energy security in Europe.
On an adjusted basis, the company reported a profit of $1.09 per share, soaring past analysts’ expectations of 60 cents per share, according to LSEG data. Despite a 15% reduction in total production to 3,495 million cubic feet equivalent per day, attributed to its departure from the Eagle Ford basin earlier in the year, Chesapeake raised its 2023 gas production forecast to a range of 3,425 to 3,525 mmcfe per day, an increase from the previous estimate of 3,400 to 3,500 mmcfe per day. This upward revision stemmed from augmented volumes in the Haynesville region.
Further highlighting its strategic vision, Chesapeake sealed an agreement with energy trader Vitol, outlining the supply of up to 1 million tonnes of liquefied natural gas (LNG) annually for a 15-year period commencing in 2028. Upon execution, both companies will collaboratively select a liquefaction facility in the U.S. to produce the agreed-upon LNG. This forward-looking move signifies a strategic alignment in response to evolving market demands and positions Chesapeake Energy at the forefront of the LNG market.