Chesapeake Energy 2Q15: Low Prices Take Big Bite, $5.6B in Red

red inkChesapeake Energy released their second quarter 2015 operating and financial results today. Chessy, as you know, is a big company involved in a number of shale plays–although the Ohio Utica and the Pennsylvania Marcellus are its biggest and most important areas of operation. The good news: Chessy’s OH Utica production increased by 13% from 1Q15–even while curtailing much of their Utica production. Overall, across all of their shale plays, converting oil and natural gas into barrels of oil equivalent production, Chesapeake held the line. In 2Q14 they produced 63.2 million barrels of oil equivalent per day (mmboed) of production, and 63.9 mmboed in 2Q15. The company continued to lower costs over the past year–so it stands to reason if you produce and sell the same amount but lower costs, you make more in profit, right? Wrong. Prices the company received for both oil and natural gas collapsed over the past year. In 2Q14 Chesapeake got an average $2.45 per thousand cubic feet (Mcf) for their natural gas. In 2Q15? They got a piddly $1.01/Mcf. Ouch. You can understand why net income (which includes expenses) swung from $371 million in the black for 2Q14 to $5.6 BILLION in the red (a loss) in 2Q15. No wonder Wall Street is telling Chesapeake to sell itself (see today’s companion story)…

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