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(Reuters) – Chesapeake Energy beat Wall Street estimates for fourth-quarter profit on Tuesday as the U.S. natural gas producer tackled weak commodity prices with lower operating expenses.
Chesapeake shares fell about 2% in aftermarket trading as the company forecast a 20% drop in spending on baseline production this year. Its fourth-quarter shareholder returns also fell sharply versus earlier quarters.
Share buybacks and dividends totaled about $117 million in the final quarter, down from an average of $242.6 million per quarter in the first nine months.
The Oklahoma-based company reported fourth-quarter output fell to 3.43 billion cubic feet equivalent (bcfe) per day, from 4.05 bcfe per day the previous year. Its capital spending plan will fund about 2.7 bcfe per day in volumes this year, the company said.
Average natural gas prices dipped over 50% in the fourth quarter compared with last year, and have fallen to a three-and-one-half year low this month.
“We continue to show the resilience of this organization and assets in the midst of lower commodity prices,” said CEO Nick Dell’Osso said in the earnings release.
Adjusted profit was $1.31 per share for the three months ended Dec. 31, compared with analysts’ average estimate of 73 cents per share, according to LSEG data.
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The business generated $470 million in operating cash flow in the quarter, down from $1.05 billion in the year ago period.
Chesapeake said in January it had agreed to buy rival Southwestern Energy in an all-stock deal valued at $7.4 billion, making it the largest independent U.S. natural gas producer.
Reporting by Saikeerthi in Bengaluru; additional reporting by Gary McWilliams in Houston; Editing by Pooja Desai and Stephen Coates
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