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Chesapeake Energy Corporation reports first quarter 2024 results


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OKLAHOMA CITY, April 30, 2024 /PRNewswire/ — Chesapeake Energy Corporation (NASDAQ:CHK) today reported first quarter 2024 financial and operating results.
  • Net income of $26 million, or $0.18 per fully diluted share; adjusted net income(1) of $80 million, or $0.56 per share
  • Net cash provided by operating activities of $552 million
  • Adjusted EBITDAX(1) of $508 million; free cash flow(1) of $131 million
  • Delivered $112 million in adjusted free cash flow(1) yielding combined quarterly base and variable dividend of $0.715 per common share to be paid in June 2024
  • Produced approximately 3.20 bcf/d net (100% natural gas); building productive capacity with 46 combined DUCs and deferred TILs at the end of the quarter
  • Reaffirmed credit facility borrowing base and increased aggregate commitments to $2.5 billion
(1) A Non-GAAP measure as defined in the supplemental financial tables available on the company’s website at www.chk.com.

Nick Dell’Osso, Chesapeake’s President and Chief Executive Officer, said, “Today’s results show the strength of our portfolio and strategy, further demonstrating that our company was built to withstand demand cycles. As we build productive capacity, we continue to focus on capital discipline and prudently respond to today’s market conditions. We remain excited about our pending combination with Southwestern which we expect will close in the second half of this year. The merger positions us to expand America’s energy reach to markets that are increasingly turning to natural gas to meet the growing demand for reliable, affordable, lower carbon energy to domestic and international consumers.”

Shareholder Returns Update

Chesapeake generated $552 million of operating cash flow and $112 million of adjusted free cash flow(1) during the first quarter. Chesapeake plans to pay its base and variable dividends on June 5, 2024 to shareholders of record at the close of business on May 16, 2024.

($ and shares in millions, except per share amounts) 1Q 2024
Net cash provided by operating activities (GAAP) $                            552
Less cash capital expenditures 421
Less cash contributions to investments 19
Adjusted free cash flow (Non-GAAP)(1) 112
Less cash paid for common base dividends 75
50% of adjusted free cash flow available for common variable dividends $                              18
Common shares outstanding at 4/30/24(2) 131
Variable dividend payable per common share in June 2024 $                           0.14
Base dividend payable per common share in June 2024 $                         0.575
Total dividend payable per common share in June 2024 $                         0.715
(1) A Non-GAAP measure as defined in the supplemental financial tables available on the company’s website at www.chk.com.
(2) Basic common shares outstanding as of the declaration date of April 30, 2024. Assumes no exercise of warrants between dividend declaration date and dividend record date.

Including the first quarter base and variable declared dividends, Chesapeake has returned more than $3.4 billion to shareholders since 2021 through dividends and share buybacks.

Operations Update

Chesapeake’s net production in the first quarter was approximately 3.20 bcfe per day (100% natural gas), utilizing an average of nine rigs to drill 28 wells and place 29 wells on production while building an inventory of 24 drilled but uncompleted (DUCs) wells and 22 deferred turn in lines (TILs). Chesapeake is currently operating eight rigs and two completion crews. The company plans to drop an additional rig in the Marcellus around mid-year.

Given continued weak market dynamics, the company is executing its previously disclosed plan to defer completions and new well turn in lines, building short-cycle, capital efficient productive capacity which can be activated when supply and demand imbalances correct. At the end of the first quarter the company had 50 DUCs, approximately twice its normal average at current rig counts, and 22 deferred TILs. For the full-year, the company expects to drill 95 – 115 wells and place 30 – 40 wells on production, which is consistent with previous guidance.

Marketing/LNG Update

In February, Chesapeake announced the signing of long-term LNG Sale and Purchase Agreements (SPAs). Under the SPAs, Chesapeake will purchase approximately 0.5 million tonnes per annum (“mtpa”) of LNG from Delfin LNG at a Henry Hub linked price with a targeted contract start date in 2028. Chesapeake will then deliver the LNG to Gunvor on a free-on-board basis with the sales price linked to the Japan Korea Marker (“JKM”) for a period of 20 years. These volumes represent 0.5 mtpa of the previously announced up to 2 mtpa HOA with Gunvor. The company continues to pursue additional LNG agreements to deliver on its LNG strategy.

Financial Update

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In April 2024, the company’s borrowing base was reaffirmed and the aggregate commitments under our Credit Facility were increased by $500 million to $2.5 billion in total. Additionally, the sublimit available for the issuance of letters of credit were increased by $300 million to $500 million in total.

ESG Update

The company continues to work on direct emission reductions while also investing in adjacent technology and businesses to meet its 2035 Scope 1 and Scope 2 net zero commitment. The company achieved its 2025 interim GHG and methane intensity target last year and successfully recertified all assets under the MiQ and EO100™ standards, maintaining 100% independent responsibly sourced gas certification across its entire portfolio.

Chesapeake’s culture of operational excellence and safety resulted in a ~40% year-over-year combined TRIR improvement, to an industry leading 0.14. Additionally, IR Magazine recognized Chesapeake for Best ESG Reporting by a small to mid-cap company, for the quality and depth of its 2022 sustainability report. The company’s 2023 sustainability report is expected to be published later this quarter.

Conference Call Information

Chesapeake plans to conduct a conference call to discuss its recent financial and operating results at 9:00 am EDT on Wednesday, May 1, 2024. The telephone number to access the conference call is 1-888-317-6003 or 1-412-317-6061 for international callers. The passcode is 9185107.

Financial Statements, Non-GAAP Financial Measures and 2024 Guidance and Outlook Projections

The company’s 2024 first quarter financial and operational results, along with non-GAAP measures that adjust for items typically excluded by certain securities analysts, are available on the company’s website. Non-GAAP measures should not be considered as an alternative to GAAP measures. Reconciliations of these non-GAAP measures and other disclosures are provided with the supplemental financial tables available on the company’s website at www.chk.com. Management’s updated guidance for 2024 can be found on the company’s website at www.chk.com.

Headquartered in Oklahoma City, Chesapeake Energy Corporation (NASDAQ:CHK) is powered by dedicated and innovative employees who are focused on discovering and responsibly developing our leading positions in top U.S. natural gas plays. With a goal to achieve net zero GHG emissions (Scope 1 and 2) by 2035, Chesapeake is committed to safely answering the call for affordable, reliable, lower carbon energy.

 



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