Chesapeake Energy Beats Street, Plans Rig Cuts
U.S. natural gas producer Chesapeake Energy Corp reported a better-than-expected quarterly profit on Thursday and said it expects production to rise for the rest of the year even as the company plans to operate fewer rigs.
Shares of the company were up 4 percent in premarket trading.
Oil and gas producers in North America are actively trying to cut back on expenses as they try to save money as oil hovers around $50 per barrel.
Last month, oilfield services provider Halliburton Co warned growth in North American rig count was "showing signs of plateauing".
Chesapeake said it would operate 14 rigs by the end of 2017 down from the 18 rigs its currently runs. The company also said it expected total production to rise, driven by projects in the Eagle Ford, Utica and Powder River basins.
"We are actively managing our 2017 capital program to the highest return on investments in our portfolio, or reducing spending in certain areas altogether," CEO Doug Lawler said on Thursday.
U.S. energy companies added 10 rigs in July, the fewest in any month since May 2016. Oil prices have fallen 7.3 percent so far this year, slowing the pace of a 14-month drilling recovery.
Chesapeake on Thursday said it produced about 88,400 barrels of oil per day, up 6 percent from the preceding quarter.
Excluding items, the company earned 18 cents per share in the reported quarter, higher than analysts' expectation of 14 cents, according to Thomson Reuters I/B/E/S.
Total revenue at the Oklahoma-based company jumped 41 percent to $2.28 billion.
Shares of the company were trading at $4.80 before the markets opened.
Reporting by Yashaswini Swamynathan and Nivedita Bhattacharjee
