By Joe Carroll
Chesapeake Energy Corp., the second-largest U.S. natural gas producer, missed analysts’ profit estimates by the biggest margin in almost two years as energy prices fell and costs to exit leases and cut jobs rose.
Fourth-quarter profit was $161 million, or 27 cents a share, excluding one-time expenses related to closing offices in north Texas, firing workers and terminating drilling rig contracts, the Oklahoma City-based company with Ohio operations said Wednesday.
Per-share earnings were 13 cents below the average estimate from 28 analysts in a Bloomberg survey.
Chief Executive Officer Doug Lawler has been scaling back spending on drilling and acquisitions since his appointment last year to replace fired co-founder Aubrey McClendon amid a shareholder revolt.
The company plans to raise more than $1 billion from asset sales this year to close a gap between cash flow and expenditures.
Fourth-quarter profit was “materially lower” than expectations, a team of analysts led by Matthew Portillo at Tudor Pickering Holt & Co. wrote in a note to clients Wednesday.
The per-share result was 33 percent below the average estimate, the largest miss since the first quarter of 2012, according to data compiled by Bloomberg. Chesapeake shares have increased about 41 percent in the past year.
The prices Chesapeake received for crude and gas fell by 2.9 percent and 8.2 percent, respectively, from a year earlier.
Lawler said costs associated with shutting underperforming business units and shrinking the company’s footprint in some U.S. shale formations will start to decline.
“Most of the charges related to our organizational restructuring are in the rearview mirror,” Lawler said during a conference call with analysts and investors. “We’ve dramatically improved our capital efficiency,”
The company has already sold or is in negotiations to divest about $1 billion in assets this year, according to the statement. That figure excludes the possible sale or spinoff of the oil-field services division and other undisclosed dispositions, the company said. Asset sales last year totaled $4.4 billion.