Chesapeake Reports Robust Profits for 2023, Plans Lower Production

Chesapeake Energy reported expectation-beating profits for 2023 even though the figure was lower than the net result for 2022, standing at $2.4 billion, versus $3.5 billion for 2022.

The company also reported net cash from operating activities at $2.4 billion for 2023, which was a much stronger figure than the one for 2022, which stood at $1.05 billion.

In production, Chesapeake reported an average daily output of 3.66 billion cubic feet of natural gas equivalent. In the final quarter of the year, however, the average was lower, at 3.43 billion cubic feet of natural gas equivalent.

Plans for this year also point towards production maintenance rather than strong growth. The company said it would lower spending this year, to fund the addition of a modest 2.7 billion cubic feet equivalent.

"We continue to show the resilience of this organization and assets in the midst of lower commodity prices," chief executive Nick Dell’Osso said at the earnings presentation of the company.

Chesapeake has been one of the energy majors eager to grow through acquisitions over the past year. In January, the company announced its merger with Southwestern Energy, which cost $7.4 billion in an all-stock transaction. The deal will create the biggest U.S. natural gas producer by market value and production.

It was a very timely one as well, amid a precipitous drop in natural gas prices that recently dipped below $2 per million British thermal units. This price drop has prompted many gas drillers in the United States to rethink their growth plans as the benchmark dips below their breakeven levels.

Chesapeake Energy, which went through bankruptcy in 2020 when oil and gas prices crashed, has been solidifying in the past year its strategic focus on its gas assets in the Marcellus shale in Appalachia and in the Haynesville shale play in Louisiana while reducing its Eagle Ford position.

By Charles Kennedy for Oilprice.com

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