10/2/2017 Chesapeake Energy: A Well-Managed Operator - Chesapeake Energy Corporation (NYSE:CHK) | Seeking Alpha

Chesapeake Energy: A Well-Managed Operator

Sep.29.17 | About: Chesapeake Energy (CHK)

Summary

Chesapeake Energy stock has fallen behind its peers but operationally, the company
hasnt done anything wrong.

Chesapeake Energy has posted quarterly profits, improved its margins and is on
track to grow oil production to 100,000 barrels per day, despite the weather-related
disruptions.

The Oklahoma-based company has proven that it is a well-managed operator.

The company will likely end the year on a high-note by posting significantly higher
levels of earnings and production in Q4-2017.

This has been a tough year for Chesapeake Energy (CHK) shareholders. But I believe
this is a well-managed oil and gas producer that will likely post significantly higher levels of
volumes and earnings in the second half of the year, driven in large part by double-digit
growth in production in the fourth quarter on a sequential and year-over-year basis. That
could provide much-needed relief to shareholders.

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10/2/2017 Chesapeake Energy: A Well-Managed Operator - Chesapeake Energy Corporation (NYSE:CHK) | Seeking Alpha

This hasnt been a great year for Chesapeake Energy stock which has tumbled 37% on a
year-to-date basis. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP),
which is the benchmark fund for independent oil and gas producers, has fallen 17% in the
same period. This shows that Chesapeake Energy stock has underperformed its peers by
a wide margin. The company has been hurt by persistent weakness in energy prices, a
high debt load and tough weather conditions (Hurricane Harvey) which disrupted the
companys exploration and production work. But I think the negative headlines have
overshadowed the companys impressive operational performance.

Chesapeake Energys earnings slipped into the red in mid-2015 following the plunge in
commodity prices. But thanks in part to successful cost-cutting efforts, the company
became profitable in Q3-2016. So far, it has reported four quarterly profits in a row. In
addition to this, the company has also managed to improve its profit margins. For Q2-
2017, the company reported an adjusted EBITDA of $461 million from revenues of $2.28
billion which translates into an EBITDA margin of 20.2%. Thats up from 15.5% in the
corresponding quarter last year.

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