Earnings Highlights CHK
Chesapeake Energy reported Q2 2024 earnings and guidance on July 28th. The company produced 2.745 bcf/d, which was higher than their guidance midpoint. Chesapeake is building productive capacity with 75 combined DUCs and 46 deferred TILs at the end of the second quarter 2024. The company lowered 2024 capital and production expense guidance by ~4% and ~8% respectively, primarily due to improved operational efficiency and year-over-year deflation. Improved operational efficiencies continues to be a common theme from producers and even appears to be accelerating recently.
Chesapeake ran an average of eight rigs to drill 30 wells and place four wells on production while building an inventory of five drilled but uncompleted ("DUCs") wells and 24 deferred turn-in-lines ("TILs"). Chesapeake is currently operating seven rigs and two completion crews, having dropped an additional rig in the Marcellus earlier in July.
Given continued weakness in the natural gas market, the company is executing its previously disclosed plan to defer completions and new well TILs, building short-cycle, capital-efficient productive capacity, which can be activated when supply and demand imbalances correct.
At the end of the second quarter, the company had 29 DUCs, excluding working inventory, and 46 deferred TILs. For the full year 2024, the company expects to drill 95 to 115 wells and place 30 to 40 wells on production, which is consistent with previous guidance.
Their full year 2024 natural gas production guidance is unchanged from the prior reporting quarter. The company’s production is expected to drop sequentially in Q3 2024 and Q4 2024.
