Crude oil now represents about 14 percent of Chesapeake's total production, up from 9 percent one year ago.
Argus analyst Philip Weiss was pleased with Chesapeake's oil results.
“Oil production seems to be growing nicely — in line to very slightly ahead of my expectations,” Weiss said.
McClendon also said natural gas prices are likely to increase faster than most industry observers have predicted. Seven months ago, the country's natural gas storage held 900 billion cubic feet more than it did one year before, largely because of a warmer-than-normal winter combined with increased natural gas production.
That surplus is now down to 120 billion cubic feet.
“We believe the small remaining storage overhang should soon go into a year-over-year deficit, which is a quite remarkable turn of events from this past spring,” McClendon said.
McClendon attributed the storage drop to Chesapeake and other natural gas producers switching their focus to oil production while electric utilities began burning more natural gas and less coal.
“After battling natural gas headwinds, driven by relentless supply growth for the past four years, we now expect to enjoy a multiyear rebound in natural gas prices driven by demand growth that is likely to be equally relentless,” McClendon said. “This move from a multiyear trend of natural gas headwinds to a multiyear period of natural gas tail winds will have many positive implications for Chesapeake and its investors.”
Hanold said he generally agrees with McClendon's natural gas price forecast.
“They've always had somewhat of a bullish bias to natural gas. They have a pretty significant position in gas plays. That makes them a little bit biased,” Hanold said.
“But I don't think they're overly aggressive. You're seeing Chesapeake and others focus less on natural gas. With that coupled with the demand side, the data supports everything he (McClendon) is saying.”
Other analysts are not as convinced.
“It seems to me like he (McClendon) is betting heavily on a cold winter,” Weiss said. “Seasonal forecasts before the season starts do not have a good track record. Long-term, I do expect natural gas prices to be higher. I'm just not as confident it will happen as fast as Aubrey stated today.”