Chesapeake Energy Corp. on Wednesday reported a third-quarter profit as the company is seeing positive results from its ongoing efforts to reduce costs while increasing oil production, CEO Doug Lawler said Wednesday.
Despite the strong earnings report, Chesapeake shares slipped 6.8 percent Wednesday, after the company said it is under investigation for possible antitrust violations in Michigan.
In regulatory filings Wednesday, Chesapeake said it has received subpoenas from the U.S. Justice Department and state agencies in Michigan for information and testimony about the company's purchase and lease of oil and natural gas leases in the state.
Reuters reported last year that executives at Chesapeake and Calgary-based Encana Corp. exchanged emails discussing bidding strategies before a lease auction in 2010.
Chesapeake shares dropped $1.91, or 6.8 percent, Wednesday to close at $26.23.
Chesapeake spent $1.25 billion on drilling and completion in the third quarter, which was $180 million less than was budgeted and $350 million less than what was spent in the second quarter.
“We have significant opportunities to improve our capital allocation and efficiency and reduce our cash costs, which we believe will result in greater returns and greater cash flow,” Lawler said during a conference call with analysts.
Chief Financial Officer Nick Dell'Osso addressed the layoffs the company announced over the past two months.
“These were difficult, but necessary, actions to align the organization with our new operational structure and strategy to achieve profitable growth from captured resources,” he said.
Chesapeake reported third-quarter profits of $156 million, or 24 cents a share, up from a loss of more than $2 billion, or $3.19 a share in the year-ago period.
Adjusting for one-time items, the company reported a net income of $282 million, or 43 cents a share, up from $35 million, or 10 cents a share in the third quarter of 2012.
Revenues improved to $4.87 billion in the quarter, up from $2.97 billion one year ago.
Oil production jumped 23 percent from the third quarter of 2012, while total production improved 8 percent.
Net oil production in the third quarter increased to 120,000 barrels per day, roughly 4,000 barrels per day greater than in the second quarter.
Chesapeake produced more oil than expected, allowing the company to raise its full-year production outlook by 2 million barrels to a range of 40 million to 42 million barrels.