Speaking publicly for the first time since he was hired as Chesapeake's new chief executive, Doug Lawler on Thursday expressed his excitement about the company's future.
Investors responded by driving Chesapeake's stock up more than 7 percent. It reached a 52-week high at $25.20 before closing at $24.95 a share.
Lawler said the Oklahoma City-based oil and natural gas company delivered strong results in the second quarter, a testament to its employees' determination and focus.
Chesapeake reported net income of $457 million, or 66 cents a share, with several after-tax adjustments.
The company's adjusted income of $334 million, or 51 cents a share, is 10 cents higher than analysts' estimates and well ahead of the same quarter of last year, when the company earned $3 million, or 6 cents a share.
Lawler said Chesapeake's second-quarter production averaged 4.1 billion cubic feet of natural gas equivalent a day, up 7 percent year over year.
The company's oil production was up 44 percent, buoyed by gains in south Texas' Eagle Ford Shale.
“I am very excited and energized by what I have seen during my first six weeks with the company,” Lawler said. “Chesapeake has an exceptionally broad and deep asset base, which offers tremendous opportunity for value creation.”
Sterne Agee analyst Tim Rezvan said Chesapeake has managed to erase near-term liquidity concerns without hampering its production.
“While full-year guidance remains subject to change, it is clear that the portfolio is producing ahead of our (and Street) expectations,” Rezvan wrote in a note to clients.
Lawler said Chesapeake will exercise greater fiscal discipline by bringing its capital expenditures in line with its cash flow.
He said ongoing asset sales have raised enough money to fund all of Chesapeake's planned capital expenditures this year, but additional sales still are possible.
Lawler also said continued efficiency gains will allow Chesapeake to trim its capital expenditures, as it balances spending with cash flow from operations.
“We're implementing a new competitive capital allocation process to ensure the highest quality projects are funded, we will continue to divest our noncore assets and noncore affiliates,” he said in Thursday's earnings call with analysts. “We will reduce our financial and operational risk and complexity, and we will achieve investment grade credit metrics.”
Lawler said Chesapeake will focus on developing its highest quality assets.
“Chesapeake has a world-class inventory with significant growth potential in multiple basins,” he said.
“This inventory will provide competitive production reserve growth for years to come,” he said.