Chesapeake posts $866 million loss, could sell stake in Barnett Shale

Chesapeake Energy Corp. posted an $866 million loss for the fourth quarter 2008, ending its string of record earnings quarters and following in the footsteps of a fellow Oklahoma City-based energy company that also posted a significant loss in revenue due, in large part, to a surplus of natural gas and deflated commodity prices.

The company’s $866 million loss – significantly down from its fourth quarter 2007 earnings of $158 million – was joined by a net income of $623 million for fiscal year 2008, compared to a 2007 net income of $1.229 billion, according to the Feb. 17 release.

Average daily production in the Barnett Shale increased about 55 percent over the fourth quarter in 2007, according to the release, reaching 570 million cubic feet equivalent. The company will use about 25 rigs in the field in 2009.

Over the past several months, Chesapeake Energy has sold interests in its operations in all but one of the four major shale plays: the Barnett. Chesapeake Energy said it currently is in “discussions with several large international energy companies” about a possible joint venture transaction for its 310,000 acres of leasehold in the Barnett Shale.

Excluding one-time items, Chesapeake Energy reported net income of $0.73 per share and net income of $427 million.

Natural gas exploration companies have been hit hard by the recession; shares in publicly traded companies have dropped on average about 40 percent in the past 12 months, while commodity prices similarly have fallen from a summer peak of about $14 per million British thermal units to a current price of $4.18.

Devon Energy Corp. recently reported a net loss of $6.8 billion, or $15.42 per share, due to a massive, $7.1 billion decline in the value of its oil and natural gas assets, which offset increases in production and sales.

jtronche@bizpress.net