By Sourasis Bose
(Reuters) -Chesapeake Energy beat Wall Street estimates for third-quarter profit on Tuesday, as lower overall costs helped offset the impact of falling natural gas prices, sending its shares 3.4% higher in extended trading.
The company's production expenses fell to 23 cents per thousand cubic feet of gas equivalent (mcfe) for the third quarter, below its 2023 expectations.
That helped it against falling natural gas prices, which were down 60% in the third quarter, compared with a year earlier, as U.S. production continued to rise and concerns eased over energy security in Europe.
"Results beat expectations driven by lower cash costs and better revenue," RBC Capital Markets analysts said.
On an adjusted basis, the company reported a profit of $1.09 per share, beating analysts' estimates of 60 cents per share, according to LSEG data.
Chesapeake's total production fell about 15% to 3,495 million cubic feet equivalent (mmcfe) per day, as it completed its exit from the Eagle Ford (NYSE:F) basin earlier this year following pressure from activist investment firm Kimmeridge Energy Management to shift toward solely producing natural gas.
It, however, lifted its forecast for 2023 gas production in the range of 3,425 to 3,525 mmcfe per day from the earlier forecast of 3,400 to 3,500 mmcfe per day, boosted by higher volumes in Haynesville.
The company also announced an agreement with energy trader Vitol, under which Chesapeake would supply up to 1 million tonnes of liquefied natural gas (LNG) per annum for 15 years starting 2028.
Once the agreement is executed, the companies would jointly select the liquefaction facility in the U.S. to produce the contracted LNG, the company said.