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Chesapeake Energy posts Q3 loss on write-downs

Chesapeake Energy Corp. (NYSE:CHK) late Thursday wrote down $2 billion in natural gas deposits as prices plunged, prompting the company's biggest net loss in three years.
Chesapeake Energy posts Q3 loss on write-downs

Chesapeake Energy Corp. (NYSE:CHK) late Thursday wrote down $2 billion in natural gas deposits as prices plunged, prompting the company's biggest net loss in three years.

For the third quarter, the oil and gas company posted a net loss of $2.06 billion, or $3.19 per share, compared to a profit of $879 million, or $1.23 per share, a year earlier. Adjusted to exclude one-time items, the company reported a profit of 10 cents per share, compared to 72 cents in the third quarter of 2011.

Analysts surveyed by FactSet had predicted adjusted earnings of 9 cents per share.

The company reported revenue of $2.97 billion in its third quarter, down from $3.98 billion a year earlier.

The net loss was the company’s biggest since the first three months of 2009, when Chesapeake wrote down the value of some reserves in response to the worldwide financial crisis and weak energy demand.

Gas output climbed 25 per cent to the equivalent of 3.81 billion cubic feet a day during the quarter, even as CEO Aubrey McClendon shifted the company’s drilling focus to production of oil and byproducts such as butane that fetch higher prices. Chesapeake's McClendon also raised the 2012 drilling budget to $8.75 billion, an increase of 2.9 per cent to 9.4 per cent from the $8 billion to $8.5 billion estimate announced in September.

Chesapeake’s McClendon is selling assets to raise as much as $14 billion to plug a funding shortfall that has been worsened by the plunge in gas prices.

Chesapeake lost 10 percent of its market value this year as the impact of falling gas prices was compounded by disclosures that McClendon borrowed more than $800 million last year to finance his personal stakes in thousands of company-owned oil and gas wells.

McClendon was removed from the chairman’s role in June and more than half the board was replaced at the insistence of Chesapeake’s largest investors, Southeastern Asset Management and activist investor Carl Icahn.

The board has been conducting an internal investigation for more than six months of McClendon’s borrowings from some of the company’s biggest financiers. Investigations also are underway at the Internal Revenue Service and the U.S. Securities and Exchange Commission.



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