Chesapeake Update -- Zeits -- February 13, 2018 -- For Newbies, Note The 2.6 BCF/D; The Importance Of DUCs -- Money In The Bank

Summary, link over at SeekingAlpha:

• Chesapeake guided to sequentially lower production volumes in Q1 2018, following a very strong Q4 2017
• spending within cash flow in 2018 means activity levels will be reduced as compared to the second half of 2017
• however, even with this consideration in mind, the full-year production outlook is underwhelming.
• with total debt again approaching $10 billion, Chesapeake cannot "drill its way out" of the leverage problem - significant asset sales is the only path to stability.

Then this:

For Q4 2017, Chesapeake Energy achieved its production goal of 100,000 barrels of crude oil per day, in-line with previous guidance. Natural gas and NGL production for the quarter were 2.6 Bcf/d and 59,500 b/d, respectively, above previous guidance.

These volumes represent a 10% sequential increase on a BOE basis, after adjusting for asset sales.

As a reminder, in the last six months Chesapeake significantly accelerated the pace of completions to monetize the company’s significant inventory of drilled but uncompleted wells.

During Q3 2017, Chesapeake emphasized completions in the Marcellus, Utica and Haynesville to position itself for winter demand for natural gas.

In Q4 2017, the company nearly tripled the pace of completions in the Eagle Ford, as compared to the preceding two quarters.

The “surge” in the number of new wells being brought online yielded an impressive ramp-up in production volumes during the second half of 2017.

The advantage of DUCs -- take note:

In retrospect, Chesapeake's decision to accelerate DUC conversions was well timed. Cash flows have benefitted from greater crude volumes sold into an attractive price environment that prevailed during the last several months. On the natural gas side, Chesapeake took advantage of the strong heating demand this winter for natural gas and NGLs.

Bottom line:

Chesapeake remains one of the most over-levered stocks in its peer group. If one were to plot the stock's trajectory versus several other high-leverage peers, the big decline since early January does not stand out as differential.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship-related decisions based on anything you read here or think you may have read here.

By the way, for newbies, note Chesapeake's natural gas production: 2.6 Bcf/d. This seems to be a number that resonates across the global energy sector.