Chesapeake Energy shares dive at large volume after another loss of revenue

Shares of Chesapeake Energy Corp. took a deep dive Tuesday after the oil and natural gas production company's financial performance missed Wall Street expectations for a third straight quarter, giving investors reason to doubt the company's ability to reach its target for free cash flow next year.

stock

CHK, -17.95%

fell 17% to very active in afternoon trading. That puts it on track to suffer the biggest one-day decline of 3 1/2 years, and the worst results after earnings of more than a decade.

The trading volume amounted to 1[ads1]2.6 million shares, compared to the average daily average of 53.7 million shares.

Prior to the opening clock, Chesapeake reported a net loss that was reduced to $ 101 million, or 6 cents per share, from $ 169 million, or $ 19 a share, the previous year. Excluding non-recurring items, such as unrealized derivatives and sale of assets, the adjusted loss per share increased to 11 cents from 1 per cent, and lacked the FactSet consensus for a loss per share of 10 cents.

Total revenue fell 14.8% to $ 2.06 billion, below the $ 2.12 billion FactSet consensus, as a loss of marketing revenue offset a slight slump in oil and gas revenues.

The company has not beaten bottom or top expectations since the fourth quarter of 2018.

Average daily production fell 11.0% to 478,000 barrels of oil equivalent (boe), which consisted of 115,000 barrels of oil, 1,989 billion cubic feet (bcf) of natural gas and 32,000 barrels of natural gas liquids.

The company said it raised $ 329 million in cash from operating activities during the third quarter, down from $ 444 million last year, while spending net $ 563 million in cash in investment activities, up from $ 489 million.

For 2020, the company said it expects to reduce CE production and general and administrative expenses by about 10%. Chesapeake is targeting $ 1.3 billion to $ 1.6 billion in investment spending, something SunTrust Robinson Humphrey analyst Neal Dingmann said was below his $ 2.3 billion capex estimate.

CEO Doug Lawler said the improvements in capital efficiency and expected reduction in cash costs and expected capital plan, "position us to target the free cash flow in 2020."

But Dingmann said that the way the company outperformed cash flow by as much as it did during the quarter "may cause investors to question the company's ability to generate free cash flow in 2020, even with a significantly reduced 2020 budget."

Dingmann reiterated its $ 1 holding valuation and stock price target, which is 25% below today's level.

“We are still confident in our strategy, asset portfolio and our talented staff, and we will continue to use all of our resources to to drive for greater shareholder value and return, "Lawler said in the conference call after revenue according to a FactSet transcript." The unstable commodity pricing environment has pushed the pace and timing to achieve these goals, but we will continue to make step-by-step progress and improve ours. .. competitiveness and profitability. "

The stock traded just 1.6% over the 20-year low of $ 1.27 on October 9, and has fallen 39% in By comparison, SPDR Energy Select Sector Fund exchanged

XLE, + 0.13%

has gained 6.8% so far this year and the S&P 500 index

SPX, -0.12%

has increased 23%.