Chesapeake to report 1st-qtr results amid growing production forecasts as demand stays weak

Earnings Preview: Chesapeake Energy to report 1Q

COLUMBUS, Ohio — Chesapeake Energy Corp., one of the nation’s largest natural gas producers, is scheduled to report its first-quarter results after the market closes Tuesday.

WHAT TO WATCH FOR: Chesapeake has been a key developer of gas production from shale, a kind of sedimentary rock found in geological formations around the world. The gas, tightly locked in the rock, had been expensive to extract until recently.

Chesapeake and other producers have become so prolific that production forecasts have been increasing even as some operations have been reduced due to low gas prices or Chesapeake taking on partners for some projects.

Chesapeake, based in Oklahoma City, announced in January that it was selling a quarter of its stake in the Barnett shale in Texas to French oil company Total for $2.25 billion. Even with the sale, Chesapeake raised its production forecast 8 percent to 10 percent this year and 15 percent to 17 percent next year.

WHY IT MATTERS: Natural gas is taking on a bigger energy role in the U.S., especially for electricity generation. Last year, electric generation from natural gas increased 5.1 percent while generation from coal fell 10.8 percent, according to the Energy Information Administration. More than a fifth of the nation’s electricity now comes from gas.

Gas emits fewer greenhouse gases credited with global warming than coal, and abundant and affordable supplies has backers calling for more use of natural gas as a transportation fuel in addition to its traditional use of heating homes and businesses.

CEO and co-founder Aubrey McClendon said at a conference Friday that the oil spill in the Gulf of Mexico may get more people to listen to ideas about using more gas as a transportation fuel.

WHAT’S EXPECTED: Analysts surveyed by Thomson Reuters expect Chesapeake to report profit of 70 cents per share on revenue of $2.37 billion.

LAST YEAR’S QUARTER: Chesapeake recorded a loss of $5.7 billion, or $9.63 per share, as tumbling natural gas prices forced it to write down the value of its gas and oil properties. Excluding special charges, Chesapeake recorded profit of $277 million, or 46 cents a share, for the quarter.