Chesapeake earnings rise 47 pct in 3Q

Chesapeake Energy Corp. said Thursday that its adjusted third-quarter earnings rose 47 percent on rising natural gas production.

The nation's largest natural gas producer said it made $486 million, or 85 cents a share, for the quarter ended Sept. 30, compared with $346.3 million, or 72 cents per share, a year ago.

Oklahoma City-based Chesapeake also posted a gain of $2.8 billion from hedges on gas, oil and interest rates — bringing the company's total profit to $3.3 billion, or $5.61 per share. Revenue nearly quadrupled to $7.5 billion in the quarter because of the hedges from $2 billion a year ago.

Analysts surveyed by Thomson Reuters expected, on average, profit of 88 cents per share on revenue of $2.57 billion. Analyst estimates typically exclude one-time charges and gains.

The report was released after the stock market closed Thursday. Chesapeake shares rose $1.42, or nearly 7 percent, to $22.07 during Thursday's regular trading and jumped another 73 cents, or 3 percent, in after-hours trading.

The shares have been rebounding since hitting a four-year low of $11.09 on Oct. 10 after the company disclosed Chief Executive and co-founder Aubrey McClendon was forced to sell most of his nearly 6 percent stake in the company to satisfy margin loan calls.

McClendon used margin loans to buy Chesapeake stock. Brokers offer these loans, with securities used as collateral. When a stock falls below a certain point, the investor must sell stock or pony up more cash to cover losses.

The shares hit a 52-week high of $74 in July, but have fallen sharply on the back of weakening gas and oil prices.

The ongoing financial crisis has Chesapeake hoarding cash by selling properties, cutting capital expenditures and drawing on lines of credit.

Chesapeake said last month it was reducing its drilling activities as part of a plan to trim capital expenditures by about $1.5 billion in 2009 and 2010 because of declining prices and worries about the possibility of a gas surplus.

The company also lowered its full-year production growth estimate to 18 percent from 21 percent.

The company said production rose 15 percent during the third quarter to 2.3 billion cubic feet per day from 2 billion cubic feet per day in the year-ago quarter.

Much of the gain on hedges during the quarter stems from lower natural gas and oil prices as of Sept. 30 compared with June 30.

Year to date, Chesapeake said it has made $1.5 billion, or $2.73 per share, compared with $1.1 billion, or $2.10 per share, a year ago. Revenue rose to $8.6 billion for the year from $5.7 billion.

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