(Reuters) - Chesapeake Energy Corp (CHK.N), the No. 2 U.S. natural gas producer, reported a third-quarter profit on Wednesday compared with a loss a year earlier and said it expects to spend less as it drills fewer wells.
Under new chief executive Doug Lawler, Chesapeake has slashed 10 percent of its workforce and is spending less on exploration and production as part of the executive’s relentless campaign to control costs. The company also expects to sell more than $4 billion in assets this year to raise cash.
The Oklahama City, Oklahoma company’s results matched Wall Street expectations and shares climbed 3 percent in premarket trade.
Analysts at energy-focused investment bank Tudor, Pickering Holt & Co. characterized the results as “slightly positive” and said Chesapeake produced more oil than they expected.
“Although we have reduced our drilling and completion activities in the second half of 2013 and we are planning for a lower capital expenditure budget next year, we expect to continue delivering organic production growth in 2014,” Lawler said in a statement.
The expected growth will be fueled by an increase in oil production from the Eagle Ford Shale in south Texas and an increase in natural gas and natural gas liquids output from the Utica and Marcellus shales, Lawler said.
Profit was $156 million, or 24 cents per share, in the third quarter, compared with a loss of $2.1 billion, or $3.19 per share, a year earlier, when the company wrote down the value of some of its natural gas assets.
Excluding special items, profit was 43 cents per share, matching analysts’ average estimate, according to Thomson Reuters I/B/E/S.
Daily production in the third quarter dipped 2 percent due to asset sales, but daily oil output rose 23 percent, the company said.
In the fourth quarter, Chesapeake plans to operate an average of 59 rigs and to complete about 14 fewer wells compared to the 2013 third quarter. Based on that plan, Chesapeake is reducing its 2013 full-year outlook for drilling and well completion costs to a range of $5.5 billion to $5.8 billion from $5.7 billion to $6 billion.
Chesapeake operated an average of 67 rigs in the third quarter.
Chesapeake shares rose 3 percent to $29.00 in premarket trading. They closed at $28.14 on Tuesday on the New York Stock Exchange.
Reporting by Anna Driver and Swetha Gopinath; Editing by Maju Samuel, John Wallace and Chizu Nomiyama