(Reuters) - Higher gas prices helped Chesapeake Energy Corp (CHK.N) beat expectations with a big jump in quarterly profit Wednesday and the company hiked its production forecast for the year, sending its shares up more than 2 percent in midday trading.
The results showed Chesapeake was off to a “strong start” in 2014, analysts at Houston-based energy focused investment bank Simmons & Co. said.
Still, Doug Lawler, chief executive of the second-largest U.S. producer of natural gas told investors: “We’ve got a lot of wood to chop.”
In the post for less than a year, Lawler has been working to cut costs and improve profitability after taking the reins from Aubrey McClendon, who was pushed out amid governance issues and a liquidity crunch.
A harsh winter in much of United States sapped stockpiles and drove benchmark Henry Hub natural gas prices up 50 percent from a year earlier. Those gains helped Chesapeake and other companies post better-than-expected results for the first quarter.
Chesapeake earned a profit of $374 million, or 54 cents per share, in the three months ended March 31, compared with $15 million, or 2 cents, a year earlier.
Adjusting for one-time items, Chesapeake earned 59 cents a share, while analysts expected 48 cents, according to Thomson Reuters I/B/E/S.
The Oklahoma City, Oklahoma company said its oil and gas production was 675,200 barrels oil equivalent per day, up 11 percent from a year ago after adjusting for asset sales.
Looking ahead, Chesapeake expects total oil and gas output to grow 9 percent to 12 percent in 2014, up from a prior forecast of 8 percent to 10 percent growth.
The increase in production will mostly be driven by higher volumes of natural gas liquids as the company looks to ship more ethane on a pipeline coming into service.
Natural gas liquids like ethane and propane are stripped out of natural gas because they fetch higher prices.
Shares of Chesapeake were up 2.5 percent at $29.06 in midday trading on the New York Stock Exchange.
Reporting by Anna Driver; Editing by Sofina Mirza-Reid and Bernadette Baum