Chesapeake Energy Sees Earnings Boost Ahead Of Sale

It’s been a busy week already for Chesapeake Energy.

Chesapeake Energy Corp. reported Tuesday that fourth quarter earnings roses well ahead of last year’s results, but quarterly sales for the Oklahoma City natural gas producer lost ground.

For the period ended Dec. 31, Chesapeake reported fourth quarter net income cleared $180 million on revenue of $1.98 billion. Last year, the Fayetteville Shale driller lost $530 million on revenue of $2.2 billion.

On Monday, Chesapeake announced it has agreed to sell its Fayetteville Shale natural gas assets BHP Billiton Petroleum, the Australia-based industrial conglomerate with annual revenue of nearly $60 billion.

With the completion of the BHP deal for $4.75 billion in cash, Chesapeake will virtually have no drill-bit presence in Arkansas and is moving aggressively toward cutting the company’s long-term debt by 25 percent. Chesapeake anticipates the BHP transaction will close in the first half of 2011.

For the full year, Chesapeake reported net income of $1.66 billion, or $2.51 per share, on revenue of $9.36 billion. The company produced 1.035 trillion cubic feet of natural gas equivalent (tcfe) at the average price of $5.22 per thousand cubic feet.

However, Chesapeake said the company’s controversial hedging activities during the fourth quarter generated a $2.39 gain per mcf and a $1.43 gain per barrel of crude for a 2010 fourth quarter realized hedging gain of $571 million, or $2.13 per mcfe.

In afterhours trading on Tuesday, Chesapeake shares slipped 1.4 percent or 46 cents at $31.55.