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AP News

Chesapeake Energy drills it in the second quarter

OKLAHOMA CITY (AP) — Higher natural gas prices and rising oil production fueled Chesapeake Energy's quarterly profits, which topped Wall Street expectations and lifted the company's forecast for crude oil production this year by 1 million barrels.

Chesapeake's shares jumped 6 percent Thursday to a new 52-week high.

CEO Doug Lawler, a highly regarded executive who was recruited from Anadarko Petroleum earlier this year, said during a conference call Thursday that during the past six weeks, he had launched a "comprehensive review of our assets and the organization."

Lawler said Chesapeake is focused on the path to driving shareholder value and realizing the company's full potential.

"Chesapeake is at a key juncture in its history, and we have a laser focus on positioning the company to execute more competitively," Lawler said.

Chesapeake posted second-quarter net income of $457 million, which works out to 66 cents per share, or 51 cents when one-time items are removed. That's a sharp drop from its quarterly net income of $929 million, or $1.29 per share, reported the year before.

But even the adjusted results easily beat out the 41 cents per share that Wall Street was looking for, and shares rose $1.50 to $24.80. Shares at one point reached as high as $25.20.

Revenue surged 38 percent to $4.68 billion, topping analyst predictions of $3.6 billion, according to a poll by FactSet.

The company produced more natural gas and at a higher price. Oil production increased 44 percent over the year to 116,000 barrels per day. Under its latest forecast, Chesapeake said it expects to produce between 38 million and 40 million barrels this year.

It's the first earnings report for Chesapeake under CEO Doug Lawler, who replaced company founder Aubrey McClendon.

Chesapeake, under McClendon, grew at a meteoric pace by aggressively acquiring drilling rights on the eve of what became an energy revolution through new drilling techniques.

Chesapeake came under fire for some of the perks that McClendon had arranged, including the right to invest personally in all of the company's wells.

He left the company earlier this year over "philosophical differences" with the board.

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