Chesapeake Energy Corporation has reported fourth quarter and full-year 2023 results and issued 2024 guidance.

Fourth Quarter 2023 Highlights:

• Net cash provided by operating activities of $470 million
• Net income totaled $569 million, or $4.02 per fully diluted share; adjusted net income totaled $185 million, or $1.31 per share
• Adjusted EBITDAX of $635 million; free cash flow of $91 million
• Produced approximately 3.43 bcfe/d net (98% natural gas)
• Closed remaining Eagle Ford divestiture package for approximately $700 million

Full-Year 2023 Highlights:

• Net cash provided by operating activities of $2.4 billion
• Net income totaled $2.4 billion, or $16.92 per fully diluted share; adjusted net income totaled $702 million, or $4.91 per share
• Adjusted EBITDAX of $2.5 billion; free cash flow of $551 million
• Returned approximately $840 million to shareholders, approximately $480 million in dividends and approximately $360 million in share repurchases
• Successfully closed Eagle Ford divestitures; total proceeds greater than $3.5 billion

2024 Outlook Highlights:

• Lowering prior capital expenditure guidance approximately 20% to $1.25 – $1.35 billion through rig count reductions and deferring completions and turn-in-lines
• Capital plan generates a baseline guide of 2.65 – 2.75 bcf/d
• Announced Southwestern Energy merger targeted to close in the second quarter
• Signed LNG SPAs with offtake from Delfin LNG and sale to Gunvor at a JKM linked price

Nick Dell'Osso, Chesapeake's President and Chief Executive Officer, commented: 
"2023 marked another year of strong operational performance for Chesapeake as we delivered approximately $840 million to shareholders via our capital return framework despite a challenging commodity price environment. Our 2024 operating plan is designed to prudently respond to today's market, further demonstrating our continued focus on capital discipline, operational efficiency, and free cash flow generation to consistently deliver through all demand cycles. Our strategic combination with Southwestern will make our future outlook even stronger, extending America's energy reach by positioning us to deliver more reliable, affordable, lower carbon energy to markets in need. We are forming the first U.S. independent that can truly compete on a global scale, redefining the natural gas producer to the benefit of our shareholders and energy consumers alike."

Operations Update

Chesapeake's net production in the fourth quarter was approximately 3.43 bcfe per day (approximately 98% natural gas and 2% total liquids), utilizing an average of nine rigs to drill 45 wells and place 52 wells on production.

For the full year 2023, the company produced approximately 3.66 bcfe per day (approximately 95% natural gas and 5% total liquids), utilizing an average of 11 rigs to drill 193 wells and place 166 wells on production.

Chesapeake is currently operating nine rigs (five in the Haynesville and four in the Marcellus) and four frac crews (two in each basin). Given current market dynamics, the company plans to defer placing wells on production while reducing rig and completion activity. The company will drop a rig in the Haynesville and Marcellus in March and around mid-year, respectively, and a frac crew in each basin in March. These activity levels will be maintained through year end. Deferring new well production and completion activity will build short-cycle, capital efficient productive capacity which can be activated when consumer demand requires it. The company expects to drill 95 to 115 wells and place 30 to 40 wells on production in 2024.

Chesapeake announced earlier this month the signing of its first LNG Sale and Purchase Agreements (SPA) which represents two long-term SPAs for LNG. Under the SPAs, Chesapeake will purchase approximately 0.5 million tonnes per annum ("mtpa") of LNG from Delfin LNG at a Henry Hub linked price with a targeted contract start date in 2028. Chesapeake will then deliver the LNG to Gunvor on an FOB basis with the sales price linked to the Japan Korea Marker ("JKM") for a period of 20 years. These volumes represent 0.5 mtpa of the previously announced up to 2 mtpa HOA with Gunvor.

ESG Update

Chesapeake successfully recertified all assets under the MiQ/EO100™ standard, maintaining 100% independent responsibly sourced gas certification across its entire portfolio.

The company remains committed to achieving its expanded 2035 net zero goal, inclusive of both Scope 1 and Scope 2 GHG emissions. From 2020 to 2022, Chesapeake installed more than 2,000 continuous methane emission monitoring devices and retrofitted more than 19,000 pneumatic devices leading to a 37% and 64% reduction in Scope 1 and 2 GHG emissions intensity and methane emissions intensity, respectively. Chesapeake will continue its work on direct emission reductions while also investing in adjacent technology and businesses to meet its net zero commitment.

Chesapeake's culture of operational excellence and safety resulted in a ~40% year-over-year combined TRIR improvement, to an industry leading 0.14.

KeyFacts Energy: Chesapeake Energy US onshore country profile