Chesapeake Energy Corp. said Tuesday that its fourth-quarter profit more than doubled as the company benefited from hedging positions that offset lower prices for oil and gas.
Chesapeake posted earnings of $429 million or 63 cents per share, compared with $180 million, or 28 cents per share, a year ago.
The company had hedging gains of $315 million in the fourth quarter, which helped as natural gas prices remained low during a mild winter with abundant supplies.
Revenue was $2.73 billion, up from $1.98 billion a year ago.
Excluding special charges, earnings were 58 cents a share. Analysts polled by FactSet expected 59 cents per share on an adjusted basis and revenue of $3.04 billion.
Chesapeake said it is working to balance liquid and natural gas production and expects capital spending to exceed free cash flow in 2012 and 2013.
The Oklahoma City-based company said In January that it will cut back production by 1 billion cubic feet per day, equal to 1.5 percent of natural gas production in the lower 48 states. The cutbacks are mainly in the Haynesville and Barnett shale plays, the company said.
Natural gas futures prices have lingered near 10-year lows as companies like Chesapeake produced far more gas than the country can use. The Energy Department says current supplies are far above the five-year average. Some experts think the U.S. has enough natural gas to meet its needs for a century.
Chesapeake said production curtailments and reduced drilling will bring natural gas production in 2012 down 4 percent to 2.6 billion cubic feet per day, compared to the 2011 average of 2.75 billion cubic feet per day.
For the 12 months ending Dec. 31, the company earned $1.57 billion, or $2.32 per share, compared to year-ago earnings of $1.66 billion or $2.51 per share. The company had 2011 revenues of $11.6 billion, compared to $9.4 billion in 2010.
In the fourth quarter Chesapeake's average daily production of 3.6 billion cubic feet was up 23 percent from the same quarter last year.
About 82 percent of Chesapeake's production was in natural gas, with the balance in oil and natural gas liquids.
In after-hours trading, Chesapeake shares fell 12 cents to $24.50.