(Reuters) - U.S. natural gas producer Chesapeake Energy Corp beat quarterly profit estimates, but said it planned to cut its rig count and bring fewer wells into production this year.
The company, which operates in the Eagle Ford Shale in South Texas, the Utica Shale in Ohio and the Anadarko Basin in northwestern Oklahoma among others, said it would run 14 rigs by the end of 2017, down from 18 rigs now.
“We suspect Chesapeake may cut back activity in the relatively gassy North Eastern Appalachia, Haynesville and (to a lesser extent) Midcontinent regions,” Barclays analysts wrote in a note.
Last month, oilfield services provider Halliburton Co warned growth in North American rig count was “showing signs of plateauing”.
U.S. energy companies added 10 rigs in July, the fewest in any month since May 2016. Oil prices have fallen 7.3 percent so far this year, slowing the pace of a 14-month drilling recovery.
Chesapeake said it expected to bring about 250 wells to sale in the second half of 2017 - 10 less than it had earlier projected.
The company may also deploy less capital to rigs in 2018, while spending more on other assets, CEO Doug Lawler said.
Like many other oil producers, Chesapeake is working toward reducing expenses, while using new technology to improve production.
“We expect to exceed our goal of 100,000 barrels of oil per day prior to (the) year-end,” CEO Doug Lawler said. The company had earlier expected to just hit the target.
The company produced about 88,400 barrels of oil per day in the quarter, up 6 percent from the preceding quarter.
Excluding items, the company earned 18 cents per share in the reported quarter, higher than analysts’ expectation of 14 cents, according to Thomson Reuters I/B/E/S.
Total revenue for the Oklahoma City-based company jumped 41 percent to $2.28 billion.
Separately, Chesapeake said the U.S. Department of Justice was closing its investigation into its accounting methodology.
Shares of the company fell as much as 2.5 percent to $4.50 in late morning trading on Thursday.
Reporting by Yashaswini Swamynathan and Nivedita Bhattacharjee in Bengaluru; Editing by Shounak Dasgupta and Arun Koyyur