Plan to Attend Chesapeake Energy Corporation (CHK)’s Big Earnings Show

Then, in concert with Southeastern Asset Management, Chesapeake’s largest shareholder led a successful effort to purge most of the board and replace McClendon as chairman with Archie Dunham, who once held the same position at ConocoPhilips (NYSE:COP). But don’t cry for either Argentina or Aubrey. When he departs from his nearly quarter-century-old company, he will take with him about $45 million in the form of base salary, bonuses, and early vesting restricted stock awards.

What to expect from the release and call
So what’ll Thursday bring? The consensus is that earnings will come in near $0.14 per share, a sharp drop from last year’s $0.58. More importantly, there will surely be a discussion of a continued effort to recast the company from 90% gas production, where it was characterized not long ago, to higher amounts of oil and liquids output.

Shoring up the balance sheet — which under McClendon was always packed with excessive debt, owing to the building of the acreage positions and the prevalence of ambitious drilling programs — will surely constitute a key topic of conversation. It’s already been announced that asset sales are in the works as a debt-reduction elixir. So news of progress on that front will be expected. And for much the same reason, there’ll likely be more specificity added to previous announcements that drilling in 2013 will be constrained in an effort to minimize the gap between cash flow and expenditures. At this juncture, it appears that that gap will still reach about $3.5 billion this year.

Obviously, the item that all investors would like clarified is the likely value of Chesapeake shares in, say, two to four years. Of course, surprising as it may appear, Icahn et al are no more certain about the answer to that million-dollar question than the rest of us. The only way to have unquestionable prescience about the company’s future value is to enjoy certainty about the path of gas prices, which is beyond all of our ken.

Foolish bottom line
In any event, I’m betting that Thursday’s session at Chesapeake will be well worth the price of admission. I suggest that Fools climb on line and enjoy the show.

The article Plan to Attend Chesapeake’s Big Earnings Show originally appeared on Fool.com and is written by David Lee Smith.

Fool contributor David Lee Smith has no position in any stocks mentioned. The Motley Fool has the following options: Long Jan 2014 $20 calls on Chesapeake Energy, long Jan 2014 $30 calls on Chesapeake Energy, and short Jan 2014 $15 puts on Chesapeake Energy.

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