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Chesapeake ‘off to a strong start’ in 2013

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Chesapeake Energy, one of the largest stakeholders in the Marcellus shale gas play, says first quarter earning suggest a good year.

The quarter is the first reported since founder and former CEO Aubrey McClendon stepped down amid controversy over financial practices at the natural gas company. Chesapeake Energy conducted an internal investigation of McClendon and found no intentional wrongdoing.

Steven C. Dixon, Chesapeake's acting CEO, said the company is "off to a strong start in 2013."

"We are beginning to see the benefits of our operational strategy shift from identifying and capturing new assets to developing our extensive existing assets and entering a new era of shareholder value realization," Dixon said. "Our operational focus on the core of the core is enabling our drilling program to increasingly target the best reservoir rock in each of our key plays. We are capitalizing on pad drilling efficiencies wherever possible and leveraging our substantial investments in roads, well pads, gathering lines, and compression and processing facilities. As a result, we are generating more efficient production growth, stronger cash flow and better returns on capital."

Chesapeake reported net income available to common stockholders of $15 million. The company's adjusted earnings before interest, taxes, depreciation and amortization was $1.13 billion, an increase of 35 percent year over year.

Daily production is also up, about 9 percent from the same quarter in 2012. Chesapeake produced about 3 billion cubic feet of natural gas per day and about 157,000 barrels of oil and natural gas liquids.

"We plan to devote more than 80 percent of our total capital expenditures to drilling and completion activities in 2013 as compared to an average of approximately 50 percent over the last three years," said Domenic J. Dell'Osso Jr., Chesapeake's CFO. "Going forward, we expect this capex trend to continue to improve as we capitalize on our past investments in leasehold, oilfield services and other assets to deliver meaningful improvements in returns on capital."