Chesapeake Energy (NYSE:CHK) announced first-quarter results before the market opened this morning. America's second-largest natural gas producer reported adjusted net income of $405 million or $0.59 per share, which beat estimates by $0.11 per share. This represented a 97% surge from last year's first quarter.

Chesapeake Energy's production increased by 11% to an average of 675,200 barrels of oil equivalent per day, or BOE/d. This increase in production was mainly due to a surge in natural gas liquids volumes, which were up 63% over last year's first quarter while oil volumes increased 20% and natural gas production moved up by 4%. Because of surging natural gas liquids volumes the company is now raising its full-year production guidance range from 8%-10% to 9%-12%.

Surging liquids production, along with higher realized prices, is fueling an increase in the company's operating cash flow. First-quarter operating cash flow was $1.6 billion, which was 37% ahead of last year's first quarter. Chesapeake Energy now sees full-year cash flow of $5.8 billion-$6.0 billion. That's 13% higher, or $700 million, than its previous guidance.

Chesapeake Energy was able to achieve this success despite a 50% year over year drop in its capital spending plan. That capital was enough to enable the company to complete 234 total wells in the quarter, which is just 40 less than it drilled in last year's first quarter.

In a statement in the company's press release commenting on the quarter, CEO Doug Lawler called it "an important and defining quarter." He noted that the company's focus on cost drove a tangible improvement in Chesapeake Energy's growth profile. Because of that, it was able to raise its production and its cash flow guidance as its performance improvements are expected to continue throughout the year.

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