Source: Chesapeake Energy Corporation. 

Chesapeake Energy Corporation (CHKA.Q) recently reported really strong third-quarter results. Not only did the company beat Wall Street's earnings estimates but production growth topped the company's own guidance. It was a result the company's management team was absolutely thrilled with, which was pretty evident on the third-quarter conference call with analysts and investors. Here are five areas Chesapeake Energy's management pointed out as reasons why it's so excited by the company's future.

Transformation is evident

CEO Doug Lawler led off the call by saying how pleased he was with the progress the company has made since he took over the top job. He pointed out the noticeable results:

In mid-2013, the Board, Management and employees of Chesapeake set out to transform a company, and that's exactly what we've done. Quarter-over-quarter for the last four quarters, we have met or exceeded our production targets, met or reduced our capital expenditure budget, and consecutively reduced our cash costs.

He's seeing steady progress in every aspect of the company's operations; it's delivering higher production even as it spends less money.

  

CFO Nick Dell'Osso. Source: Chesapeake Energy Corporation.

Balance sheet has never been stronger

Chesapeake Energy's improvements have had a noticeable impact on the company's balance sheet. Once an area of weakness and concern, the balance sheet is now a source of strength as CFO Nick Dell'Osso noted on the call:

I'd like to highlight that we will spend approximately $250 million less on interest expense and preferred dividends on an annualized basis pro forma for these balance sheet reductions. Our focus on efficiency can be seen in all parts of the Company, including here. Chesapeake has never been stronger financially.

The financial transformation at Chesapeake has been impressive, and it's now in the best financial position ever. 

"Weapons grade attacking" of costs

A lot of companies talk about becoming more efficient, but Chesapeake Energy has taken that to a whole new level. On the conference call, an analyst asked the company about its capital efficiency by asking how the company would "compare where you are today versus where you have been in the past [...]?"

Lawler's response was enthusiastic:

I'll tell you, I just have been super impressed with the focus of the leadership and the employees inside of Chesapeake. I'm not kidding you. It's like weapons grade attacking cost and driving value that is unlike anything I've ever seen before. And it's just really exciting, and you can just expect to see that continued trend.

Later in the call, an analyst asked if the company still had the potential to cut costs even further. Here, Lawler's response was just as enthusiastic:

It's the contagious environment of driving more value. And so the way that we look at 2015 -- we're using the most current well information, and we will base our program off of current costs. But what's really cool about it is we continue to see, and I'm very confident that we will see, further efficiencies as we execute in 2015.

We typically don't hear the phrase "weapons grade attacking" and "contagious environment" describing cost cutting, but that's the new atmosphere at Chesapeake Energy. So, while the company is budgeting that it won't cut costs next year, Lawler believes his team will find a way to keep cutting.  

  

CEO Doug Lawler. Source: Chesapeake Energy Corporation.

No longer cost management, but cost leadership

Chesapeake Energy is taking its cost cutting to a new level. Lawler pointed out that the company is now shifting from managing its costs to being the leader on cost:

[...] when I came into the Company, our focus was how do we drive greater cost management, ultimately leading for what I call cost leadership. Cost management means that we stop doing things that aren't adding value to our shareholders. Cost leadership means that we deliver more for less, deliver something unexpected or more value than what we had previously [...] We've made a reference in the past that there were a lot of opportunities for low hanging fruit. And as we have worked through the past year, we've cleaned that up. That's all cleaned up. And now it's just pure cost leadership.

Chesapeake Energy is no longer focused on the low-hanging fruit of cutting wasteful spending. Instead, the company is focused on becoming the low-cost leader across every basin it operates in as it works to deliver more value for every dollar spent than any of its competitors.

Best is yet to come

In closing his prepared remarks, CEO Doug Lawler noted that while the company is happy with the progress it's making, it still plans to improve:

I couldn't be more happy with our results for the third quarter. But importantly, I also want you to know that we are not done. There is a deep and strong commitment here at Chesapeake to become a top quartile E&P company, and we are progressing steadily toward that goal. We believe that our core values, our focus on Chesapeake being an industry leader in every aspect of the E&P business, and our commitment to creating shareholder value is more evident each and every day.

Investor takeaway

Chesapeake Energy's management's enthusiasm for its future was evident on the company's conference call. Under Doug Lawler, the company has made tremendous progress in a short amount of time. However, he still believes the best is yet to come, which suggests a very exciting future for the company and its investors.