Chesapeake Energy (OTC:CHKA.Q) stunned its investors late last year when it made a bold move to buy the oil-focused WildHorse Resource Development. That $4 billion deal, however, has quickly paid dividends, which was evident in the company's second-quarter report. Here are three numbers from that report showing that Chesapeake continues to head in the right direction.

122,000 barrels of oil per day (BPD): Oil production in the second quarter

One reason Chesapeake bought WildHorse (which it has since renamed Brazos Valley) is that it would accelerate the company's pivot toward oil. That's exactly what has happened this year as the company produced record oil volumes during the second quarter. Overall, its oil production surged 36% versus the year-ago period (and 10% after adjusting for asset sales), which pushed crude up to a record 25% of Chesapeake Energy's total production.

Three oil pumps at sunset

Image source: Getty Images.

Overall, Brazos Valley chipped in 35,000 BPD during the quarter, fueled by several high-rate oil wells it completed during the period. The company completed seven wells in the region this year that delivered more than 1,000 BPD during their first day online, which exceeded its internal expectations. That's due in large part to continued innovation, which is enabling it to complete more productive wells.

Another significant growth driver during the quarter was Chesapeake's position in the Powder River Basin. Crude output in the region more than doubled to 20,000 BPD during the second quarter.

Thanks to the strong showing in those two regions, and an oil-focused development plan in the second half, Chesapeake Energy is raising the mid-point of its full-year oil production guidance by 250,000 barrels to between 43 million and 44.5 million barrels.

$250 million-$280 million: projected 2019 cost savings

When Chesapeake Energy agreed to acquire WildHorse last year, it expected that the combined company would be able to capture substantial cost savings. In the company's view, it would be able to reduce expenses by $200 million to $280 million per year due to operational and capital efficiencies.

However, Chesapeake has been able to drive costs out more quickly than it initially expected. It has already eliminated an average of $600,000 per well (up from $500,000 per well last quarter), with it saving as much as $2 million on some wells. Because of this, the company now expects to capture $250 million and $280 million in cost savings this year from that deal. These cost savings have helped lower the company's breakeven level in the Brazos Valley region to around $39 per barrel.

$600 million: Remaining debt maturities through 2022

A driver of the WildHorse deal is that it would help accelerate Chesapeake Energy's efforts to improve its balance sheet. The company's oil-fueled growth should boost its earnings, which would help drive its leverage ratio down toward its targeted level over the next few years.

Meanwhile, the company has been able to leverage its improving results to buy it more time with creditors. During the quarter, Chesapeake exchanged $919 million of new notes due in 2026 for $884 million of notes that would have matured in 2020 and 2021. Further, the company repaid a $380 million note when it came due this year. As a result of these moves, the company now has less than $600 million of debt maturing through 2022. That a considerable improvement for a company that had billions of dollars in debt scheduled to mature during that timeframe.

However, while the company has pushed back most of its near-term debt maturities, it still has a bloated balance sheet. It ended the quarter with $10.2 billion of total debt, which is $1.375 billion above where it ended last year due to the WildHorse deal. Because of that, the company's leverage ratio remains elevated at around 4.0 times, which is twice its targeted level of 2.0 times.

Chesapeake Energy continues to head in the right direction

Chesapeake's decision to buy WildHorse continues to look good in hindsight. While oil prices have been quite volatile over the past few months, the company has outperformed on both driving down costs and its production expectations. That's helping boost cash flow. However, despite all of this progress, Chesapeake Energy still has a long way to go before it catches up to its peers since it still has a mountain of debt to address.

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