Chesapeake Energy Corp. is more than making do with its smaller portfolio and reduced spending plans, with its first quarter natural gas and oil production increasing by 11% and revenues surging 47%.

Stronger-than-expected growth from natural gas liquids (NGL) production led Chesapeake to increase its 2014 outlook for production to 9-12%, 2% more than it forecast in February.

“This was an important and defining quarter for Chesapeake, as our competitive capital allocation, cost leadership and capital efficiency initiatives are driving tangible improvements in the company’s growth profile and financial performance,” CEO Doug Lawler said Wednesday.

Profits roared to $425 million (54 cents/share) in the first period, versus $102 million (2 cents) in the year-ago period. Excluding mark-to-market impacts, asset sales and writedowns, earnings jumped to 59 cents from 30 cents. Revenue climbed to $5.05 billion.

Operating cash flow expectations this year were raised by 13%, or $700 million, on the higher output, solid revenue and an increase in benchmark commodity assumptions for the year.

Asset sales over the past two years have helped repair the balance sheet. However, even with fewer wells drilled and despite the hit from the cold weather in the first quarter, production still jumped to 675,000 boe/d. The production gains could have been higher. Weather-related downtime adversely impacted the first period by about 7,600 boe/d, predominantly in the Midcontinent region.

Average oil production for the period was 109,500 b/d, 20% more year/year. NGL output increased by 63% to 84,200 b/d. Natural gas production, once Chesapeake’s bread-and-butter, jumped 4% year/year to 2.9 Bcf/d, as realized prices increased by 73% from the fourth quarter to $3.27/Mcf from $1.90.

The increase in gas prices generally resulted from cold winter temperatures, “as well as Chesapeake’s increased access to premium priced markets in the Northeast,” Lawler noted. “More specifically, the company had firm natural gas transportation capacity commitments in place that enabled it to access the New York City market where natural gas prices during the 2014 first quarter traded at a substantial premium to New York Mercantile Exchange Henry Hub benchmark prices.”

As a result, the gas price differential on a companywide basis fell to $1.08/Mcf in 1Q2014 from $1.76/Mcf in 4Q2013.

With its new focus on value over volumes, the Oklahoma City-based operator no longer is attempting to be the No. 1 driller in the United States, Lawler noted. Instead, the company plans to run a “more balanced pace of drilling and completion operations” than it did 2013, when it substantially reduced its inventory of nonproducing wells.

Chesapeake spud a total of 299 wells (gross) and completed 234 between January and March, compared to 239 spud and 274 completed in the fourth quarter. Given expected increases in completion activity for the rest of this year, the company reiterated its full-year capital expenditure guidance of $5.2-5.6 billion. Capital expenditures (capex) in the latest period totaled $850 million, half again as much as it spent in the year-ago quarter. Drilling and completion (D&C) capex came in at $729 million. The company also invested $882 million during the period in D&C activities, partially offset by lower-than-estimated costs of about $153 million. Capex declined 37%, or $422 million, from the fourth quarter, primarily on improving efficiencies and 15% fewer well completions.

Between January and March, Chesapeake received a total of $520 million from asset sale; in April it received another $362 million after closing a sale with Exterran Partners LP. To date asset sale proceeds are more than $925 million.

The portfolio still isn’t where Chesapeake wants it to be, CFO Nick Del’Osso said during the conference call. “We still have a fair amount to do there. It will come in pieces, not a big wave necessarily like we’ve had in the past…But we do have a large portfolio,” and there are a “number of things in the portfolio that others may look at and feel that they would covet more highly than we do…It would be worth more to them than it would be to us.”

A lot of property remains on the table to be reviewed, said Del’Osso. “The things that we are not investing in today…we’ll look for ways at improving them or divesting them…”

Still in the works is a strategic move for Chesapeake Oilfield Services, the oilfield services division, which could mean a spinoff or outright sale.

The production focus this year is on oily and high-margin operations, which doesn’t include expansions in the Marcellus Shale at this point. Instead, more work is planned in the Eagle Ford Shale in South Texas and the Midcontinent, and from higher-margin operations in the gassy Utica and Haynesville shales.

In the Eagle Ford, net production averaged 88,000 boe/d, 26% higher than in 1Q2013 and 1% more than in the fourth quarter. The company is projecting a “higher sequential quarterly growth trajectory” for the rest of this year. An average of 18 rigs were in operation during the period, with 81 wells gross connected to sales. In the fourth quarter, Chesapeake had 12 rigs working with 65 wells connected. Average peak production from the 81 wells was 885 boe/d. All told, Chesapeake at the end of March had 945 producing wells and 114 awaiting pipe connection or completion.

Production in the Midcontinent primarily is from the Mississippian Lime, Granite Wash, Cleveland, Tonkawa and Hogshooter plays, which had aggregate output during the first three months of 101,000 boe/d net. Adjusted for sales, output rose 4% year/year and was down 3% from 4Q2013 on weather impacts. On average Chesapeake had 17 rigs running during the first period and it connected 52 wells gross. It had the same number of rigs working in 4Q2013, when it connected 70 wells gross. Peak rates from the 52 new wells was 925 boe/d. Forty-two wells are awaiting pipeline or are in various completions stages.

The Utica operations in Ohio, Pennsylvania and West Virginia resulted in output averaging 50,000 boe/d net, up 422% from a year ago and 59% more than in the fourth quarter. The production is gassy — 60% weighted to gas, 30% to NGLs and 10% to oil. On average nine rigs were working, and 47 wells gross were connected to sales, almost on par with the fourth quarter. Average peak production from the new wells was 1,180 boe/d during the first period. At the end of March, a total of 485 wells had been drilled, including 274 producing and 211 awaiting connections or completion.

Meanwhile, in the legacy Haynesville natural gas holdings in northwestern Louisiana and East Texas, quarterly output was 495 MMcfe/d net, down 41% year/year and 8% sequentially. Based on the current drilling program, output should return to sequential growth in the second half of the year. On average, seven rigs were working, with seven wells gross connected to sales, versus four operated rigs and 12 wells in 4Q2013.

“The company has achieved substantial drilling and completion cost reductions in the Haynesville,” noted the company. “Most notably, two wells were drilled and completed during the 2014 first quarter for approximately $7 million each.” The average peak production rate of the seven wells ramping up was 13.1 MMcfe/d. At the end of March 14 wells were awaiting connection or were in various completion stages.

While Marcellus output continues to grow, Chesapeake’s management team made it clear during the conference call that it’s not planning to expand any operations there this year. Average production — all gas — between January and March was 910 MMcfe/d net, up 28% from a year ago and 3% sequentially. Chesapeake averaged five rigs in the play during the first quarter and connected 22 wells gross, the same number of rigs that were running at the end of December. Average peak production rates of the 22 new wells was about 10.9 MMcfe/d. At the end of March, 110 wells were waiting for pipeline or needed to be completed.