Chesapeake Energy Corp. (NYSE: CHK), the natural gas producer that announced plans last week to expand in the Rocky Mountains, said profit fell as a supply glut in the U.S. Northeast dragged down prices, Bloomberg reported Aug. 6.

Second-quarter net income plunged by more than half compared to a year earlier, even as the company cut spending and raised production. Chesapeake reported earnings of $191 million, or 22 cents a share, down from $580 million, or 66 cents a share, in 2013’s quarter, according to a statement Aug. 6. Per-share profit, excluding one-time items, was 36 cents compared to the expected 44 cents, based on the average of 29 analysts’ estimates compiled by Bloomberg.

Chesapeake warned investors July 29 that the price it received for gas averaged $2.45 per thousand cubic feet during the quarter, a 51% decline from a year earlier. The company cited excess supply in the Marcellus Shale region that feeds gas to New York, Philadelphia and other Northeast markets. Output beat estimates, rising 13% to the equivalent of 694,650 barrels of oil and natural gas per day (bbl/d). The company boosted its 2014 production target to 730,000 bbl/d.

“The earnings miss was all due to lower oil, gas and liquids prices, but all operating results were positive and above guidance,” said Fadel Gheit, an analyst at Oppenheimer & Co. in New York. “They continue to reduce costs and improve operating efficiency, while selling assets and reducing spending.”

CEO Doug Lawler has been selling gas fields, slashing capital spending and untangling the complex financial instruments favored by his predecessor, company co- founder Aubrey McClendon. Lawler replaced McClendon 13 months ago after an investor revolt led by activist shareholders including billionaire Carl Icahn.

Chesapeake reduced capital spending by 27% in the quarter to $1.32 billion compared to a year earlier, although spending rose 54% relative to the first three months of the year. The company received $675 million from asset sales and expects to receive more than $700 million in the second half, according to the statement.

“Chesapeake delivered solid organic production growth in the quarter while continuing to demonstrate capital discipline and efficiency,” Lawler said. “As a result, we are increasing our 2014 production outlook while leaving our capital budget unchanged.”

Chesapeake this month will complete a $450 million deal with closely-held RKI Exploration & Production LLC as part of a land swap that will boost the company’s holdings in the prolific Powder River Basin by an area twice the size of San Francisco.

Chesapeake fell 2.9% to $26.06 at the close of trading in New York Aug. 5. The company has nine Buy, 24 Hold and two Sell ratings from analysts.