Chesapeake again cites area shale gas potential
SALEM – Columbiana and Carroll counties once again drew the attention of Chesapeake Energy brass during its fourth-quarter earnings call last Thursday.
It was the third straight earnings call that Utica Shale operations in this area took the spotlight as Chesapeake’s Steve Dixon, chief operating officer, Nick Dell’Osso, chief financial officer; and Gary Clark, vice president of investor relations and research spoke to investors and answered questions.
In transcripts published on the Seeking Alpha website, Dixon opened his remarks talking about Chesapeake’s most productive field, the Eagle Ford Play in southeastern Texas.
During the 2012 fourth quarter, Chesapeake connected 98 wells in the Eagle Ford, he said, adding the company looks ahead to a goal of connecting approximately 400 wells in all of 2013, while noting that is roughly the same number as in 2012 but it will run 14 fewer rigs in Eagle Ford than last year.
In the Utica Shale region, Dixon said, “We continue to focus our drilling efforts in the wet gas window of the play inside our joint venture with Total (French oil company), where we hold more than 450,000 net acres.
“I’m pleased to announce that within this area, we are projecting average EURs per well to range from 5-10 Bcf (billion cubic feet; an abbreviation for billion equal to109 cubic feet).
EURs is the Estimated Ultimate Recovery, an approximation of the quantity of oil or gas that is potentially recoverable or has already been recovered from a reserve or well.
In Utica, Chesapeake has drilled 184 wells with 45 currently producing.
“Production in the Utica was fairly minimal in the year in 2012 due to infrastructure constraints, but we are anticipating a significant ramp up during 2013, perhaps reaching 55,000 BOEs per day by the end of the year,” Dixon said, and addressed those constraints, saying the addition of Dominion’s Marshall County, W.Va. mid-stream plant in April, followed by Momentum’s Kensington plant in Columbiana County will help.
The Kensington plant should be operational in May.
Like the Eagle Ford, Chesapeake is generating significant efficiency gains in the Utica. Spud-to-spud cycle times (sometimes referred as spud-to TD or total depth) have decreased 37 percent over a year ago or from 35 days down to just 22 days, Dixon said while spotlighting a Carroll County well.
“In terms of drilling results, I would particularly like to highlight a well we recently drilled in Carroll County.
“This well experienced 24-hour IP (initial production) of over 2,200 BOE (barrels of oil equivalents) per day, with a liquids cut of approximately 33 percent, assuming full ethane recovery.
“We believe we’ve captured the industry’s largest position in the Utica, and look forward to solid results in this play for years to come.”
For more on Chesapeake’s Q4 earnings call visit: www.SeekingAlpha.com.
Larry Shields can be reached at firstname.lastname@example.org