SALEM - During Chesapeake Energy's third quarter earnings call this month, CEO Aubrey McClendon called Columbiana, Carroll and Harrison counties the "core of the core" in the Utica Shale Play.
The core of the core is described in the call as a strategy that allows the company to focus on its best rate of return areas. According to Chesapeake.com, "... Utica Shale is a geological formation of sedimentary rock that contains oil and natural gas. It is roughly 175 miles wide and 225 miles long. Lying mainly under parts of New York, Pennsylvania, Ohio and West Virginia, the Utica can be as thick as 1,000 feet in portions."
The Utica Shale Play reaches below the Mahoning Valley and appears to be a hot spot on Chesapeake's geological map. According to the company, "In 2011 we spent more than $1 billion on exploration and production in Ohio and paid more than $651 million to land and mineral rights owners."
According to the Ohio Department of Natural Resources' Nov. 10 updated Utica/Point Pleasant shale well activity spreadsheet, there are 267 wells listed in the three-county (Columbiana, Carroll and Harrison) area with Chesapeake Exploration holding the oil and gas rights to 230 of them.
Carroll County has 155 wells in different stages of development from permitted to drilling to producing to plugged or not drilled at all and 147 are leased to Chesapeake.
The remaining eight wells are leased to three other companies, including Chevron, RE Gas Development and Enervest Operating.
In Columbiana County there are 58 wells and Chesapeake leases 57 with the other leased to SWEPI LP. In Harrison County there are 54 wells with 26 under lease to Chesapeake and the remainder divided between four companies including Gulfport Energy, Hess (with Consol Energy), Atlas Noble and Buckeye Energy. The wells in Columbiana and Harrison counties are also in different stages of development.
The Chesapeake Energy conference call with bankers and stock brokers is posted on the Seeking Alpha website and shows that Scott Hanold of RBC Capital Markets asking Chesapeake officials about the two large shale plays. He asked them to make a comparison of the Utica Shale play with the Eagle Ford Shale region in southern Texas that is one of Chesapeake's most active plays when made his "core of the core" comment.
Hanold asked, "Okay. All right. And then on the Utica Shale, I think when you all first started talking about this play pretty aggressively, you had sort of dubbed it as better than the Eagle Ford or something pretty close to that. And with obviously over 100 wells now drilled and a few dozen on line, what are your thoughts right now?
"Does it it seems like it's a little bit more gassy with some of the results. And how does your kind of the core of the core strategy work in the Utica? When do you think you could really start fine tuning that a little bit better?"
McClendon answered the question himself.
"Well, I think we have a really good handle on where the core of the core is and we feel like we own it in Columbiana and Carroll and Harrison counties. And so, we went after the wet gas here. We picked up some oil acreage in some of our deals and haven't been in the process of really selling the oil acreage to companies that we're more focused on that part of the play than us. So, I think in the wet gas the best of the Utica wet gas is absolutely competitive with the best of the Eagle Ford wet gas.
"And so, the question is really is has the area of wet gas narrowed somewhat? Probably it has a little bit. But so did the Eagle Ford wet gas window and we've dealt with that. And we have acreage in the right spot for the Eagle Ford wet gas; and then Utica, I think, our Utica wet gas acreage is between 300,000 and 400,000 acres out of our million-plus acres there.
"So, we're thrilled with the Utica. It's just taken a while to be able to show results because we simply are waiting on midstream build-out to occur which will be starting in 2013 and extend on into 2014. So, I think if you look around and look at the wells that Gulfport's announced and some of the other wells that other companies have announced that if you're in that corridor which stretches from Columbiana down through Carroll and Harrison, and maybe a little further south from there, you have results that are as good as any from any play in the country."