Chesapeake Energy Provides Update On Drilling, Production Activities

During 2009, Chesapeake Energy continued the industry’s most active drilling program and drilled 1,148 gross operated wells (831 net wells with an average working interest of 72 percent) and participated in another 1,126 gross wells operated by other companies (99 net wells with an average working interest of 9 percent). 
            The company’s drilling success rate was 99 percent for company-operated wells and 97 percent for non-operated wells. 
            Also during 2009, Chesapeake invested $2.941 billion in operated wells (using an average of 104 operated rigs) and $439 million in non-operated wells (using an average of 60 non-operated rigs) for total drilling, completing and equipping costs of $3.380 billion.
            With approximately 1.6 million net acres, Chesapeake is the largest leasehold owner in the Marcellus Shale play that spans from northern West Virginia across much of Pennsylvania into southern New York.  The company’s joint venture partner, Statoil, owns approximately 590,000 additional net acres of Marcellus leasehold. 
            Chesapeake remains the most active driller in the play. Since January 1, 2008, Chesapeake has drilled and completed 56 company-operated horizontal wells in the Marcellus. During the 2009 fourth quarter, Chesapeake’s average daily net production of approximately 45 mmcfe in the Marcellus increased approximately 26 percent over the 2009 third quarter and approximately 530percent over the 2008 fourth quarter. 
            Chesapeake is currently producing a company record monthly average of approximately 65 mmcfe net per day (115 mmcfe gross operated) from the Marcellus and anticipates reaching approximately 270 mmcfe net per day (515 mmcfe gross operated) by year-end 2010 and approximately 450 mmcfe net per day (855 mmcfe gross operated) by year-end 2011.
            To further develop its 1.6 million net acres of Marcellus leasehold, Chesapeake is currently drilling with 24 operated rigs and anticipates operating an average of approximately 32 rigs in 2010 to drill approximately 175 net wells. 
            During 2009, approximately $162 million of Chesapeake’s drilling costs in the Marcellus were paid for by STO. During 2010 through 2012, 75% of Chesapeake’s drilling costs in the Marcellus will be paid for by STO, or approximately $2.0 billion over the next three years.
            Chesapeake’s leasehold investment in the Marcellus has been approximately $1.8 billion, of which $1.3 billion, or 70 percent, has been recouped by selling a 32.5 percent interest in the company’s leasehold to STO. The company’s net investment in its Marcellus leasehold is now approximately $330 per net acre on average.
            Three notable recent wells completed by Chesapeake in the Marcellus are as follows:
-- The White 2H in Susquehanna County, PA achieved a peak 24-hour rate of 8.7 mmcf per day;
-- The White 5H in Susquehanna County, PA achieved a peak 24-hour rate of 8.6 mmcf per day; and
-- The Benscoter 3H in Susquehanna County, PA achieved a peak 24-hour rate of 8.4 mmcf per day.
            The full update is available online.


2/19/2010

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