by Tom Knox
Chesapeake Energy Corp. has by far the most land in Ohio’s Utica shale play. It was the first to blitz Ohio and it operates more than half of all Ohio wells.
Yet despite holding more than a million acres of land, the Oklahoma City driller doesn’t have much in what is shaping up to be Ohio’s “sweet spot,” a portion of Belmont and Monroe counties where companies are finding the best natural gas production.
“If you surveyed companies and people out there, they’d probably point you to that direction south of us as the ‘core of the core,'” said Chris Doyle, executive vice president of operations for Chesapeake Energy’s northern division.
Chesapeake (NYSE:CHK) would certainly like additional acreage in the core, “But we create more value for the Utica position than any company out there, even if we’re not in the core of the core,” Doyle told me.
Doyle was enthusiastic about the company’s plans for Ohio, and often focused on the company’s long-term plans here, eschewing the flashy initial production numbers that often grab headlines.
Why such confidence?
It comes down to capital efficiency, he said. Chesapeake, like most other oil and gas drillers in Ohio, has had to significantly reduce its rig count and planned capital expenses nationwide for 2015 because of the fall in commodity prices. It plans to spend 37 percent less than last year, although a quarter of its spending is dedicated to the Utica, up from 10 percent a year ago.
The company can drill its Utica wells for under $7 million. Competitors might average about $9 million per well and higher, Doyle said.Read full article