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Business, Finance, Occupation & Industry

The Utica's Potential Glimpsed in Chesapeake's Results

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By Arjun Sreekumar, The Motley Fool

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After discovering the Utica Shale in 2010, Chesapeake Energy was initially highly optimistic about the play’s hydrocarbon potential. Though it has since dialed back its expectations, its most recent well results in the play are highly encouraging.

Chesapeake remains the largest leasehold owner in the play, commanding roughly 1 million net acres. It is also by far the most active driller, having drilled more than 240 wells to date – representing about three-quarters of all wells drilled in the entire play.  

However, due to infrastructure constraints, the company is selling production from just 54 of those wells and is therefore only producing 75 million cubic feet of gas equivalent per day net to the company.  

Chesapeake expects infrastructure constraints to ease substantially, which it reckons should allow for a substantial ramp-up in production.

Infrastructure additions bode well for Utica production
A few of the coming improvements in gas processing infrastructure will include Dominion‘s natrium processing plant in Marshall County, W.V. – expected to go on line shortly – and three processing trains at Momentum’s Kensington plant in Columbiana County, Ohio, two of which are expected to be operational before the end of the year.

Chesapeake is not alone in pointing out the Utica’s lack of processing infrastructure as a major hindrance. Several operators, including CONSOL Energy , have cited infrastructure constraints as the single biggest reason for Utica producers’ reluctance in bringing new wells on line.

But that looks set to change shortly, as a handful of companies are eager to provide Utica producers with the infrastructure they so desperately require. For instance, midstream company Williams Partners , through a 48% stake in a privately held company, plans on shelling out roughly $380 million over the next couple of years on a joint venture with Dominion that will provide pipelines and processing services to Utica producers.

Chesapeake’s Utica wells
As evidence of the play’s potential, acting CEO and COO Steve Dixon highlighted recent well results in Carroll County, Ohio: “We drilled six wells from a common pad with average 24-hour stricted test rates of 1250 BOE per day, which includes 310 barrels of oil. 200 barrels of NGL with ethane not recovered and 4.4 mmcf of natural gas per day. This is a flowing tubing pressures exceeding 3000 [PSI].”

He added that well production data recently submitted to the Ohio Department of Natural Resources, in compliance with the department’s annual disclosure of Ohio production data, is “not indicative of the productive capacity of the initial wells drilled.” 

Assuming the timely start-up of crucial gas processing infrastructure in subsequent months, Chesapeake reckons it can produce more than 330 million cubic feet of gas equivalent or 55,000 barrels of oil equivalent per day from the Utica by year’s end. That implies production would more than quadruple from current levels.

What next?
Chesapeake’s operations in the Utica this year will be focused primarily on drilling within the play’s wet gas …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

3 Companies Betting Big on This Emerging Shale Play

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By Arjun Sreekumar, The Motley Fool

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The great thing about America’s shale oil and gas revolution is that new shale plays keep popping up from time to time.

Currently, the two hottest shale plays are arguably North Dakota’s Bakken and Texas’ Eagle Ford. These oil-rich formations are especially attractive because the price of oil is high, providing producers with a major incentive to keep drilling.

But there’s a downside to these plays. Because they’ve already proved their mettle and boast at least a few years of very impressive production history, land lease prices and production costs are sky high. That’s why energy companies continue to search for the next big resource play, hoping to establish a substantial acreage position while the land is cheap and competitors few and far between.

A case in point is the Utica, an emerging shale play that spans several states, though the majority of drilling activity so far has been focused in Ohio. Initial assessments suggest that the Utica’s resource potential could be on par with that of the Eagle Ford.

Based on encouraging initial test well results, several energy companies have expressed enthusiasm about the Utica’s prospects. Let’s look at three major ones.

Chesapeake Energy
First up is Chesapeake Energy . After discovering the Utica in 2010, Chesapeake remains one of the most active operators in the play. As it stands, it is the largest leasehold owner, boasting approximately 1 million net acres. To date, it has drilled a total of 184 wells in the play, of which 45 are currently producing.

Chesapeake’s well results so far have been quite impressive, with several of its wells reporting daily production rates in excess of 350 bbls of oil per day. Two recent well completions in the company’s core drilling area in Carroll County, Ohio — the 8H Houyouse “15-13-5” and 8H White “17-13-5” — posted rates of 465 bbls and 390 bbls of crude oil per day, respectively.  

Though the company was initially very bullish about the play’s oil potential, it has since scaled back its expectations. It even recently announced that it no longer views the Utica as central to meeting its oil production growth target for the year, though it remains optimistic about the play’s dry gas and gas liquids potential.

Going forward, it will be focusing its drilling efforts primarily in the wet gas window of the play inside of its joint venture with Total , where it commands 450,000 net acres. Within this area, the company is projecting expected ultimate recoveries of five to 10 bcfe.  

Magnum Hunter Resources
Next up is Magnum Hunter Resources , a Houston-based energy explorer and producer. In February, the company closed on the acquisition of about 15,500 gross leasehold acres located primarily in Noble County, Ohio, through Triad Hunter, its wholly owned subsidiary. That brings Magnum Hunter Resources‘ total position in the Utica shale to a little over 61,000 net  acres.

The company has announced plans to drill at least four …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Chesapeake Still Optimistic About the Utica

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By Arjun Sreekumar, The Motley Fool

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The Utica — a shale formation underlying vast tracts of the Appalachian Basin — has attracted a significant amount of interest over the past couple of years. Though relatively little is known about its productive potential, encouraging initial test results in Ohio have drawn a bevy of energy companies into the emerging shale play.

Chesapeake Energy was the first entrant, having discovered the play back in 2010. Initially, the company was highly enthusiastic about the Utica’s potential. As late as May 2012, outgoing CEO Aubrey McClendon expressed a great deal of confidence that Chesapeake would report solid oil production numbers from its acreage in the play.

But by November, McClendon had changed his mind, suggesting that the Utica was unlikely to account for a significant portion of the company’s oil production going forward.

Despite this recent change of opinion, however, the company remains bullish on the play’s overall potential. McClendon even characterized the Utica as one of Chesapeake’s “foundational plays for decades to come.”

Chesapeake in the Utica
After discovering the Utica a few years ago, Chesapeake remains one of the most active operators in the play. As it stands, it is the largest leasehold owner, boasting approximately 1 million net acres. To date, it has drilled a total of 184 wells in the play, of which 45 are currently producing.

Though production in the Utica over the past year was fairly insignificant, the company said it plans a “significant ramp up” this year. With 14 rigs currently operating in the play, Chesapeake expects output to reach as high as 55,000 boe per day by year-end.

Of Chesapeake’s total acreage in the Utica, roughly a third is thought to lie in an oil-rich zone. But, as the company mentioned in its most recent earnings conference call, it will focus its future efforts primarily on drilling in the Utica’s wet gas window, inside of its joint venture with Total SA, where it boasts 450,000 net acres. Within this area, the company forecasts expected ultimate recoveries (EURs) of 5-10 bcfe.  

Like the company’s operations in its other core holdings, especially the Eagle Ford, Chesapeake has experienced substantial efficiency gains in the Utica. Average per-well drilling and completion costs have declined nearly 30% year over year, while spud-to-cycle times have come down to just 22 days, a nearly 40% decrease from 35 days a year ago. 

Encouraging well results
A recent well that the company drilled in Carroll County — the Co 34-12-41H — posted a staggering 24-hour initial production (IP) of 2,225 boe per day, of which a third was liquids. Encouraged by the results, the company’s COO Steve Dixon commented in the fourth quarter earnings conference call: “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.” 

Though Chesapeake‘s wells have posted some of the best production figures to date, it’s not the only company seeing success in the Utica. Other …read more
Source: FULL ARTICLE at DailyFinance

White House Press Office

President Obama Signs New Hampshire Disaster Declaration

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By The White House

The President today declared a major disaster exists in the State of New Hampshire and ordered Federal aid to supplement state and local recovery efforts in the area affected by a severe winter storm and snowstorm during the period of February 8-10, 2013.

Federal funding is available to state and eligible local governments and certain private nonprofit organizations on a cost-sharing basis for emergency work and the repair or replacement of facilities damaged by the severe winter storm and snowstorm in the counties of Belknap, Carroll, Cheshire, Hillsborough, Merrimack, Rockingham, Strafford, and Sullivan.

In addition, federal funding is available to the state and eligible local governments on a cost-sharing basis for snow assistance for a continuous 48-hour period during or proximate to the incident period in Belknap, Cheshire, Hillsborough, Merrimack, Rockingham, Strafford, and Sullivan Counties and a 72-hour period in Carroll County.

Federal funding is also available on a cost-sharing basis for hazard mitigation measures statewide.

W. Craig Fugate, Administrator, Federal Emergency Management Agency (FEMA), Department of Homeland Security, named James N. Russo as the Federal Coordinating Officer for federal recovery operations in the affected area.

FEMA said additional designations may be made at a later date if requested by the state and warranted by the results of further damage assessments.

…read more
Source: White House Press Office