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Chesapeake to Drill Fewer Wells In Utica, Marcellus
OKLAHOMA CITY -- Chesapeake Energy Corp. said Thursday it will reduce capital expenditures in 2014 to $5.2 billion, a 20% reduction from the $5.6 billion company spent to drill for oil and gas in 2013.
After adjusting for asset sales – Chesapeake sold $3.6 billion worth of assets in the first nine months of 2013 (fourth-quarter results are not yet posted – the company projects production growth of 8% to 10%.
By category, the company said oil production would grow 8% to 10%: natural gas liquids production by 44% to 49%; and natural gas production by 4% to 6%. “On an absolute basis, Chesapeake is targeting 2014 production growth of 2% to 4%, which implies an average daily production rate of up to 695,000 barrels of oil equivalent.
In its forecast, Chesapeake reported its Utica wells averaged a daily net production of 35 barrels of oil equivalent (mboe) in December. For all of 2013, the company said its Utica drilled well inventory was 195 barrels of oil equivalent.
In 2014, Chesapeake said it would reduce by 15% its Utica exploration and production capital expenditures, and only operate seven- to nine drilling rigs in the play.
By comparison, during 2014 in the Marcellus North play, Chesapeake said it would reduce capital expenditures by 10% and operate six- to seven rigs.
Chesapeake plans to spud approximately 1,100 gross operated wells in 2014, which is relatively unchanged from 2013 activity levels. The company also said it would connect 1,300 gross operated wells to sales in 2014, or approximately 115 fewer wells than in 2013.
"Our improving capital efficiency has made it possible for us to forecast similar adjusted production growth in 2014 compared to 2013, despite a substantial reduction in capital expenditures and approximately 8% fewer operated wells expected to be connected to sales,” said Doug Lawler, CEO, in a prepared statement.
“Disciplined capital allocation, budget and cost leadership programs are now in place,” he noted, “and I am very excited about Chesapeake’s opportunity to become a differential investment and industry partner of choice in 2014 and beyond."
CLICK HERE to read Chesapeake’s complete 2014 forecast.
Published by The Business Journal, Youngstown, Ohio.
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