Welcome to the Business Journal Archives
Search for articles below, or continue to the all new BusinessJournalDaily.com now.
Search
Chesapeake Puts 337K Utica Acres Up for Sale
YOUNGSTOWN, Ohio – Cash-strapped Chesapeake Energy Corp is selling the oil and gas drilling rights it controls for 337,481 net acres in the Utica Shale formation in Eastern Ohio – but none of its holdings, at least not now, in Mahoning, Columbiana, Carroll, Harrison and Noble counties.
Chesapeake controls leases for 1.3 million acres in eastern Ohio and has paid more than $2 billion to landowners in bonus payments for the drilling rights. The Oklahoma City energy giant, the nation’s second most active natural gas drilling company, must raise $7 billion by year-end to avoid defaulting on its loan covenants, analysts say. Chesapeake has said it plans to sells $12 billion in assets in the next year to bridge its cash-flow gap.
A sale prospectus is posted at the website of Meagher Energy Advisors, a company retained to sell the 337,481 acres, which are said to be mostly in the wet or oil windows.
Chesapeake’s rationale for the sale, states the website, is it “has altered its plans to develop all of its highly prospective acreage and instead will focus its development on those counties where its land ownership is more concentrated than the land ownership in the counties being offered for sale.”
A map shows the 19 counties where leasing rights are for sale; it includes Trumbull and Ashtabula, Geauga, Portage and Summit counties. Most of the acreage is in southeast and northern Ohio. Two operated wells are included on the sale list. One of the wells was drilled in 2012 and is set with a temporary plug; another also was drilled in 2012 and is scheduled to be fracked in July.
Execution of a confidentiality agreement is required before the full prospectus can be obtained.
Chesapeake announced earlier this year that the company and its partners will invest $900 million to build a gas processing complex in Kensington, the tiny Columbiana County town that borders Carroll County, and a fractionation plant in Harrison County. The midstream infrastructure is necessary to get to market the dry and wet gases Chesapeake extracts from its Utica shale wells.
Two weeks ago Chesapeake put up for sale 57,273 acres in the Woodbine oil play in east central Texas.
About the same time, the Times Reporter in New Philadelphia reported Chesapeake is no longer offering the village of Carrollton, county seat of Carroll County -- where Chesapeake has drilled the most wells in eastern Ohio -- $5,800 an acre plus 20% of the gross oil and gas rights for its 275 acres. No reason was given for the company withdrawing the offer, the newspaper said.
At last report, Chesapeake had 10 drilling rigs operating in the Eastern Ohio, 13 will be operating by the end of the year, and 22 rigs through the course of the next year. Nearly all of the company's activity is in Columbiana, Carroll and Harrison counties. The company has no drilling rigs or wells operating in Mahoning County.
IN-DEPTH COVERAGE:
Chesapeake Strikes Deal with Largest Shareholders
Chesapeake Reports Huge Gusher in Anadarko Basin
Copyright 2012 The Business Journal, Youngstown, Ohio.