Thursday, August 6, 2009

Chesapeake Energy And Haynesville Shale Gas Production

Chesapeake Energy is reporting some very significant production results from their Haynesville Shale Gas Play activity.

By OGJ editors (source)

HOUSTON, Aug. 3 – Chesapeake Energy Corp. expects to hike its Haynesville shale gas output to a gross operated 575 MMcfe/d at the end of 2009 and as much as 1.025 bcfe/d by the end of 2010.

The production rate in late July was 175 MMcfe/d net and 285 MMcfe/d gross operated.

The company plans to average 33 operated rigs in the second half of 2009 and 36 rigs in 2010 compared with 29 currently active.

Chesapeake has added 40,000 net acres since Mar. 31, 2009, and is now the play’s largest leasehold owner at 510,000 net acres. Plains Exploration & Production Co., Houston, Chesapeake’s 20% joint venture partner, owns another 113,000 net acres.

The two companies have drilled and completed 74 Chesapeake-operated horizontal wells.

Assuming a flat Nymex gas price of $7/Mcf for the life of the well, Chesapeake estimated pretax rates of return from a 6.5 bcfe horizontal Haynesville well drilled for $7.5 million of 42% excluding the benefit of drilling carries and more than 345% including carries.

Chesapeake recovered 35% of its $4.7 billion Haynesville leasehold investment with the sale of a 20% interest to Plains, bringing Chesapeake’s net investment in Haynesville leasehold to $6,000/net acre.

Three second quarter completions achieved pipeline-constrained initial 30-day average production of 15.3, 14.2, and 15.2 MMcfe/d. The three wells are in Caddo and De Soto parishes, La.

For a far more thorough discussion of Chesapeake's production activity, see the following article:

The following is a brief summary:

Company Reports 2009 Second Quarter Production of 2.453 Bcfe per Day, an Increase of 4% over 2009 First Quarter Production and 5% over 2008 Second Quarter Production

Company Increases Proved Natural Gas and Oil Reserves by 0.7 Tcfe to 12.5 Tcfe, Anticipates Reporting 2009 Second Quarter Drilling and Net Acquisition Costs of Less Than $1.00 per Mcfe; Company Record Set for Organic Reserve Additions and Reserve Replacement Over a Six-Month Period; Year-End Proved Reserve Targets for 2009 and 2010 Reaffirmed at 14 and 16 Tcfe, Respectively

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