Chesapeake Pumps More Oil, Earnings Spike

Chesapeake Energy’s Shawn Couch well in Ohio County yielded daily averages of 505 barrels of oil and 290 barrels of natural gas liquids during the first three months of this year.

“We are capitalizing on pad drilling efficiencies wherever possible and leveraging our substantial investments in roads, well pads, gathering lines, and compression and processing facilities,” said Chesapeake’s Acting Chief Executive Officer Steven Dixon in announcing his company’s earnings report this week.

“We are beginning to see the benefits of our operational strategy shift from identifying and capturing new assets to developing our extensive existing assets and entering a new era of shareholder value realization,” he added.

The Oklahoma City-based driller, long-known as a natural gas producer, continues its shift toward developing crude oil and NGL, as company-wide oil production jumped 56 percent from last year to an average of 103,000 barrels per day. This helped Chesapeake earn $1.134 billion during the first quarter of 2013, an increase of 35 percent compared to the same period in 2012.

Production levels from the Couch well and the Glenn Didriksen well for the first three months of 2013 are highlighted in the company’s earnings report as follows:

  • Couch 8H well, south of West Liberty just off W.Va. 88, produced 3.4 million cubic feet of dry methane natural gas per day, in addition to the aforementioned crude oil and ethane, propane and butane.
  • Didriksen 1H, north of Oglebay Park just off Dement Road, produced 4.6 million cubic feet of natural gas, 395 barrels of oil and 195 barrels of NGL each day.

As drillers such as Chesapeake continue drilling wells and pumping gas, the leases signed by Upper Ohio Valley mineral owners will begin to pay off, as landowners will receive checks for leases as high as $6,000 per acre with production royalties of as high as 20 percent.

In the Ohio Utica Shale, where Chesapeake recently opened field offices at Fox Commerce Park in St. Clairsville, the driller is now operating 14 rigs. The company has already drilled 249 wells, with 66 of these producing and 86 waiting on pipeline connections. First quarter daily results from the Ohio Utica Shale include:

  • Henderson South 5H well in Harrison County yielded 755 barrels of oil, 240 barrels of NGL and 3.8 million cubic feet of natural gas.
  • Coe 1H well in Carroll County produced 235 barrels of oil, 470 barrels of NGL and 7.6 million cubic feet of natural gas.

Moving forward, Domenic J. Dell’Osso, Chesapeake’s chief financial officer, said the company will spend more time drilling and fracking – and less time acquiring new leaseholdings – this year.