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Chesapeake Increases Oil, Gas Output

Company posts $929 million net income in second quarter

August 8, 2012
By CASEY JUNKINS - Staff Writer , The Intelligencer / Wheeling News-Register

Despite some market turbulence involving Chief Executive Officer Aubrey McClendon's personal business dealings over the past few months, Chesapeake Energy reported $929 million in net income to shareholders from April to June.

The Upper Ohio Valley's largest active natural gas and oil driller - and the only active horizontal driller in Ohio, Brooke or Hancock counties - also produced an average of 25 percent more natural gas during the last three months compared to the same period last year. Chesapeake also developed 88 percent more oil from April to June than over the same time in 2011, along with 37 percent more natural gas liquids, such as ethane, propane, butane and pentane.

"We are taking aggressive and focused actions to increase cash flow and net asset value per share while also reducing long-term debt as we continue our ongoing transformation to a more balanced asset base between higher-margin liquids and lower-margin natural gas," said McClendon.

Article Photos

Photo by Casey Junkins
Natural gas and oil abstractors working on behalf of Chesapeake Energy continue filling the second floor hallway outside the County Clerk’s Office daily at the City-County Building in Wheeling.

Property records show that via firms such as Jamestown Resources and Larchmont Resources, McClendon took a 2.5 percent stake in Chesapeake's Ohio, Marshall and Brooke County operations. Chesapeake is a publicly owned company traded on the New York Stock Exchange. Conversely, Jamestown and Larchmont are privately held by McClendon. Jamestown and Larchmont gained interest in thousands of acres of Chesapeake leases signed by local mineral owners. McClendon eventually agreed to end this practice by June 30, 2014.

Though these practices caused some investor concerns over the past few months, Chesapeake managed to increase its production in the field. Chesapeake holds 1.8 million acres in the Marcellus Shale region of West Virginia, Pennsylvania and southern New York.

In the wet gas region of the Marcellus Shale, Chesapeake saw increased production in West Virginia's Northern Panhandle. Three Marshall County wells on property in the name of Burge yielded the following average daily results during the past few months:

- 7.2 million cubic feet of natural gas per day with 445 barrels of natural gas liquids;

- 6.8 million cubic feet of gas with 346 barrels of liquids; and

- 5.5 million cubic feet of gas with 240 barrels of liquids.

In the eastern Ohio area of the Utica Shale formation, Chesapeake holds 1.3 million net acres, the industry's largest position. As of June 30, Chesapeake had drilled 87 wells in the Utica formation, with 28 of those wells registering production information. There are 28 other wells waiting to be connected to pipelines in Ohio to send gas to market.

As for individual Utica well production from April to June, a Jefferson County well in the name of Brown yielded average daily production of 8.7 million cubic feet of natural gas.

In Carroll County, Ohio, a Chesapeake well in the name of Bailey yielded 5.7 million cubic feet of natural gas, 205 barrels of oil and 270 barrels of natural gas liquids per day. Another Carroll County well in the name of Snoddy produced 4.2 million cubic feet of natural gas, 320 barrels of oil and 250 barrels of NGL each day during the period.

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