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Ohio Utica Shale

Chesapeake Energy still pleased with developing Utica shale

By Bob Downing Published: August 1, 2013

Chesapeake Energy Corp. remains very satisfied with what it is developing in Ohio’s Utica shale.

"First let me say that I really am encouraged by what I’ve seen in the Utica," said Doug Lawler, the company’s chief executive officer, on Thursday in a teleconference.

He added: "The Utica is outstanding."

"We’ve got a lot of wells that we’re getting ready to bring online…I’m very encouraged by it…and I think it’s an exciting area for the company," he told financial analysts in a report on second quarter 2013 earnings and operations. "We see the Utica to be a very strong asset going forward."

The company intends to focus on the most-productive areas in the Utica shale for natural gas, petroleum and other liquids including ethane, butane and propane, he said.

More multi-well pads will be developed in Ohio — with multiple wells being drilled from the same pad or drilling area, a move that will increase production with lower drilling costs, he said.

Oklahoma-based Chesapeake, the No. 1 player in Ohio’s Utica shale, said Utica production is expected to increase sharply in late 2013, after this week’s start-up of a natural gas processing plant in Columbiana County and a liquids-separating facility in Harrison County.

That complex, connected by a pipeline, is servicing Chesapeake-drilled wells in eastern Ohio. It is owned and operated by Utica East Ohio, a joint venture owned by Access Midstream, M3 and EV Energy Partners.

Additional pipelines and processing facilities in eastern Ohio are also under construction.

Through June 30, Chesapeake has drilled 321 wells in the Utica shale in eastern Ohio, western Pennsylvania and northern West Virginia.

That includes 106 producing wells, 93 more awaiting pipeline construction and 122 wells in various stages of completion.

Net production from the Utica shale averaged 85 million cubic feet of natural gas equivalents per day during the second quarter.

That is up 48 percent from the first quarter 2013, the company said.

The average peak daily production rate of the 42 Utica wells that began production in the quarter was about 6.6 million cubic feet of natural gas equivalents per day, the firm said.

The number includes natural gas, oil and other liquids.

The Utica shale may be gassier with less oil than some experts had predicted, but it is still an attractive drilling area, said Steve Dixon, Chesapeake’s chief operating officer.

"I thin it’s still early.…So more more to come," he said.

Oil produces more income so it is more attractive to drillers than natural gas that remains low priced.

It has had 11 rigs drilling wells in eastern Ohio. That number will be reduced to 10 by Dec. 31, the company said.

Company-wide, Chesapeake will be operating 64 rigs, compared to 81 rigs in the first half of the year.

The company also reported that its drilling time for Utica wells has been cut from 26 days a year ago to 18 days, a move that saves significant costs.

Chesapeake said there were no announcements on possible asset sales in Ohio.

The company has indicated that it intends to keep its core area in Carroll County and surroundings areas, but intends to sell off non-core assets in Ohio as part of an effort to reduce the company’s significant debt.

Chesapeake is also shifting internal policy. Previously, its priority was to preserve leased land for drilling. Now it is seeking the most value and that may result in Chesapeake selling off assets and abandoning some leases, Lawler said.

Chesapeake reported a better-than-expected quaretrly profit as it produced more crude oil than Wall Street had expected.

Chesapeake, the No. 2 U.S. natural gas producer, said oil production rose 44 percent in the quarter to 116,000 barrels per day. Analysts had expected 105,000 barrels per day.

Second-quarter profits fell to $457 million or 66 cents a share, from $929 million or $1.29 a share a year earlier.

But adjusting for one-time expenses, Chesapeake had a profit of 51 cents a share. Analysts on average had expected a profit of 41 cents a share.

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Utica and Marcellus shale web sites

Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.