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Ohio Utica Shale

Chesapeake Energy to explore its natural gas-only areas

By Bob Downing Published: May 7, 2014

Chesapeake Energy Corp. will soon begin exploring its natural gas-only areas in eastern Ohio.

The company is "excited about some of the tests that we’ve seen" on the dry-gas areas, spokesman Chris Doyle said on Wednesday in a teleconference/earnings call with analysts on first quarter 2014 results.

"So we’re out there," he said. "We’ll be out there testing the dry gas window and excited about the hundreds of thousands of acreage we’ve gotten in it."

Utica net production is averaging 50,000 barrels of oil equivalents per day, but that volume is expected to go significantly higher, Chesapeake said.

That is a 422 percent increase over a year ago and a 59 percent increase from fourth quarter 2013, the company said.

It reported that it has drilled 485 Utica wells in Ohio, Pennsylvania and West Virginia, as of March 31. That includes 274 producing wells and 211 wells awaiting a pipeline connection of are in various stages of completion.

In the first quarter 2014, Chesapeake connected 47 Utica wells for sales. Those wells produced an average peak production of 1,180 barrels of oil equivalents per day, the company said.

In that quarter, Chesapeake got 10 percent oil from its Utica wells, 30 percent from natural gas liquids and 60 percent from natural gas, the company said.

Company officials promised analysts more details on the Utica drilling at Investors Day on May 16 in Oklahoma City.

Much of the Utica shale drilling in Ohio has focused on the so-called wet gas window where drillers can get natural gas, oil and other liquids. That is focused largely In Harrison, Belmont. Monroe, Noble and Guernsey counties.

Low prices paid for natural gas has discouraged drillers from tapping the dry gas areas.

Chesapeake, most active in Carroll County, is also anticipating completion of a major expansion at a natural-gas processing plant at Kensington in southern Columbiana County that gets its natural gas, Doyle said.

That expansion with a third unit will likely be operating in June, and that will boost production even more, he said.

The volume of ethane, butane and propane from the Utica shale has shown "very robust" growth, said CEO Doug Lawler.

Chesapeake is shipping some of its Utica ethane via the Atex Express Pipeline to Texas. It is also selling its pipeline capacity to other parties, the company said.

Company-wide, Chesapeake reported first quarter 2014 production of 109,500 barrels of oil, 84,200 barrels of natural gas liquids and 2.9 billion cubic feet of natural gas. Its daily production for the quarter averaged 675,200 barrels of oil equivalents per day.

Chesapeake is poised to make more money than it spends for the first time in more than a decade under Lawler’s cost-cutting strategies. "This was an important and defining quarter for Chesapeake," he said.

First-quarter net income climbed to $425 million, or 54 cents a share, from $58 million, or 2 cents, a year earlier, the company said. Per-share profit excluding one-time items was 11 cents more than the 48 cent average of 29 analysts’ estimates.

Record-breaking cold weather across parts of the U.S. that boosted demand for natural gas was a boon to Chesapeake, the No. 2 natural gas producer in the U.S. Chesapeake’s output rose 1.8 percent during the January-to-March period from a year earlier.

Lawler replaced ousted CEO and co-founder Aubrey McClendon 11 months ago, after an investor revolt.

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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.