Chesapeake Energy Corp. still intends to aggressively develop wells in the Utica shale formations deep underground in eastern Ohio.
The company said that area of the state remains attractive because it is producing oil and natural gas liquids, not just natural gas.
Chesapeake provided more specifics on its Ohio operations as part of its second-quarter earnings release Monday and Tuesday.
The cash-strapped company said it has completed $4.7 billion in asset sales in the first half of 2012 and expects to announce deals for another $7 billion in the third quarter to reduce debt.
Chesapeake reported a second-quarter net profit of $929 million, or $1.29 a share, up from $467 million, or 68 cents a share, in the same period a year ago. All but $3 million came from the sale of its pipeline assets and non-cash gains.
Revenue rose 2 percent to $3.4 billion, and earnings were 6 cents a share.
The company also raised 2012 production estimates, due to discoveries in Ohio and Texas. It said it is on track to close a land deal in West Texas with EnerVest Ltd. The sale price was not disclosed.
Chesapeake, the nation’s second largest producer of natural gas, has been battered by low natural gas prices and has been shifting away from that product toward oil and natural gas liquids.
“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 on ongoing transformation to a more-balanced asset base between higher-margin liquids and lower-margin natural gas,” CEO Aubrey McClendon said in a company-issued statement.
The energy giant said its production of liquids rose 65 percent, now accounting for 21 percent of total production with more than 130,000 barrels per day. It said liquids are projected to be 25 percent of total production in 2013 and 55 percent of revenue next year.
The company is projecting that liquid production will increase 32 percent in 2013, while natural gas production will drop 7 percent.
Chesapeake, based in Oklahoma, said it has drilled 87 wells in eastern Ohio, but not all are operational. Its 28 completed wells are averaging about 1,000 42-gallon barrels of oil equivalents per day.
Daily, each well is averaging about 205 barrels of oil; 150 barrels of natural gas liquids like ethane, butane and propane; and 3.8 million cubic feet of natural gas, the company said.
A volume of 6,000 cubic feet of natural gas is equal to one barrel.
Chesapeake has 11 drilling rigs operating in Ohio and expects to bring that number to 16 before Dec. 31, it said.
The company has 1.3 million acres leased in eastern Ohio and is focusing on Carroll, Harrison, Columbiana and surrounding counties. It said earlier it is trying to sell about 337,481 acres in Ohio outside that core area as part of its debt-reduction strategy.
Shares closed up more than 9 percent Tuesday, closing at $19.37.
Bob Downing can be reached at 330-996-3745 or firstname.lastname@example.org.