Chesapeake Energy expects to double its Utica shale processing capacity by the end of the year.
The capacity increase will come even as Chesapeake on Thursday announced it was reducing overall 2014 capital spending by about 20 percent compared to 2013 levels.
Oklahoma-based Chesapeake is the largest energy operator in Ohio’s Utica shale.
The company said it has drilled more than 450 Utica shale wells to date, with executives saying in a conference call with industry analysts they expect to see “a very strong ramp up in the production of the Utica.”
In December, Chesapeake said it was producing the equivalent of 35,000 barrels of oil per day — including natural gas and related liquids — from its Utica holdings. By comparison, Chesapeake said it was producing the equivalent of 193,000 barrels of oil a day, primarily natural gas, from its Marcellus shale holdings.
The company said that it expects to grow what it calls “gross processing capacity” in the Utica shale from the equivalent of 400 million cubic feet/day at the end of 2013 to 800 million cubic feet/day by the end of this year.
Executives said they will provide “heavy intricate detail” on Chesapeake’s Utica shale operations in an upcoming investor day program May 16 at company headquarters.
Chesapeake said it expects to operate seven to nine drilling rigs in its Utica shale properties this year, saying that is the equivalent of a 20-rig operation by competitors.
While Chesapeake is considered primarily a natural gas company, executives said they will be primarily targeting liquids, particularly oil, at its sites around the nation.
The company said it is looking to its Utica shale sites primarily for liquids, not dry natural gas.
“In 2014 we plan to recover more ethane than in 2013, particularly in the Utica and southern Marcellus,” Nick Dell’Osso, chief financial officer, said in the conference call with industry analysts.
The company is looking to increase its liquids production and said it is getting oil and liquids from its Utica holdings, Dell’Osso said.
Dell’Osso said Chesapeake is working on “some divestiture transactions” and hopes to have more to say about that in upcoming weeks. Chesapeake has been selling off assets to pay down high debt levels.
The company’s capital spending for the year will be between $5.2 billion and $5.6 billion, a 20 percent reduction from spending in 2013, the company said in a statement. About 15 percent will be spent on the company’s Utica shale holdings, according to a company statement.
After adjusting for asset sales last year, Chesapeake expects production to grow 8 percent to 10 percent this year, after adjusting for asset sales in 2013.
Jim Mackinnon can be reached at 330-996-3544 or firstname.lastname@example.org