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 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.”
Chesapeake, he said, has “a tremendous amount of excitement about what we’re seeing” in the Utica shale.
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 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 that are in various stages of completion.
In the first quarter of 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 an “Investors Day” that it is holding 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 have 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, 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 share, 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.
Bob Downing can be reached at 330-996-3745 or firstname.lastname@example.org.