Chesapeake reports net loss of $71 million for 1st quarter

Staff report

YOUNGSTOWN

Chesapeake Energy Corp. reported a net loss of $71 million for the first quarter of 2012.

The Oklahoma City-based company owns the majority of oil-and-gas leases in Mahoning and Columbiana counties.

Company officials said they intend to reduce capital expenditures for drilling, completion and leasing from first quarter 2012 levels for the remainder of the year and 2013.

Since 2000, Chesapeake has built the largest combined inventories of onshore leasehold of 15.6 million net acres and 3-D seismic, 31.8 million acres in the U.S.

The company also has accumulated the largest inventory of U.S. natural- gas shale play leasehold — 2.2 million net acres. The company claims to have a leading position in 11 of the top 15 unconventional liquids-rich plays in the U.S., including the Utica Shale, according to a company press release.

Chesapeake expects its activity level to continue to rise in the Utica Shale. The company has about 1.3 million acres of leases, is operating 10 rigs and plans to average 13 rigs in 2012 and 22 rigs in 2013.

The company’s initial development focus has been in wet gas. Chesapeake has drilled 59 wells; nine are producing, 15 are being completed, 15 are awaiting completion and 20 need pipeline infrastructure.

Of the nine producing wells, eight are in the wet-gas window of the shale play. Peak rates from the wet-gas window have averaged about 415 barrels of oil, 260 barrels of natural-gas liquids and 3.9 million cubic feet of natural gas per day, or about 1,325 barrels of oil equivalent per day, according to company figures.

The company’s best Utica well, the Buell 8H in Harrison County, had an initial peak rate of more than 3,000 barrels of oil equivalent per day in September 2011, with roughly half the production from liquids.

Chesapeake has a significant number of wells planned for Utica oil this year and believes it will have strong results based on its successful results in the oilier portion of the wet-gas window, preliminary results from oil-window testing and the results of certain of its competitors.

Chesapeake’s daily production for the 2012 first quarter companywide averaged 3.658 billion cubic feet, an increase of 2 percent per day from the 2011 fourth quarter and an increase of 18 percent from the 2011 first quarter, according to the company’s press release.