Chesapeake plans to double US production of oil, liquids by 2015
By BEN LEFEBVRE
Chesapeake Energy said it plans to more than double its oil and liquids production by 2015 as the natural gas giant aims to become one of top five US oil producers.
Chesapeake and other oil and gas companies are fleeing natural gas fields amid a supply glut that has brought prices to low levels not seen in years.
Chesapeake said it plans to produce about 250,000 bpd of oil and natural gas liquids (NGLs) by 2015, up from about 104,000 bpd in the fourth quarter.
Chesapeake said it plans to increase its activities in the increasingly important oil and gas fields in the Eagle Ford region of south Texas and the Utica shale formation in the Midwest and Northeast.
In the Eagle Ford, Chesapeake has 178 producing wells and a backlog of 200 more, the company said.
The Oklahoma City-based company plans to have 20 rigs operating in the Utica shale this year, up from eight in 2011.
Chesapeake said it would finance its expansion into relatively new oil fields by selling some or all of its 1.5 million net acres in the Permian Basin in west Texas and New Mexico.
Chesapeake said it also hopes to announce a joint venture this summer focused on its acreage in the Mississippi Lime oil and gas field in Oklahoma and Kansas.
"On the oil side, we hope to have some breakthroughs this year," Chesapeake CEO Aubrey McClendon said during a conference call with investors.
The widespread adoption of modern drilling methods such as horizontal drilling and hydraulic fracturing, or fracking, by Chesapeake and other producers led to a boom in natural gas production that has far outstripped demand and caused prices to plummet.
Natural gas closed at a $2.63 a million British thermal units on Tuesday, compared to nearly $14 a million British thermal units in July 2008.
McClendon said the company's oil services segment "will be an excellent candidate" for an initial public offering later this year. The segment reported revenue of $145 million in the fourth quarter, up from $67 million the year before.
Dow Jones Newswires
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