Chesapeake Energy Corporation (CHK), Anadarko Petroleum Corporation (APC): Meet the Utica Shale’s Top Producer

According to a long-awaited report from the Ohio Department of Natural Resources, Chesapeake Energy Corporation (NYSE:CHK) was the leading driller in Ohio’s Utica Shale last year. The company produced 372,212 barrels of oil and 10.1 million mcf of natural gas last year from 53 wells in the play.

That level of production for both oil and gas allowed the Oklahoma City-based company to capture the title of the play’s leading producer. On the oil side, Anadarko Petroleum Corporation (NYSE:APC)‘s E&P Onshore came the closest to challenging Chesapeake Energy Corporation (NYSE:CHK)’s dominant position, producing 118,726 barrels of oil from its Utica wells. And on the natural gas side, Hess Ohio Resources took second place, producing 922,979 mcf of gas.

Chesapeake’s Utica success to continue
Chesapeake Energy Corporation (NYSE:CHK) expects its success in the Utica to accelerate this year. In the first quarter, the company reported a daily net production of around 60 MMcf of natural gas per day. As of March 31, it had drilled roughly 250 wells in the play, including 66 producing wells, 87 that are waiting on pipelines, and 97 wells in various stages of completion.

Importantly, the company has seen a sharp decline in its Utica well costs, which plunged by 30%, from around $8.5 million to just under $6 million currently. With 14 rigs running in the play, Chesapeake Energy Corporation (NYSE:CHK) is projecting estimated ultimate recoveries of 5-10 Bcfe in the Utica’s wet-gas window.

The company is especially optimistic about the effect of new infrastructure slated to come on line this year. According to Jeffrey A. Fisher, Chesapeake Energy Corporation (NYSE:CHK)’s executive vice president of production, the opening of two major processing plants this year should provide a big boost to production.

New infrastructure additions
The first of those facilities – the expanded Natrium processing plant in Marshall County, W.V., built by Blue Racer Midstream, a joint venture between Dominion Resources, Inc. (NYSE:D) and Caiman Energy – came on line earlier this month, reporting recent flows at more than 80% of its 200,000 Mcfpd capacity, according to data from Bentek Energy, while the second facility – a processing complex in Columbiana and Harrison counties – is expected to open midyear.

With the addition of new infrastructure, Chesapeake Energy Corporation (NYSE:CHK) says it is confident that it will achieve its year-end target of 330 MMcf of gas per day from its Utica wells. If it manages to meet that goal, it would represent a more than quadrupling of its average first-quarter natural gas volumes.

Infrastructure additions also bode well for Gulfport Energy Corporation (NASDAQ:GPOR), a company highly levered to the play. In fact, Gulfport Energy Corporation (NASDAQ:GPOR) is plowing the majority of its capital budget toward developing its Utica acreage, with quite impressive well results thus far. Improved infrastructure should also provide a boost to Rex Energy Corporation (NASDAQ:REXX), which is allocating nearly a third of its roughly $255 million capital budget for the year toward developing its assets in the Utica.

Though Chesapeake is optimistic about the Utica, the company is more focused on the Eagle Ford and Greater Anadarko Petroleum Corporation (NYSE:APC) Basin – assets that will be crucial in helping it transition away from natural gas production and toward oil. Will Chesapeake manage to meet its oil production target and boost cash flow? Or will it languish under the weight of its heavy debt load?

The article Meet the Utica Shale’s Top Producer originally appeared on Fool.com.

Fool contributor Arjun Sreekumar owns shares of Chesapeake Energy. The Motley Fool recommends Dominion Resources (NYSE:D). The Motley Fool has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy, Long Jan 2014 $30 Calls on Chesapeake Energy, and Short Jan 2014 $15 Puts on Chesapeake Energy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!