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Chesapeake Energy Corporation (CHK), Devon Energy Corp (DVN): Why Science Will Be the Key to Unlocking the Utica’s Potential

Chesapeake Energy Corporation (NYSE:CHK) has also found some of the more successful areas of the play. It expects to see its production jump from 60 mmfce/d, where it ended the first quarter, all the way to 300 mmcfe/d by the end of the year. Chesapeake Energy Corporation (NYSE:CHK) has not only found some of the better spots, but by moving to multi-well pad drilling, it expects to shave about 30% off its well costs, which will help to boost its returns.

Range Resources Corp. (NYSE:RRC) and EQT Corporation (NYSE:EQT) are relative newcomers to the play, as both have focused more extensively on the Marcellus. That focus has enabled them to be among the lowest cost natural-gas producers in the country, which enables both to profit even as natural gas prices stay low. The joint project in the Utica is designed to find the most economical ways to target that play, so that overall returns won’t be harmed.

The takeaway for investors is pretty clear: the potential to earn solid returns from the Utica remains. The trick will be finding the best ways to develop the play. As first movers, Chesapeake Energy Corporation (NYSE:CHK) and Gulfport have already laid claim to some great spots in the play, which is a reminder of the rewards of being a first mover. On the other hand, Devon Energy Corp (NYSE:DVN)’s big miss highlights the risk of being a first mover. That’s why Range Resources Corp. (NYSE:RRC) and EQT Corporation (NYSE:EQT) are banding together with a couple other peers and using science as leverage to find the right techniques to develop the play. That will help both companies deliver returns, but with less risk of coming up dry.

The article Why Science Will Be the Key to Unlocking the Utica’s Potential originally appeared on is written by Matt DiLallo.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Range Resources. The Motley Fool owns shares of Devon Energy and has the following options: long January 2014 $20 calls on Chesapeake Energy, long January 2014 $30 calls on Chesapeake Energy, and short January 2014 $15 puts on Chesapeake Energy.

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

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