Chesapeake Energy has been working hard to get their portfolio into tip top shape. The approach they have been using is to utilize unconventional plays and shale plays. Not too long ago people probably would have thought them crazy, but not at this point in the game. David White explains how CHK is doing so well, and the smart moves they made to get there.
A brief description ofChesapeake Energy’s (CHK) “best assets in the business” holdings:
Natural Gas Plays
- 1,750,000 net acres in the Marcellus Shale (#1)
- 495,000 net acres in the Haynesville Shale (#1)
- 190,000 net acres in the Bossier Shale (#1)
- 220,000 net acres in the Barnett Shale (#2)
- 350,000 net acres in the Pearsall Shale
Total net acres = 3,005,000 net acres
Unconventional Liquids Plays
- 2,035,000 net acres in the Anadarko Basin (#1 including the Granite Wash, Cleveland, Tonkawa,, and 1,000,000 in the Mississippian Lime formation)
- 500,000 net acres in the Eagle Ford Shale (#2 with 80% in the wet gas and oil phases)
- 320,000 net acres in the Bakken/Three Forks (top 10)
- 835,000 net acres in the Permian Basin (Top 5 – Avalon, Bone Spring, Wolfcamp, and Wolfberry)
- 595,000 net acres in the Powder River (Niobrara) and DJ Basin – #3
- 1,250,000 net acres in the Utica Shale (#1)
- 320,000 net acres in other plays
Total net acres = 5,855,000
Other Conventional and Unconventional Plays
- Total net acres = 6,520,000
Grand total of all net acres = 15,380,000
In addition to all of this, CHK has approximately 15 million acres of 3D seismic data on acres it doesn’t own or control. It seems reasonable to think that CHK will control at least a sizeable fraction of this acreage in the not very distant future. It is already planning on expanding several of its holdings such as the Utica.
The natural gas plays are great assets. They are very valuable. However, CHK has been concentrating on developing its oil plays as oil has been a much more lucrative venture lately. I will try to quantify some of CHK’s oil holdings.
80% of CHK’s holdings in the Eagle Ford are in the wet gas and oil phases. In these phases the EUR per well has been about 500,000 BOE. A typical spacing in the Eagle Ford has been approximately 125-140 acres, although some are experimenting with a spacing as low as 40 acres. If you estimate approximately 75% of the acreage is drillable, then CHK has approximately 300,000 acres of drillable acreage. Using a spacing of 125 acres/well, CHK would have 2,400 drill sites that would yield on average about 500,000 BOE EUR per well (or 1.2B BOE of recoverable oil). This is just a ballpark figure.
CHK has lease holdings of 320,000 acres in the Bakken/Three Forks. Using a 75% drillable site estimate, this would amount to 240,000 of drillable acres or 1920 drillable sites. Bakken EURs range from roughly 300,000 BOE to 700,000 BOE, although there are higher figures. Taking 500,000 BOE EUR as an average value, CHK may have 0.96B BOE of recoverable oil in its Bakken holdings.
This is only a small portion of the holdings that CHK has. As you can see many are unconventional plays, which are working to their advantage. I think this is telling about the company in that they are able to readjust as needed in order to be as successful as possible.
Quotes taken from report by David White, Read the entire article here.
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