Did Chesapeake err on Utica shale fairway in Ohio?

By Bob DowningPublished: December 13, 2012

An analyst, Tim Rezvan of Sterne Agee, reports that Chesapeake Energy Corp. has acknowledged that the Utica shale in eastern Ohio extends further south than it thought.

In addition, the gas edge of the Utica shale play also extends further to the west than the company had anticipated, it said.

Chesapeake Energy's management "acknowledges the company misjudged the emerging fairway of the Utica shale," he wrote.

That came from the Oklahoma-based energy company in what Rezvan called a competitor conference this week.

The comments by Chesapeake Energy, the No. 1 player in Ohio's Utica shale, is backed up by drilling results, he said in a Wednesday note to investors.

In fact, the results from wells to the south of Chesapeake's wells are actually better, especially those of Gulfport Energy Corp. in Ohio's Harrison and Belmont counties, Rezvan said.

Gulfport has the top four wells in Ohio for preliminary production as reported by the companies.

It appears that the play in the Guernsey, Belmont, Noble and Monroe counties may be better than what Chesapeake Energy has found in Carroll and Columbiana counties, he said.

Chesapeake, however, appears intent on drilling largely in the northern part of the Utica play under a joint agreement with Total, the French energy company.

He concluded: "While it will take another year or two to have clarity on the (Utica) play's fairway, the company's uncharacteristic muted tone regarding Utica well results suggests that much of the leasehold may not compete with the prolific southern fairway."

The drilling companies are targetinjg the liquid-rich Utica shale in Ohio for oil, natural gas liquids and natural gas.