EID's Shawn reports on yesterday's Chesapeake Ohio operations update: 

"In one of his first actions as the acting chief executive of Chesapeake Energy, Steve Dixon held an operations updateconference call at 8:30 this morning.  While many areas were covered, Dixon’s update on Chesapeake’s Utica Shale operations was worth noting  as it provided a very positive picture of the Utica Shale’s potential.

According to the company’s data, Chesapeake has developed over 240 wells in the Utica/Point Pleasant formation.  This accounts for approximately 75% of all development in the Utica Shale.  With these assets alone, Chesapeake is currently producing 75 million cubic feet equivalent (mmcfe) of natural gas per day. Given the limited sample available these numbers are promising.  In fact, Chesapeake estimates that if it’s production was unconstrained it would be capable of producing double its current production.  Given that, looking forward Chesapeake has a target of 330 mmcfe a day, or 55,000 barrel of oil equivalent, by the end of 2013.  While reaching this estimate depends greatly on processing and pipeline infrastructure coming online as scheduled, the initial outlook in reaching this goal provides reason for optimism.

Also covered on the call was a production update from one of Chesapeake’s wells in Carroll County.  The pad, called the Scott Unit, has 6 laterals.  Chesapeake was able to get development costs down to an average of $6.5 million a lateral on the pad, a notable reduction in cost from the play’s average well cost of $8-$10 million. In addition to getting well costs down, the numbers being produced by the Scott Unit wells also look promising according to figures referenced during the call.

We drilled six wells from a common PAD with average 24-hour restricted test rates of 1,250 boe per day, which included 310 barrels of oil, 200 barrels of NGL, with ethane not recovered, and 4.4 mmcf of natural gas per day, at flowing tubing pressures exceeding 3000 psi.- Steven C. Dixon, Acting Chief Executive Officer, Chesapeake Energy

While Chesapeake’s initial results are encouraging, the company’s opportunity for future Utica growth seems even more encouraging taking into account that companies like MarkWest, and others, will continue to expand Ohio’s midstream infrastructure assets throughout the year.   This will allow Chesapeake, and other upstream producers, to develop additional wells that will enable more natural gas and natural gas liquids to be brought to market."

READ THE REST: http://www.eidohio.org/chesapeake-provides-another-promising-operat...