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Chesapeake Energy Corp. intends to resume drilling Utica Shale wells in eastern Ohio in 2016 and 2017, company officials said Thursday.
The cash-strapped company, the No. 1 driller in the Utica Shale, did not say how many Utica wells will be drilled.
But Chesapeake is interested in drilling dry gas wells with little liquid content in the Utica Shale, said spokesman Frank Patterson.
The reason that Chesapeake intends to drill in the Utica Shale is because it can ship the natural gas via a recently opened pipeline to the Gulf Coast and get better prices, he said in an earnings call with analysts and the media.
Drilling in many shale areas has been sharply curtailed or eliminated because of continuing low commodity prices.
“We’re pretty happy with our position [in the Utica Shale],” Patterson said.
Company CEO Doug Lawler called the Utica Shale “an incredibly powerful asset.”
In information released to investors, Chesapeake indicated that it will drill zero to five wells in the Utica Shale in 2016, although 45 to 55 Utica wells will go into production.
Chesapeake, like many drillers, has wells that have been drilled but are not yet connected to pipelines.
In the Marcellus Shale in Pennsylvania and West Virginia, Chesapeake intends to drill zero to five wells and to put 20 wells into production.
The company has significant assets in the Marcellus that can be tapped and marketed when prices rise, officials said.
Last February, the company had announced its plans to halt drilling in the Utica and Marcellus due to low commodity prices.
Chesapeake said its average daily production in the first quarter of 2016 in the Utica Shale topped the company’s average daily production in the Marcellus Shale.
The Utica produced 146,000 barrels of oil equivalents per day, compared to its Marcellus total of 144,000 barrels of oil equivalents per day in the first quarter, the firm said.
Chesapeake’s overall first-quarter production was 672,400 barrels of oil equivalents per day, a 1 percent increase over a year ago, adjusted for asset sales.
The company’s main drilling efforts are focused in the Mid-Continent Shale in Oklahoma, the Eagle Ford Shale in south Texas and the Haynesville Shale in Louisiana. It has curtailed its drilling in the Barnett Shale in Texas and the Powder River Basin in Wyoming.
The company’s net loss narrowed to $964 million in the three months ended March 31, from $3.8 billion a year earlier. The year-earlier period included one-time items of $3.8 billion. First-quarter revenue fell 39 percent on the year to $1.9 billion as gas prices tumbled.
Excluding an $853 million impairment charge, the loss in the latest quarter was 10 cents per share, in line with analysts’ average estimate.
Revenue slumped 39 percent to $1.95 billion, widely missing analysts’ expectations of $2.55 billion.
The company on Thursday sold assets in Oklahoma to Newfield Exploration Co. for $470 million, and additional asset sales are planned, officials said.
Bob Downing can be reached at 330-996-3745 or bdowning@thebeaconjournal.com.
