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Chesapeake Energy Corporation Reports Financial And Operational Results For The 2012 Third Quarter

The company continues to achieve strong operational results in its liquids-rich plays, as highlighted below:

Eagle Ford Shale (South Texas) : Chesapeake’s activities on its approximately 490,000 net acres of leasehold in the Eagle Ford Shale in South Texas continue to drive strong results, yielding net production of 52,200 boe per day (120,500 gross operated boe per day) for the 2012 third quarter. This represents an increase of 371% year over year and 44% sequentially, which included an increase in oil production of 462% year over year and 48% sequentially. Approximately 68% of total Eagle Ford production during the 2012 third quarter was oil, 14% was NGL and 18% was natural gas.

As of September 30, 2012, Chesapeake had 441 gross company operated producing wells in the Eagle Ford play, which included 124 wells that reached first production in the 2012 third quarter, compared to 121 in the 2012 second quarter and 40 in the 2011 third quarter. Also, as of September 30, 2012, Chesapeake had approximately 233 Eagle Ford wells drilled, but not yet producing, that were in various stages of completion and/or waiting on pipeline connection. Recent efficiency gains in drilling cycle times will allow the company to achieve its targeted well count goal utilizing fewer rigs than would have been required in 2010-12. The company is currently operating 23 rigs in the play, down from a peak of 34 rigs in April 2012 and plans to exit the year at 22 rigs. The company is currently on pace to have essentially all of its core and Tier 1 Eagle Ford acreage held by production by the 2013 fourth quarter.

Of the 124 wells which commenced first production in the 2012 third quarter, 115 wells (or 93%) had peak production rates of more than 500 boe per day, including 43 wells (or 35%) with peak rates of more than 1,000 boe per day, continuing a trend of steady operational improvement during the past year. Three notable recent wells completed by Chesapeake in the Eagle Ford during the quarter are as follows:
  • The Faith-Yana A Unit C1H in Dimmit County, TX achieved a peak rate of approximately 2,175 boe per day, consisting of 1,580 bbls of oil, 295 bbls of NGL and 1.8 mmcf of natural gas per day;
  • The Gates 010-CHK-B 1286-D3H in Webb County, TX achieved a peak rate of approximately 2,100 boe per day, consisting of 660 bbls of oil, 655 bbls of NGL and 4.7 mmcf of natural gas per day; and
  • The Shining Star Ranch B 1H in La Salle County, TX achieved a peak rate of approximately 1,580 boe per day, consisting of 1,450 bbls of oil, 80 bbls of NGL and 0.3 mmcf of natural gas per day.

As part of its “core of the core” strategy, Chesapeake is currently pursuing the sale of a portion of its existing leasehold and producing assets outside its current core development area in the Eagle Ford play.

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