During the past four years, Chesapeake has substantially shifted its drilling and completion activity to liquids-rich plays in response to strong U.S. oil prices and relatively weak U.S. natural gas prices. During 2012, the company invested approximately 84% of its operated drilling and completion capital expenditures in liquids-rich plays and projects approximately 86% of such expenditures will be invested in liquids-rich plays in 2013.
The company continues to achieve strong operational results in its liquids-rich plays, as highlighted below:
Eagle Ford Shale (South Texas) : Chesapeake continues to generate impressive liquids production growth rates from its 485,000 net acres of leasehold in the Eagle Ford Shale in South Texas. Net production during the 2012 fourth quarter averaged 62,500 boe per day (143,200 gross operated boe per day). This represents an increase of 266% year over year and 20% sequentially. Approximately 66% of total Eagle Ford production during the 2012 fourth quarter was oil, 15% was NGL and 19% was natural gas.
As of December 31, 2012, Chesapeake had 534 gross operated producing wells in the Eagle Ford, of which 405 reached first production in 2012, including 98 in the fourth quarter. The company is currently operating 17 rigs in the play, down from a peak of 34 rigs in April 2012, and plans to operate an average of 16 rigs in 2013. Spud-to-spud cycle times have declined dramatically in the Eagle Ford, from 26 days in the 2011 fourth quarter to only 18 days in the 2012 fourth quarter. Chesapeake plans to drill fewer Eagle Ford wells in 2013 than in 2012; however, the planned number of wells turned-to-sales will be roughly equal in both years. The company remains on pace to have substantially all of its core and Tier 1 Eagle Ford acreage held by production by the end of 2013.
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