Chesapeake Energy, who has been given credit for discovering the play, has been in the land acquisition mode since mid-2010 and has a major head start. Since the play is in the early stages there has been a race to acquire leases, in which CHK has a definitive lead. Here is a graph showing net acreage leasehold of the major operators in the Utica. Information provided by investor presentations, quarterly conference calls, and company press releases.
Chesapeake is obviously very optimistic about the play, but all the land acquisition has left them with too much debt to pay for drilling. CHK recently closed a joint venture agreement with the French company, Total E&P USA, to help cover development costs. Total will acquire an undivided 25% interest in approximately 619,000 net acres in the liquids and wet gas phases of the Utica at $15,000 per net acre. Approximately 542,000 net acres were contributed by Chesapeake and approximately 77,000 net acres were supplied by EnerVest Ltd. The combined value of the venture will come out to roughly $2.32 billion, where $2.03 billion will be acquired by Chesapeake and $290 million received by EnerVest. Approximately $610 million was paid to Chesapeake in cash upon closing and roughly $1.42 billion will be paid in the form of a drilling and completion carry. Chesapeake is anticipating to fully receiving the cost carry by year-end 2014. Total will participate with both Chesapeake and EnerVest in midstream infrastructure attributable to their 25% interest in production. Chesapeake will be the operator of the joint venture and will perform all leasing, drilling, completing, operating and marketing duties.
Here is a map showing Ohio Utica permits approved in the past 12 months using the Drilling Info dataset. Once again, Chesapeake is at the top of the list.
To date, Chesapeake has spudded 19 horizontal wells with 8 being completed. CHK currently has 8 rigs operating and plans ramp up to 20 rigs by year-end 2012, and possibly 30 rigs by year-end 2014. On September 28th Chesapeake disclosed the initial horizontal well drilling results from the first four horizontal wells drilled in the wet and dry gas phases of the Utica Shale play in Eastern Ohio and Western Pennsylvania. The three wells in the wet gas phase averaged 2,051 boe and the Pennsylvania dry gas well achieved a peak rate of 6.4 Mmcf/d of dry natural gas. It will be interesting to see more preliminary production results in the oil phase of the play as operations take full steam in 2012.
For more information and to learn more about other operators in the Utica visit the Operators Folder in the Unconventional Updates of DI DNA.
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