Drilling Down

Chesapeake Cuts Spending, Drilling for 2015

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OKLAHOMA CITY — Chesapeake Energy Corp., the most active driller in Ohio’s Utica shale, said Wednesday that it would slash capital spending and drilling activity this year in the face of substantially lower oil and gas prices.

The company said it would reduce its capital budget by 37% in 2015 to between $4 billion and $4.5 billion, compared to $6.7 billion in capital expenditures in 2014.

Chesapeake reported it would reduce its rig count to between 35 and 45 rigs in 2015, the lowest operated rig count since 2004 and a decrease of about 38% from 2014’s average of 64 rigs.

This year, the company plans to operate between three and five rigs in the Utica and commit 25% of its capital expenditures in the play.

During the fourth quarter of 2014, total average Utica shale production averaged approximately 100,000 barrels of oil equivalent per day, Chesapeake said, an increase of 17% compared to the previous quarter.

Average completed well cost was approximately $6.6 million with an average lateral length of 6,0000 feet and 27 frack stages. Chesapeake, nevertheless, expects to devote 25% of its capital expenditures this year to Utica operations, up from 10% last year.

Production in the Marcellus shale during the fourth quarter averaged approximately 817 million cubic feet of natural gas per day, a decrease of 7% versus the third quarter of 2014.

Chesapeake reported a profit of $586 million during the fourth quarter 2014, or 81 cents per share, compared with a loss of $159 million or 24 cents per share compared to the same period a year earlier.

Published by The Business Journal, Youngstown, Ohio.