Chesapeake Posts $4.15B Loss on Impairment Charge
OKLAHOMA CITY – Chesapeake Energy Corp. said Wednesday that its oil and gas production in eastern Ohio’s Utica shale increased 13% during the second quarter ended June 30 versus production in the first quarter.
Production in the Utica averaged approximately 125 million barrels of oil equivalent per day, the company said as part of its second quarter earnings.
Chesapeake reported a net loss of $4.15 billion for the quarter ended June 30, or $6.27 per share, mostly due to a $4.02 billion impairment charge on oil and gas assets. The company reported an adjusted net loss of $83 million, or 11 cents a share, compared to net income of $191 million, or 22 cents a share, during the same period last year.
Energy companies have struggled because oil and gas commodity prices have plummeted since the beginning of the year. The price collapse has devalued Chesapeake’s assets.
The company reported it voluntarily curtailed an average of approximately 100 million cubic feet of natural gas per day of Utica production in July and is currently curtailing 275 million cubic feet of gas per day as a result of weak natural gas prices and the deterioration of propane prices.
However, the company noted that prices are likely to increase once the Spectra Open pipeline goes into service in November. That pipeline will ship natural gas liquids directly to the Gulf Coast.
The pipeline will allow Chesapeake to move 350 million cubic feet of gas per day out of the Utica at a competitive transportation rate, the company said.
“Once Open is online, about 85% of our Utica gas will receive Gulf Coast pricing,” said Chris Doyle, executive vice president for Chesapeake’s northern division.
Chesapeake noted that it continues to drill longer laterals and use more frack stages in its Utica wells. Completion costs per well should increase this year since the company is drilling longer laterals and increasing the number of frack stages.
“The Marcellus and Utica teams turned in their best operational quarter in their history,” Doyle said. “The drilling team averaged 12 days from spud to rig release, that was a 35% improvement over 2014.”
Drilling time during the third quarter is also off to a strong start, he notes, adding that it took rig teams on average nine days on a four-well pad and set a new record for 7.9 days on another pad.
Pictured: Chesapeake Energy Corp.’s headquarters in Oklahoma City.
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