Major Discovery – Chesapeake Energy Strikes Oil (and Gas) in Ohio’s Utica Shale
After two years of research and experimental drilling, Chesapeake Energy announced yesterday they have struck oil, natural gas liquids and natural gas in Ohio’s Utica Shale. This new find will boost Chesapeake’s company value by 15-20 billion dollars and is causing quite a sensation among Ohioans.
An energy exploration company active in Ohio has declared the Utica Shale formation ”liquid rich” in eastern Ohio, meaning the geological formation contains oil.
Utica Shale is a geological formation found several thousand feet below sea level, much deeper than the commonly discussed Marcellus Shale, a natural gas-rich formation that is now being explored in eastern Ohio and Pennsylvania.
On Thursday, Chesapeake Energy, based in Oklahoma City, released its quarterly earnings report, including in it references to this latest mineral find. Chesapeake, which holds 18 of the 24 permits to drill into Utica Shale in the state, said results of recent drilling indicate oil in eastern Ohio.
”Chesapeake is announcing the discovery of a major new liquids-rich play in the Utica Shale,” the report said, noting that the finding was based on two years of ”proprietary geoscientific, petrophysical and engineering research.”
Chesapeake’s report indicated that the discovery could be worth a $15 billion or $20 billion increase in company value.
“The company believes the Utica Shale will be characterized by a western oil phase, central wet gas phase and an eastern dry gas phase,” the report said. Also, it said Utica Shale should be “economically superior to the Eagle Ford Shale in South Texas.”(1)
This is big news in Ohio, where even Gov. John Kasich has already issued a glowing statement about the find.
Here is the relevant section from Chesapeake’s quarterly earnings report that has created a big splash in Ohio:
Chesapeake Announces a Major New Liquids-Rich Discovery in the Utica Shale in Eastern Ohio
Having achieved successful results from recent drilling activities in eastern Ohio, Chesapeake is announcing the discovery of a major new liquids-rich play in the Utica Shale. Based on its proprietary geoscientific, petrophysical and engineering research during the past two years and the results of six horizontal and nine vertical wells it has drilled, Chesapeake believes that its industry-leading 1.25 million net leasehold acres in the Utica Shale play could be worth $15 – $20 billion in increased value to the company. Chesapeake’s dataset on the Utica Shale includes approximately 2,000 well logs, full-suite petrophysical data on approximately 200 wells, 3,200 feet of proprietary core samples from nine wells and production results from three wells. As a result of its analysis, the company believes the Utica Shale will be characterized by a western oil phase, a central wet gas phase and an eastern dry gas phase and is likely most analogous, but economically superior to, the Eagle Ford Shale in South Texas.
Chesapeake is currently drilling in the Utica Shale with five operated rigs to further evaluate and develop its leasehold and anticipates increasing its rig count to eight by the end of 2011 and reaching at least a range of 16-20 rigs by year-end 2012. Also, the company believes that its leasehold position in the Utica Shale will support a drilling effort of at least 40 rigs by year-end 2014. Chesapeake is currently conducting a competitive process to monetize a portion of its Utica Shale leasehold position, which will be through an industry joint venture process or through a number of other monetization alternatives. The company anticipates completing a Utica Shale transaction in the 2011 fourth quarter.(2)
THINKING OF INVESTING IN LAND LOCATED IN THE MARCELLUS AND UTICA SHALE PLAYS? CALL THE “LAND EXPERT” – KELLIE PLACE @ CENTURY 21. 607-434-5263.