Free Annual Reports
Chesapeake Energy Analyst Meeting Review
Chesapeake Energy (NYSE:CHK) outlined the company's extensive oil and gas assets, and reviewed the strategy the company will employ as it continues to shift away from natural gas and towards becoming more of an oil and liquids producer.
IN PICTURES: 4 Biggest Investor Errors
Chesapeake Energy is one of the largest independent exploration and production companies in the United States. The company reported average production of 2.79 Bcfe per day in the second quarter of 2010. It also reported proved reserves of 16.1 Tcfe at June 30, 3010, and nearly 14 million acres of prospective inventory to develop.
Oil and Liquids
Chesapeake Energy has assembled large acreage positions in most of the oil and liquids unconventional resource basins in the United States. The company expects to increase its liquids production to 200,000 barrels per day by the end of 2015. This would increase the share of total production of oil and liquids to 25%, or 35-40% on a revenue basis.
Chesapeake Energy is currently producing 56,000 barrels per day of oil and natural gas liquids, with 55% of that production concentrated in the Anadarko Basin. The company is also building positions and developing other areas including the Eagle Ford Shale, Niobrara Shale and the Permian Basin.
Natural Gas
Although Chesapeake Energy is moving to de-emphasize natural gas development, the company still has substantial assets here. Chesapeake Energy has millions of acres in all the major domestic natural gas shale plays, and will be a large producer of natural gas for quite some time.
Chesapeake Energy is most active in the Haynesville Shale, where the company is operating 34 rigs, and reported average production of 725 million cubic feet equivalent in September 2010.
Joint Ventures
One strategy that Chesapeake Energy employs is to enter into joint venture deals with other exploration and production companies that want exposure to shale plays in the United States. The company believes this strategy helps recapture the initial costs of entry to unconventional resource plays and will fund future development costs.
The latest joint venture deal was signed with CNOOC Limited (NYSE:CEO) in October 2010, and involved the Eagle Ford Shale in Texas. CNOOC Limited agreed to pay $1.08 billion in cash and a drilling carry of $1.08 billion to earn a one-third interest in Chesapeake Energy's 600,000 acre position.
Chesapeake Energy has done several other joint venture deals over the last two years. In January 2010, the company signed a deal with Total SA (NYSE:TOT) in the Barnett Shale. In 2008, Chesapeake Energy entered joint venture agreements with Statoil (NYSE:STO), BP (NYSE:BP) and Plains Exploration and Production (NYSE:PXP) in the Marcellus, Fayetteville and Haynesville Shale, respectively.
The Bottom Line
The company has established the goal of rapidly increasing the company's exposure to oil and liquids plays and has assembled a large prospective inventory of property with which to accomplish this. (For related reading, take a look at How Does Crude Oil Affect Gas Prices?)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
IN PICTURES: 4 Biggest Investor Errors
Chesapeake Energy is one of the largest independent exploration and production companies in the United States. The company reported average production of 2.79 Bcfe per day in the second quarter of 2010. It also reported proved reserves of 16.1 Tcfe at June 30, 3010, and nearly 14 million acres of prospective inventory to develop.
Oil and Liquids
Chesapeake Energy has assembled large acreage positions in most of the oil and liquids unconventional resource basins in the United States. The company expects to increase its liquids production to 200,000 barrels per day by the end of 2015. This would increase the share of total production of oil and liquids to 25%, or 35-40% on a revenue basis.
Chesapeake Energy is currently producing 56,000 barrels per day of oil and natural gas liquids, with 55% of that production concentrated in the Anadarko Basin. The company is also building positions and developing other areas including the Eagle Ford Shale, Niobrara Shale and the Permian Basin.
Natural Gas
Although Chesapeake Energy is moving to de-emphasize natural gas development, the company still has substantial assets here. Chesapeake Energy has millions of acres in all the major domestic natural gas shale plays, and will be a large producer of natural gas for quite some time.
Joint Ventures
One strategy that Chesapeake Energy employs is to enter into joint venture deals with other exploration and production companies that want exposure to shale plays in the United States. The company believes this strategy helps recapture the initial costs of entry to unconventional resource plays and will fund future development costs.
The latest joint venture deal was signed with CNOOC Limited (NYSE:CEO) in October 2010, and involved the Eagle Ford Shale in Texas. CNOOC Limited agreed to pay $1.08 billion in cash and a drilling carry of $1.08 billion to earn a one-third interest in Chesapeake Energy's 600,000 acre position.
Chesapeake Energy has done several other joint venture deals over the last two years. In January 2010, the company signed a deal with Total SA (NYSE:TOT) in the Barnett Shale. In 2008, Chesapeake Energy entered joint venture agreements with Statoil (NYSE:STO), BP (NYSE:BP) and Plains Exploration and Production (NYSE:PXP) in the Marcellus, Fayetteville and Haynesville Shale, respectively.
The Bottom Line
The company has established the goal of rapidly increasing the company's exposure to oil and liquids plays and has assembled a large prospective inventory of property with which to accomplish this. (For related reading, take a look at How Does Crude Oil Affect Gas Prices?)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Eric Fox
Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.
Free Annual Reports
