Chesapeake Energy (NYSE:CHK) has set an ambitious goal of quadrupling the company's production of oil and liquids by the end of 2015. One area the company is focused on to achieve this growth is in various plays in the Anadarko Basin.
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Current and Future Production
Chesapeake Energy currently produces 56,000 barrels per day of oil and natural gas liquids, or about 10% of total company production. The company is targeting liquids and oil production of 100,000 barrels per day by the end of 2012, and 200,000 barrels per day by the end of 2015. If the company is successful, 25% of its total production will be from oil and natural gas liquids by the end of 2015.

Anadarko Basin
Chesapeake Energy currently gets 55% of its liquids production out of the Anadarko Basin. The company has 930,000 net acres in this basin, which the company defines as acreage prospective for various Granite Wash and Colony Wash plays in the Texas and Oklahoma panhandle areas. It also includes other Pennsylvanian and Mississippian age formations that the company is involved with.

Colony Granite Wash
Chesapeake Energy has 130,000 acres prospective for the Colony Granite Wash. The company has already been extensively developing this play and has 100 million barrels of oil equivalent (BOE) of proved reserves and current production of 28,000 BOE per day.

Chesapeake Energy is ramping up development here and will go from seven rigs currently drilling to an average of nine rigs in 2011. The company has budgeted to drill 50 net wells in 2011. Wells in the Colony Granite Wash produce a mix of oil, natural gas liquids and natural gas, with Chesapeake Energy estimating future production from here to be 48% oil and natural gas liquids.

Granite Wash
On the Texas side of the panhandle, Chesapeake Energy has 70,000 net acres exposed to the Granite Wash. The company has proved reserves of 110 million BOE, and net production of 21,000 BOE per day from this area.

Chesapeake Energy is currently operating seven rigs and plans to keep that flat in 2011 to drill 50 net wells in the play. Wells here also produce a mix of hydrocarbons at approximately the same proportion as the Colony Granite Wash, but with a slightly higher percentage of natural gas liquids.

Many other exploration and production companies are actively developing the Granite Wash in either Texas or Oklahoma. Penn Virginia (NYSE:PVA) is allocating 50% of its 2010 capital budget to explore and develop the Granite Wash. The company has three rigs drilling here.

Apache Corporation (NYSE:APA) has 200,000 gross acres and put to sales its first horizontal well here in September 2009. Forest Oil (NYSE:FST) has 102,000 net acres and plans to drill between 25 and 30 wells here in 2010.

Bottom Line
Chesapeake Energy is making large capital investments in the Anadarko Basin over the next few years to help move the company towards a greater balance between oil and natural gas production. The Granite and Colony wash areas are a major focus in the basin. (For related reading, take a look at Accounting For Differences In Oil And Gas Accounting.)

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