With approximately 1.55 million net acres, an increase of approximately 50,000 net acres from the 2010 first quarter, Chesapeake is the largest leasehold owner, second-largest producer and most active driller in the Marcellus Shale play that spans from northern West Virginia across much of Pennsylvania into southern New York. On its Marcellus leasehold, Chesapeake estimates it has approximately 460 bcfe of proved reserves (based on the 10-year average NYMEX strip prices at June 30, 2010) and 34.1 tcfe of risked unproved resources. As a result of continued strong production results, the company has recently raised its average estimated ultimate recovery (EUR) on its Marcellus Shale acreage by approximately 24% from 4.2 bcfe per well to 5.2 bcfe per well.
During the 2010 second quarter, Chesapeake’s average daily net production of 105 mmcfe in the Marcellus increased approximately 65% over the 2010 first quarter and approximately 250% over the 2009 second quarter. The company’s average daily net production rate in the Marcellus in July 2010 was approximately 130 mmcfe and the company anticipates adding more than 60 mmcfe of net production in the West Virginia portion of the play in the second half of 2010 once new natural gas processing facilities become operational. Chesapeake is currently drilling with 26 operated rigs in the Marcellus and anticipates operating an average of approximately 28 rigs in 2010 to drill approximately 150 net wells. During the 2010 second quarter, Chesapeake received approximately $144 million of drilling and completion carries from its Marcellus joint venture partner Statoil (NYSE:STO, OSE:STL). From July 2010 through 2012, Chesapeake should receive approximately $1.7 billion in additional drilling carries from STO.
Three notable recent wells completed by Chesapeake in the Marcellus are as follows:
- The Mowry 1H in Bradford County, PA achieved a peak 24-hour rate of 9.9 million cubic feet of natural gas (mmcf) per day;
- The Przybyszewski 4H in Susquehanna County, PA achieved a peak 24-hour rate of 9.7 mmcf per day; and
- The White 2H in Susquehanna County, PA achieved a peak 24-hour rate of 9.0 mmcf per day.