The Barnett Shale is currently the largest natural gas-producing field in the U.S. In this play, Chesapeake is the second-largest producer, the most active driller and the largest leasehold owner in the Core and Tier 1 sweet spots of Tarrant and Johnson counties. Following the sale of 25% of its interests in the Barnett Shale to Total E&P USA, Inc., a wholly owned subsidiary of Total S.A. (NYSE:TOT, FP:FP), in January 2010, the company owns approximately 220,000 net acres of leasehold. Chesapeake estimates it has approximately 2.9 tcfe of proved reserves (based on the 10-year average NYMEX strip prices at June 30, 2010) and 3.4 tcfe of risked unproved resources in the Barnett play. As a result of continued strong production results, the company has recently raised its average EUR on its Barnett Shale acreage by approximately 13% from 2.65 bcfe per well to 3.0 bcfe per well.
During the 2010 second quarter, Chesapeake’s average daily net production of 535 mmcfe in the Barnett decreased approximately 5% over the 2010 first quarter and decreased approximately 20% over the 2009 second quarter. Adjusted for the company’s sale of a 25% joint venture interest to Total in the 2010 first quarter, the company’s sequential and year-over-year production growth rate in the Barnett Shale was 5% and 10%, respectively. The company’s average daily net production rate in the Barnett in July 2010 was approximately 535 mmcfe. Chesapeake is currently drilling with 22 operated rigs in the Barnett and anticipates operating an average of approximately 22 rigs in the Barnett in 2010 to drill approximately 245 net wells. During the 2010 second quarter, Chesapeake received approximately $110 million of drilling and completion carries from Total. From July 2010 through 2012, Chesapeake should receive approximately $1.2 billion in additional drilling carries from Total.
Three notable recent wells completed by Chesapeake in the Barnett are as follows:
- The Brown 7H in Johnson County, TX achieved a peak 24-hour rate of 8.0 mmcf per day;
- The Fellowship 5H in Dallas County, TX achieved a peak 24-hour rate of 7.9 mmcf per day; and
- The Greenbriar 2H in Tarrant County, TX achieved a peak 24-hour rate of 7.0 mmcf per day.