Chesapeake is the largest leasehold owner and most active driller of new wells in the Haynesville Shale play in Northwest Louisiana and East Texas. Chesapeake now owns approximately 535,000 net acres of leasehold in the Haynesville Shale play. Chesapeake and its 20% joint venture partner, Plains Exploration & Production Company (NYSE:PXP) (which owns approximately 110,000 additional net acres), have drilled and completed 150 Chesapeake-operated horizontal wells in the Haynesville play and continue to experience outstanding drilling results. During the 2009 fourth quarter, Chesapeake’s average daily net production of approximately 365 mmcfe in the Haynesville increased approximately 59% over the 2009 third quarter and approximately 519% over the 2008 fourth quarter. Chesapeake is currently producing approximately 375 mmcfe net per day (550 mmcfe gross operated) from the Haynesville and anticipates exceeding approximately 640 mmcfe net per day (970 mmcfe gross operated) by year-end 2010 and approximately 810 mmcfe net per day (1,230 mmcfe gross operated) by year-end 2011.
To further develop its 535,000 net acres of Haynesville leasehold, Chesapeake is currently drilling with 38 operated rigs and anticipates operating an average of approximately 41 rigs in 2010 to drill approximately 200 net wells. During 2009, approximately $390 million of Chesapeake’s drilling costs in the Haynesville were paid for by its joint venture partner PXP. In August 2009, Chesapeake and PXP amended their joint venture agreement to accelerate the payment of PXP’s remaining joint venture drilling carries as of September 30, 2009 in exchange for an approximate 12% reduction in the total amount of drilling carry obligations due to Chesapeake. As a result, on September 29, 2009, Chesapeake received $1.1 billion in cash from PXP and beginning in the 2009 fourth quarter Chesapeake and PXP each began paying their proportionate working interest costs on drilling.
Chesapeake’s leasehold investment in the Haynesville has been approximately $5.3 billion, of which approximately $2.8 billion, or 52%, has been recouped by selling a 20% interest in the company’s leasehold to PXP. The company’s net investment in its Haynesville leasehold is now approximately $4,600 per net acre on average.
Three notable recent wells completed by Chesapeake in the Haynesville are as follows:
The Sloan 4-12-13 H-1 in De Soto Parish, LA achieved a peak 24-hour rate of 23.4 mmcf per day;
The Johnson 21-13-13 H-1 in De Soto Parish, LA achieved a peak 24-hour rate of 18.5 mmcf per day;
The Caspiana 14-15-12H-1 in Caddo Parish, LA achieved a peak 24-hour rate of 18.4 mmcf per day.