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Shale Gas and Conventional Gas: From Pennsylvania to New Mexico

Shale Gas and Conventional Gas: From Pennsylvania to New Mexico. January 12, 2012. Chesapeake’s Operating Areas. Chesapeake Energy Overview. Second largest U.S. natural gas producer and a Top 15 oil producer Most active explorer for natural gas and oil with 164 active U.S. drilling rigs

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Shale Gas and Conventional Gas: From Pennsylvania to New Mexico

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  1. Shale Gas and Conventional Gas: From Pennsylvania to New Mexico January 12, 2012

  2. Chesapeake’s Operating Areas

  3. Chesapeake Energy Overview • Second largest U.S. natural gas producer and a Top 15 oil producer • Most active explorer for natural gas and oil with 164 active U.S. drilling rigs • Employ over 12,500 employees in 17 states • Applying unconventional thinking and state of the art technologies, Chesapeake has grown from a $50,000 startup in 1989 to a $35 billion enterprise today • Chesapeake is leading the effort to reduce American dependence on unreliable, high-cost foreign oil.

  4. Industry Leadership • Leader in technological innovations in unconventional reservoirs • #1 inventory of shale core rock data and built industry’s only proprietary unconventional petrophysics lab • Unparalleled inventory of U.S. onshore leasehold and 3D seismic • 15 mm net acres of U.S. onshore leasehold and 29 mm acres of 3D seismic data • Leader in drilling • #1 driller in the world of horizontal wells and horizontal shale wells • Leader in production • 3Q’11 gas production of ~2.8 bcf/d; liquids production of ~94 mbbls/d; total production of 3.3 bcfe/d • Overall production up 9% YOY, liquids production up 91% YOY • Diversified operational focus • Leading positions in 12 of the Top 15 unconventional liquids-rich plays in the U.S. • #1 in the Anadarko Basin -- #3 in the Niobrara Shale • #1 in the Utica Shale -- Top 10 in the Williston Basin • #2 in the Eagle Ford Shale -- Top 5 in the Permian Basin • Leading positions in 4 of the Top 5 best U.S. natural gas shale plays (having sold the Fayetteville) • #1 in the Marcellus Shale --#1 in the Bossier Shale • #1 in the Haynesville Shale -- #2 in the Barnett Shale • Leader in vertical integration into midstream and oilfield service operations • Ensures access to critical services, enables greater operational efficiencies and increases safety CHK’s track record of leadership and achievements during the past 22 years has been unique and has positioned the company for superior performance for years to come

  5. Top 20 U.S. Natural Gas Producers (1) Based on 3Q’11 company reports (2) In mmcf/day (3) Based on annualized production (4) Source: Smith Bits, a Schlumberger Company; the total and CHK’s rig counts have been adjusted for internal count of allocation to liquids-rich plays

  6. Top 20 U.S. Liquids Producers (1) Based on 3Q’11 company reports (2) In mbbls/day (3) Based on annualized production (4) Source: Smith Bits, a Schlumberger Company; the total and CHK’s rig counts have been adjusted for internal count of allocation to liquids-rich plays

  7. Chesapeake Oilfield Services, L.L.C. advantages: CHK’s in-house service companies provide premium services and products, but also serve as a hedge against oilfield inflation CHK has targeted business lines that present bottlenecks to upstream operations or generate outsized profits to the providers Controlling service equipment allows CHK to provide certainty and safety of development program timing to potential operating partners Major point of differentiation relative to all other public E&P’s Internal capabilities ensure CHK’s ability to move into potential plays quickly and without industry disruption Chesapeake Oilfield Services, L.L.C.

  8. Joint Ventures Key to Development • Science & Engineering Technology • Apply cutting-edge geoscience technology, 3D seismic and petrophysical analysis to discover new prospect areas and define sweet spots. Enhance drilling and completion design to achieve play viability; transfer technology from other plays • Land Acquisition • Acquire large leasehold positions • Add a JV Partner • Bring in a JV partner for a minority interest in order to recapture virtually all acquisition costs, reduce risk and significantly fund future development Land Acquisition

  9. Niobrara Cooperative Venture • On January 30, 2011, Chesapeake Energy Corporation and CNOOC Ltd. entered into an agreement whereby Chesapeake will sell to CNOOC Ltd. a minority, non-operating interest in Chesapeake’s oil and natural gas leaseholds in the Niobrara Formation and Frontier and Codell Sands area in the Denver-Julesburg (DJ) Basin and the Powder River Basin of Colorado and Wyoming for approximately $570 million, plus an additional $697 million of carried drilling and completion costs. • CNOOC Ltd. is one of the largest independent oil and natural gas exploration and production companies in the world. • The transaction involves a purely economic investment in leasehold assets for the purpose of conducting preliminary exploration. • The transaction is similar to the prior Eagle Ford investment, but smaller with assets earlier in the development stage. • Chesapeake will conduct all leasing, drilling, completion, operations and marketing and will be in exclusive control of the assets.

  10. CHK Rockies Overview • Chesapeake is active in the Williston Basin; Niobrara Basin, including the Powder River and Denver-Julesburg, and the Permian Basin • The Company has 2.6 million acres under lease in North Dakota, Wyoming, Colorado and New Mexico • Chesapeake currently has 8 rigs operating in the Rockies. • Joint venture with CNOOC in the Niobrara allows for faster development CHK has established a leading position in the emerging unconventional liquids-rich plays in the Rockies

  11. CHK Marcellus Overview • The Marcellus Shale play is likely to become one of the two largest gas fields in the U.S. (Haynesville the other) • CHK is the largest producer, the most active driller and the largest leasehold owner in the play with 1.73 million net acres of leasehold • Currently operating 25 rigs in the play • Currently producing over 800 mmcf/d gross production in northern Pennsylvania

  12. Declare Your Energy Independence • Chesapeake will invest $1.0 billion over 10 years to stimulate market adoption of CNG, LNG, and GTL fuels. • Putting more U.S. natural gas to work in manufacturing, utilities, and transportation will create an economic renaissance in America. • The Plan: • Increase existing production of domestic onshore oil and natural gas liquids by 50% • 8 MMBLS to 12 MMBLS • Use natural gas a primary transportation fuel, saving businesses and consumers about $2 per gallon • 16,000,000 NGVs on the road by 2035, up from 140,000 today • Investing in breakthrough new technologies to expand GTL and biogas • Investing $155 million with Sundrop Fuels to build the world’s largest bio-based, renewable “green gasoline” production plant Powering America with Energy Made by Americans for Americans

  13. Contact Us John Dill Director – Corporate Development & Government Relations Rockies Area john.dill@chk.com 1700 Lincoln Street, Suite 3000 Denver, CO 80203 (303) 832-2139

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