Chesapeake Energy 2011 Annual Report Download - page 21

2011 Annual Report | 18
2011 Natural Gas Production:
135 bcf, 80%, 13%
2011 Liquids Production:
1,500 mbbls, 275%, 5%
12/31/11 Proved Reserves:
3,190 bcfe, 75%, 17%
12/31/11 Net Leasehold Acres:
5,750,000, 16%, 38%
2011 Natural Gas Production:
55 bcf, -15%, 6%
2011 Liquids Production:
8,200 mbbls, 141%, 26%
12/31/11 Proved Reserves:
2,150 bcfe, 78%, 11%
12/31/11 Net Leasehold Acres:
3,280,000, 21%, 22%
Marcellus Shale
Utica Shale
EASTERN DIVISION
Our Eastern Division includes the Marcellus Shale play in the northern Appala-
chian Basin of West Virginia and Pennsylvania and the Utica Shale play in eastern
Ohio, northwestern West Virginia and western Pennsylvania. The Utica Shale is the
sixth unconventional play that Chesapeake has discovered to date, and the play
contains dry natural gas, wet natural gas and oil producing areas. During 2011, we
invested approximately $1.5 billion to drill 371 gross (149 net) wells in this division.
At the end of 2011, Chesapeake completed a joint venture and sold 25% of its as-
sets in the wet gas portion of the Utica to Total for $2.03 billion in cash and future
drilling carries. Chesapeake tripled its rig count in the Utica during 2011 and began
to ramp up liquids production in the play.
In early 2012, Chesapeake announced plans to further reduce its operated dry
gas drilling activity and capital expenditures in the Marcellus Shale in response to
the lowest natural gas price in the past 10 years. Accordingly, we plan to reduce
our drilling activity in the dry gas portion of the Marcellus to 12 operated rigs dur-
ing the 2012 second quarter. Conversely, Chesapeake will be ramping up drilling in
the Utica and plans to have 20 rigs running in the play by year-end 2012 to fur-
ther delineate the play and concentrate on increasing liquids production from the
play. For 2012, we anticipate spending approximately $1.2 billion, or 17% of our total
budget, net of carries from our joint venture partners, for exploration and develop-
ment activities in the Eastern Division.
WESTERN DIVISION
Our Western Division includes the Permian and Delaware basins of West Texas
and southern New Mexico including the Bone Spring, Avalon, Wolfcamp, Wolf-
berry plays, the Eagle Ford Shale play in South Texas and the Rocky Mountain/
Williston Basin plays, including the Niobrara Shale play. During 2011, we invested
approximately $1.7 billion to drill 428 gross (241 net) wells, net of $1.0 billion in
drilling and completion cost carries paid by our joint venture partner in the Eagle
Ford Shale and the Niobrara Shale. In February 2011, Chesapeake completed a joint
venture and sold 33% of its assets in the Niobrara to CNOOC Limited (NYSE:CEO;
SEHK:0883) for $1.27 billion in cash and carries. The joint venture with CNOOC was
the second for Chesapeake in the Western Division, as the company also complet-
ed a joint venture with CNOOC in the Eagle Ford Shale during 2010. Chesapeake
received the Deal of the Year Award at the Platts Global Energy Awards for these
ground-breaking and value-added international joint venture partnerships.
Chesapeake has also announced plans for a transaction including its Permian
Basin assets through either a joint venture partnership or a complete sale by the
end of the 2012 third quarter. For 2012, we anticipate spending approximately $2.7
billion, or 37% of our total budget, net of carries from our joint venture partner,
for exploration and development activities in the Western Division, with the Eagle
Ford Shale attracting approximately 85% of the division’s capital.
2011
Nat
ur
al
G
as
P
ro
ductio
n:
Niobrara Shale
and Frontier
Niobrara Shale
Williston Basin
Delaware Basin
Midland Basin
Eagle Ford
Shale
Pearsall Shale