Chesapeake Energy 1996 Annual Report Download - page 19

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Giddings Field
Chesapeake's most significant
producing assets are located in
the Giddings Field, one of the
most active fields in the United States.
The primary producing zone in the
Giddings Field is the Austin Chalk
formation, a fractured carbonate res-
ervoir found at depths ranging from
5,000 feet to 18,000 feet along a
15,000 square mile trend across Texas
and Louisiana.
The Austin Chalk is a complex
geological formation which holds
large volumes of oil and natural gas
within a series of naturally occurring
vertical fractures. As a result, tradi-
tional vertical drilling technology has
been largely uneconomical in devel-
oping this reservoir because it typi-
cally intersected only one of these
fractures. However, with the advent
of horizontal drilling, Chesapeake
and a limited number of other com-
panies have been able to unlock these
prolific, but previously underdevel-
oped, Austin Chalk reserves.
Further separating Chesapeake
from its competitors in this field has
been the company's concentration of
its Giddings drilling efforts in the gas-
prone downdip area of the field. In
this area, the Austin Chalk is depos-
ited at depths below 11,000 feet.
Chesapeake's engineers believe
CHESAPEAKE ENERGY CORPORATION
Giddings Field
Drilled Wells 175
Undrilled Locations75-125
Navasota
Giddings
Field
Fayet Independenc#
Texas Austin
Chalk Trend
Ho u ston
Giddings is one of the largest discov-
eries of onshore gas in the United
States in recent years.
Chesapeake's success in this area
is attributable to four major factors:
The limited reservoir drainage
that has occurred as a result of
the small number of vertical
wells previously drilled in the
downdip area;
Chesapeake's aggressive
leasehold acquisition program,
which has permitted the
company to create larger
spacing units and thereby
reduce competition for reserves
from offsetting wells;
The continued technological
advances in horizontal drilling,
AREAS OF OPERATION
which have significantly
lowered development costs,
expanded the field's boundaries
into deeper areas, and increased
per-well productivity through
the ability to drill longer
distances within a more tightly
defined target zone; and
The geological setting of the
downdip Austin Chalk, which
is characterized by greater
reservoir pressure and more
intensive fracturing than
updip areas.
As a result of these factors and the
experience developed by our com-
pany after drilling 275 horizontal
wells, Chesapeake's downdip wells
have produced greater per-well re-
serves and depleted more slowly than
average wells in other areas of Austin
Chalk production.
After drilling more than 175 wells
in the downdip Giddings during the
past three years, Chesapeake plans to
drill approximately 25 net wells in
this area in fiscal 1997. The company
will also continue its search for other
productive formations and for the
geological limits of the Austin Chalk
in the downdip Giddings area.