Chesapeake Energy agreed to sell about $1 billion worth of assets in the Haynesville and Eagle Ford shales to Dallas-based Exco Resources, the companies announced Wednesday morning. The Associated Press has a report here.
Chesapeake Energy's natural gas production will decline next year, a first in the company's 23-year history, chief operating officer Steve Dixon told analysts during the producer's Friday morning conference call regarding third-quarter earnings. The company said the previous day it lost about $2 billion in the quarter, largely because of big asset write-downs. Dixon said the company is projecting a 7 percent drop in total gas production in 2013, with the Haynesville Shale expected to decline 9 percent just between the third quarter and fourth quarter of 2012. CEO Aubrey McClendon said Chesapeake's production in the Barnett Shale is already down 11 percent from its peak, and even rising production in the Marcellus Shale won't be able to overcome those declines. The declines are the result of Chesapeake cutting its natural gas drilling fleet from 81 a year earlier to nine currently, including just two in the Barnett. Its drilling budget will see "a very material decrease" next year, Dixon said.
In other remarks, McClendon said the company is "just about there today" as far as drilling enough wells to hold its Barnett Shale leasehold with production. (A lease is said to be "held by production" when it has a well, and that prevents the producer's lease from expiring otherwise.) He said the Barnett shale's profitability, generally speaking, is "a toss-up" when prices are between $5 and $6 per 1,000 cubic feet.
Powell Shale Digest has a one-page summary of production and well data for nine major U.S. natural gas and crude oil shale regions. It shows nearly 36,000 wells, with total production of nearly 23 trillion cubic feet of gas and 682 million barrels of oil and condensate from the Barnett, Fayetteville, Eagle Ford shales, and multiple areas of the Haynesville, Bakken and Marcellus shales. The data is free and the link is here.
(Editor's note: An earlier version of this post used a figure of "nearly 40,000 wells" from the original Powell Shale Digest report. The authors of that report later corrected the number.)
There has been much angst in the last couple of weeks from folks who own land in the Barnett Shale and think they've missed the chance to lease their minerals for top dollar. In the heat of the summer, companies were offering $25,000 an acre in bonuses. But in the last couple of weeks, some of the same companies have said they're not leasing at all, or they're only leasing for a fraction of that amount.
If that gets you hot under the collar, consider the former Mayor of Shreveport, who's getting criticism for leasing the local airport for $1 an acre back in 2004. Shreveport is in the middle of the Haynesville Shale, which has seen a similar boom in lease prices.
Loyal readers probably saw Bill Hanna's story in Sunday's Star-Telegram about the Haynesville Shale in Louisiana and East Texas, where residents are looking to Fort Worth to learn how to organize and negotiate.
Now comes the non-profit investigative reporting group Pro Publica, with a story about how officials in upstate New York aren't ready for the impact of gas drilling in the Marcellus Shale.
Chesapeake Energy agreed to pay $178 million to jointly develop Goodrich Petroleum’s properties in the Haynesville Shale formation of Louisiana, Bloomberg News reports. Chesapeake, which also agreed to buy another producer’s stake in one of the properties, will operate the joint venture, the companies said Monday, according to Bloomberg. Chesapeake said in March that the Haynesville shale may be its most promising discovery, rivalling the quality and scope of the Barnett Shale, Bloomberg notes.