The new energy land rush is in full force, this time in the Utica Shale...and there are some smart places to put your money, writes Peter Staas of Investing Daily.
Dealmaking has been brisk in the Ohio portion of the Utica Shale, an emerging unconventional play that lies beneath the Marcellus Shale and is in the early stages of exploration and development.
Thus far, much of the information available on the field comes from Chesapeake Energy (CHK), which quietly began building a position in the play about a year and a half ago, and had amassed about 1.36 million net acres at the end of the third quarter of 2011.
The independent producer tipped its hand slightly in early November 2010, when the firm announced it had acquired 500,000 acres in the Appalachian Basin from the privately held Anschutz Corp. for $850 million.
Since Chesapeake Energy’s July 29 conference call to discuss second-quarter earnings, the company has revealed that the Utica Shale consists of three zones: a dry-gas window that abuts Ohio’s eastern border with Pennsylvania; a wet-gas segment that includes substantial amounts of natural gas liquids (NGL); and an oil-laden portion to the west of the wet-gas segment.
During the conference call, Chesapeake Energy’s outspoken CEO, Aubrey McClendon, asserted that the emerging field could generate better returns than the Eagle Ford Shale, an oil- and NGL-rich play in south Texas: “[W]e believe the Utica will be economically superior to the Eagle Ford because of the quality of the rock and location of the asset.”
A September 28 press release disclosed peak flow rates from three horizontal wells in the wet-gas phase of the Utica Shale:
- Buell ten-11-5 8H in Harrison County, Ohio, (6,148-foot lateral) yielded 9.5 million cubic feet (mcf) per day of natural gas and 1,425 barrels per day of NGLs and oil;
- Mangun 22-15-5 8H in Carroll County, Ohio, (6,231-foot lateral) flowed 3.1 mcf per day of natural gas and 1,015 barrels per day of liquids; and
- Neider ten-14-5 3H in Carroll County, Ohio, (4,152-foot lateral) peaked at 3.8 mcf per day of natural gas and 980 barrels per day of liquids.