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 Robert Douglas Lawler OKLAHOMA CITY, OK — “Chesapeake Energy Corp has hired Robert Douglas Lawler of rival Anadarko Petroleum Corp as chief executive, filling the post vacated by co-founder Aubrey McClendon, the Wall Street Journal reported, citing people familiar with the matter.
Chesapeake and Anadarko could not immediately be reached for comment by Reuters outside of regular U.S. business hours.
…Lawler, who is senior vice president of international and deep-water operations at Anadarko Petroleum, will join Chesapeake on June 17, the Wall Street Journal said.”
— Maria Ajit Thomas, Reuters
link to article
CLEVELAND — What happened to the Ohio shale boom? Oil and gas companies have given different answers every few months.
1. It’s a Marcellus shale boom. No, wait, it’s a Utica shale boom.
At first, the Ohio shale boom was all about the Marcellus shale, not the Utica. For example, in October 2010, Chris Perry and Larry Wickstrom of the Ohio Geological Survey gave a presentation on Ohio’s shale prospects, called, “The Marcellus Shale Play: Geology, History, and Oil & Gas Potential in Ohio.” The State geologists saw a big future in the Ohio Marcellus formation:
“. . . due to large production increases, a play such as the Marcellus is reshaping our natural gas distribution networks and the way we ultimately may use natural gas.”
Perry and Wickstrom barely noticed the Utica shale.
Before long, everything was reversed and no one mentioned Marcellus shale. Why?
Because nothing was happening in the Marcellus. There are currently only six producing wells in Ohio Marcellus shale, only one of which is a Chesapeake Energy well.
As a sign of how thoroughly the Marcellus vanished, in its report on 2011 natural gas production the Ohio Department of Natural Resources included figures for Utica wells, but didn’t even bother to report on the Marcellus wells.
“No more than a year ago, expectations of shale development in Ohio focused largely on the Marcellus. However, it became clear in 2011 that Marcellus-related drilling is unlikely to happen very far west of the state’s borders with Pennsylvania and West Virginia.”
— “An Analysis of the Economic Potential for Shale Formations in Ohio,” February 29, 2012, study funded by the Shale Coalition, and conducted by Cleveland State University, Ohio State University, and Marietta College.
Meanwhile, the Utica Shale bandwagon started rolling. On July 29, 2011, Chesapeake Energy CEO Aubrey McClendon said, “The Utica should emerge as a key driver in the future growth of U.S. energy supplies.” Continue reading Shale boom? What happened?
OKLAHOMA CITY, OK — “If you work in the oil and gas business then here’s a chance to get in on the ground floor of something big.
Aubrey McClendon has not wasted any time. Less than a month after his departure from Chesapeake Energy, the legendarily controversial empire-builder has already launched his new venture: American Energy Partners.
And better yet: he’s hiring. Here’s a picture that a reader sent in of one of the billboards that he’s put up in Oklahoma City — three at last count. Two of them flank the site of his new office, which is across the street from Chesapeake’s campus.”
— Christopher Helman, Forbes
link to article
ALEXANDRIA, VA — “The Utica Shale remains a bit of an enigma for drillers and investors alike. Some see it as the next big thing, while others are cautiously backing away. One thing is for sure: For many drillers, the Utica Shale isn’t living up to the original sky-high expectations, especially for oil content.
…At one time the Ohio portion of the Utica Shale was believed to hold more than $500 billion worth of oil. It’s beginning to appear that those early estimates by the Ohio Department of Natural Resources of up to 5.5 billion barrels of recoverable oil reserves might have been a bit too optimistic. That doesn’t mean that the Utica isn’t going to turn out to be a very profitable play for some companies. In fact, for the right operator that has the right location, the Utica looks like it will turn out to be a very important driver of both profit and production growth for years to come.
The other thing to keep in mind, especially when talking about Chesapeake Energy, is that this company needs cash to pay down its debt and to fund its drilling program. Overall though, this company has taken giant steps to help mitigate its problems, and the sale of a small portion of its Utica acres isn’t any indication that the play is a bust. It’s one of the many reasons why Chesapeake is worth a deeper look.”
— Matt DiLallo, The Motley Fool
link to article
 The leases Chesapeake Energy wants to sell are in Stark and Portage counties. OKLAHOMA CITY, OK — “Chesapeake Energy Corp. is trying to sell some of its drilling leases in Stark and Portage counties where the shale 6,000 feet below the surface has been said to be rich in oil.
The Oklahoma City company has listed for sale its drilling rights to more than 94,000 acres in the two counties, including three completed wells, two of which are producing. The company has the lease rights to about 1.3 million acres in Ohio.”
— John Funk, The Plain Dealer
link to article
 A Chesapeake Energy drilling rig rises about 130 feet above a noisy drilling pad that spans five acres in Carroll County OKLAHOMA CITY, OK — “Chesapeake Energy Corp.’s Ohio shale wells are producing just a fraction of what they could because the company is waiting for the completion of special plants to process the gases and oils.
In a conference call with analysts Monday, Chief Operating Officer Steven Dixon, acting CEO, said the company has drilled 240 wells in Ohio’s Utica shale but is selling gas and oil from only 54 wells.
The company’s board of directors named Dixon acting CEO Friday. He replaces Aubrey McClendon, the flamboyant founder of the company who was forced out by shareholders.”
— John Funk, The Plain Dealer
link to article
 Aubrey McClendon, former CEO and chairman of the board of Chesapeake Energy Corp. NEW YORK, NY — “It’s not an April Fools gag. Aubrey McClendon really is gone from Chesapeake Energy. In a tear-choked farewell speech to the gathered faithful on Saturday, McClendon assured employees that the company he founded would survive his departure.
Unable to find a suitable replacement for McClendon, Chesapeake board has been forced to name long-time Chief Operating Office Steve Dixon to serve as interim chief.
…Unfortunately this means little will change at Chesapeake, while the era of uncertainty continues. Dixon, 54, is inextricably linked with McClendon, having worked side-by-side with him at Chesapeake since joining as v.p. of exploration in 1991.”
— Christopher Helman, Forbes
link to article
HOUSTON, TX — “Chesapeake Energy Corp’s search for a new chief executive to replace Aubrey McClendon is likely to extend beyond an April 1 deadline, according to a person familiar with the situation.
McClendon is expected to step down on Monday even if a successor has not been named, leaving Chief Operating Officer Steve Dixon and Chairman Archie Dunham to lead the U.S. oil and gas company in the interim, the source said.
McClendon’s departure was announced in late January, following a governance crisis and a liquidity crunch caused by heavy spending on oil and gas properties, and a collapse in the price of natural gas.
Chesapeake’s board of directors is considering both internal and external candidates for the job they had initially said would be filled by April 1.”
— Anna Driver, Reuters
link to article
HOUSTON, TX — “The mineral owners represent 4,000 acres and seek ‘millions’ owed to them on their leases by Oklahoma City-based Chesapeake, a Dallas attorney representing one of the plaintiffs, the Edward Bass family, told the DBJ.
Chesapeake is the nation’s second-largest natural gas producer after Irving, Texas-based oil giant Exxon Mobil Corp. (NYSE: XOM), which has a significant presence in Houston.
The complaint says Chesapeake allegedly violated lease agreements by underpaying on royalty payments from gas produced on the plaintiffs’ land in Tarrant and Johnson counties.”
— Gregg Barr, Houston Business Journal
link to article
HOUSTON, TX — “Chesapeake Energy Corp and Chief Executive Aubrey McClendon are under investigation by the U.S. Securities and Exchange Commission for a controversial perk that granted the executive a share in each of the natural gas producer’s wells.
The investigation, disclosed on Friday by Chesapeake in a filing with the SEC, comes nine days after the company said an internal probe of the well program and McClendon’s finances revealed no “intentional” wrongdoing by the executive.
…’I'm now confused because the board just said everything was fine,’ said Fadel Gheit, oil analyst at Oppenheimer. ‘I really thought the board had an iron-clad, air-tight grip on the situation. Unfortunately the saga continues.’”
— Swetha Gopinath and Anna Driver, Reuters
link to article
 Chesapeake Energy wells in the Utica Shale region. Source: Chesapeake Energy February 2013 Investor Presentation CLEVELAND – In discussions with industry analysts yesterday, Chesapeake Energy officials in Oklahoma City were guarded in their assessments of the prospects for the Utica Shale formation. Analysts returned repeatedly to the topic of the Utica Shale, pressing for specifics, and learned little. Here is a sample of replies:
“… production in the Utica was fairly minimal in the year 2012 …”
“I’ll start with the Utica. That’s still pretty early and results change pretty quick across the play … So I don’t really have a number to give you on that.”
“We are constrained there [in the Utica] and really haven’t been able to produce these wells as we would like. So that’s why we gave a big range … So I’m afraid it’s just too early to tell.”
“It’s pretty early, and a very limited well set …”
“It’s just early …”
“There’s a lot to learn about this [Utica] basin still. Our number of penetrations relative to the number of wells that we’d ultimately drill is very small. And we don’t yet have the processing capacity to flow things at full rate yet, and there’s just a lot to learn. So that’s the reason we’re being a little bit less informative here, just because we feel like we need to learn more before we can say more.”
“Don’t have that with us this morning.”
Only once did a questioner elicit a hint about Chesapeake’s internal assessment of the Utica’s potential. Scott Hanold, an analyst for RBC Capital Markets, said, “A little bit on the Utica again, and I’ll try to skin the cat a different way. When you step back and look at the Utica today versus what you all thought a couple of years back, it seems like it’s a little bit more gassy, and the core is a little bit smaller. Is that a fair statement?”
After some back and forth, Nick Dell’Osso, Chesapeake’s Chief Financial Officer, said, “As far as the volumes [of natural gas] for the Utica … it’s a good basin, and when markets tell the industry to produce gas, there will be some gas that we can look to the Utica to deliver.” The phrase “when the markets tell the industry to produce gas” translates to “when the price of natural gas goes up enough.” Many industry observers consider that to be a number of years off.
— Paul Ryder, Assistant Director, Ohio Citizen Action
 OKLAHOMA CITY, OK – “Utica Shale (eastern Ohio, Pennsylvania, West Virginia): Chesapeake continues to focus on developing the core wet gas window of the Utica Shale in eastern Ohio, a play in which the company holds the industry’s largest position, approximately 1.0 million net acres of leasehold. As of December 31, 2012, Chesapeake has drilled a total of 184 wells in the Utica, which includes 45 producing wells, 47 additional wells waiting on pipeline connection and 92 wells in various stages of completion. Chesapeake is currently operating 14 rigs in the Utica and plans to average 14 operated rigs during 2013. Production growth from the Utica is expected to accelerate during 2013 when two new third-party natural gas processing complexes will enable the company to turn a large portion of its well inventory to sales.
“Three notable wells completed by Chesapeake in the Utica during the 2012 fourth quarter are as follows: The Houyouse 15-13-5 1H in Carroll County, OH achieved a peak rate of approximately 1,730 boe per day, which included 525 bbls of oil, 305 bbls of NGL and 5.4 mmcf of natural gas per day; The Cain South 16-12-4 8H in Jefferson County, OH achieved a peak rate of approximately 1,540 boe per day, which included 425 bbls of NGL and 6.7 mmcf of natural gas per day; and The Walters 30-12-5 8H in Carroll County, OH achieved a peak rate of approximately 1,140 boe per day, which included 315 bbls of oil, 220 bbls of NGL and 3.6 mmcf of natural gas per day.”
— Chesapeake Energy, Financial and Operational Results for the 2012 Fourth Quarter and Full Year, February 21, 2013
link to press release
Is this the “shale boom” we were promised? Is it a “shale fizzle”? There’s no way to tell yet because Chesapeake hasn’t released meaningful data, and the Ohio Department of Natural Resources hasn’t required them to. The above figures on peak rates for three wells tells us almost nothing. Last year, Chesapeake bragged about the peak rate of production at one well, the Buell 8H fracked well in Harrison County. Before long, Buell’s production had dropped sharply . Hydraulically fractured wells are notorious for depleting faster than conventional vertical wells.
— Associated Press
LISBON — “A local group opposed to surface drilling in Beaver Creek State Park is turning its attention to drilling companies that may want to withdraw water from the Little Beaver Creek.
Jim Kerr, the unofficial leader of Save Beaver Creek State Park, said they are concerned about efforts by water haulers to use any one of the several branches of the Little Beaver Creek to draw water for drilling companies operating in the area.
‘We don’t know how many are doing it, but we know they are taking it out,’ he said.
Chesapeake Energy is the only applicant that has obtained a state permit to draw water from four locations along the the creek, although the company stated they have no current plans to do so.”
— Tom Giambroni, Warren Tribune Chronicle
link to article
NEW YORK, NY — “‘I see [Aubrey McClendon’s] continued involvement as a negative. These things that he created, you can argue that they hurt the stock price,’ said Phil Weiss, oil and gas analyst at Argus Research in New York. ‘And they are not going away just because he is. That part of his legacy remains’ . . . .
His enduring well interests could crimp Chesapeake’s room for maneuver. Chairman Dunham told employees in an email on Tuesday that the company ‘is not for sale.’ Wall Street analysts have said Chesapeake is a top candidate for an acquisition, however, given its impressive assets. It is the largest driller of new wells in the United States and controls oil-and-gas drilling rights on more than 15 million acres stretching from New York to Texas.
The well stakes could make it harder to structure a deal, some analysts said. ‘I don’t know that somebody wants to step into those shoes,’ said Argus analyst Weiss. ‘I can see companies being interested in certain assets, but it’s hard for me to imagine anyone wanting to take it all on.’”
— Brian Grow, Anna Driver, Joshua Schneyer, Reuters
link to article
COLUMBUS — “The commission agreed to hear the appeal over the objections of Chesapeake, which said that state law does not allow an appeal of a drilling permit. The panel ended up agreeing with Chesapeake on the merits of the case, upholding the permit, but that left an open question about whether the commission can hear these kinds of appeals.
Justice Paul E. Pfeifer wrote one of the two dissenting opinions, saying that at the time of the appeal, the law was not as clear as the majority opinion has argued.
The larger issue is how Ohio will handle disputes over drilling permits, a topic that is increasingly important as energy companies take steps to extract oil and gas from the Utica and Marcellus shale formations”
— Dan Gearino, Columbus Dispatch
link to article
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Letters supporting the Fracking Emergency Medical Right to Know Act 7,672 neighbors have sent handwritten letters and made personal phone calls urging state legislators to support the Fracking Emergency Medical Right to Know Act as of May 14, 2013.
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