NEW YORK, NY — “The worry for Chesapeake is that its level of oversight could cause high reserve estimates, leading to excessive write-downs in the future. Historically, Chesapeake’s write-downs have been in line with industry averages, according to a review of estimate revisions from 2006 to 2011.
This week Chesapeake wrote down almost five trillion cubic feet of reserves previously counted from planned wells because of low gas prices. In 2011, Chesapeake booked 46.2% of its reserves from undeveloped wells, compared with an average of 40.5% among nine of its competitors.
Most of the revised estimates were initially prepared by an independent engineer. Nevertheless, they reflect Chesapeake’s aggressive booking of undeveloped gas reserves, said Duane Grubert, an analyst at brokerage Susquehanna International Group LLP. The write-down makes Chesapeake ‘the number one cutter of reserves,’ he added.”
— Wall Street Journal