Chesapeake Sues American Energy Partners

February 18, 2015 Elizabeth Alford

Chesapeake Eagle Ford Acreage - Drilling Map — Chesapeake Eagle Ford Drilling Map

Chesapeake Energy, a major producer in the Eagle Ford, has filed a lawsuit against former CEO Aubrey McClendon’s new company, American Energy Partners. The suit alleges McClendon stole confidential documents including maps of oil and gas prospects before leaving the company in 2013.

The suit was filed on Tuesday in Oklahoma County District Court and relies on a forensic audit of Mr. McClendon’s emails that are said to contain evidence of wrongdoing.

“It is beyond belief that the company that I co-founded 25 years ago and where I worked tirelessly to build it into one of America’s largest and most successful oil-and-gas producers has now decided to add insult to injury almost two years to the day after my resignation by wrongly accusing me of misappropriating information.”

— Mr. McClendon

McClendon founded Chesapeake in 1989 and came under scrutiny multiple times throughout the past several years as his position magnified. He was named one of the few eagle Ford Billionaires in 2013.

Exterran Acquires Eagle Ford Gas Compression Assets from Chesapeake in $360 Million Deal

March 3, 2014 Kirk Eggleston

Exterran Partners will spend $360 million to acquire natural gas compression assets from MidCon Compression, a subsidiary of Chesapeake Energy. These assets will be used by Exterran to provide contract services in the Eagle Ford and other domestic plays.

Included in the deal are 334 compression units, with a total horsepower of ~440,000.

“With this transaction, we continue to deliver on our strategy of growing our core contract operations business,” said Exterran Partners CEO Brad Childers. “Because the units we are acquiring are highly standardized and average less than five years in age, the acquisition is also consistent with our strategy to modernize and standardize our existing fleet.”

rior to the deal, MidCon was the service provider for Access MLP Operating, a subsidiary of Access Midstream Partners, in the Eagle Ford, Permian, Barnett, Anadarko, Mississippi Lime, Granite Wash, Woodford, Haynesville and Niobrara Basins.

At the closing of the deal, Exterran will enter a seven year operations agreement with Access Midstream Partners.

“We are particularly pleased to establish this significant customer relationship with Access, and we look forward to servicing their contract compression needs for many years to come.”

— Exterran Partners Sr. VP, Rob Rice

Exterran Deal Highlights

Exterran acquires natural gas compression assets in $360 million deal from MidCon, a subsidiary of Chesapeake
Exterran enters seven year operations services agreement with Access at close of deal
Service area for acquired assets extends to the Eagle Ford, Permian, Barnett, Anadarko, Mississippi Lime, Granite Wash, Woodford, Haynesville and Niobrara Basins
Included in the deal are 334 compression units, with a total horsepower of ~440,000

Chesapeake Accelerating Eagle Ford Pad Drilling Program in 2014

February 26, 2014 Kirk Eggleston

Chesapeake Pad Drilling Program in Eagle Ford

Chesapeake plans on increasing pad drilling in the Eagle Ford in 2014 and reducing average completed well costs to $6.4 million or less per well. The company has eased into pad drilling in the Eagle Ford, while other operators have aggressively pursued the procedure.

“Transitioning to pad drilling a little bit slower has allowed us to see what the competition is doing [in the Eagle Ford]”

— Mikell J. "Jason" Pigott, Sr. VP Operations, Southern Division

n the second quarter of 2014, Chesapeake intends on accelerating its production growth in the play.

Chesapeake Q4 Eagle Ford Production

In the fourth-quarter of 2013, Chesapeake's Eagle Ford net production was 87,000 net (191,000 gross) boe/d. That's down slightly from average production in the third-quarter, which was 95,000 net (211,000 gross) boe/d.

The peak average production rate was also down quarter-over-quarter from ~930 boe/d in the third quarter to 800 boe/d in the fourth-quarter.

Weather and a planned inventory reduction in the second and third quarters impacted fourth-quarter production in the Eagle Ford.

“In South Texas, we had a significant rain event that caused some flooding on the roads, [and slowed some of our operations in the fourth-quarter].”

— Pigott

Chesapeake's Eagle Ford production breakdown for the fourth-quarter was as follows:

Crude oil - 68%
NGL's - 14%
Natural Gas - 18%

In the fourth-quarter of 2013, 12 rigs were running in the Eagle Ford Shale, and Chesapeake brought 65 gross wells to sales. That's down slightly from the third-quarter where 13 rigs were running and 100 gross wells were brought to sales.

Chesapeake Highlights

Reducing average completed well costs to $6.4 million or less per well in 2014
87,000 net (191,000 gross) boe/d production in Q4 2013 - Down ~8% from Q3 2013
Peak average production - 800 boe/d in Q4
Weather impacted production in Q4
12 rigs running and 65 gross wells to sales in Q4 2013
Eagle Ford production - 68% crude oil, 14% NGLs, 18% Natural Gas

Chesapeake Eagle Ford Spending $1.82 Billion in 2014

February 7, 2014 Kirk Eggleston

Chesapeake has set its 2014 capital budget at $5.2 billion - $5.6 billion. That's down ~20% from the midpoint of the company's 2013 capital budget.

Approximately 35% of the budget will go to the Eagle Ford in 2014.

Low end estimates put that figure at about $1.82 billion. The company plans to run 15 - 18 operated rigs in the Eagle Ford throughout the year.

Chesapeake Plans on Divesting Acreage in 2014 and Increasing Production

In 2014, Chesapeake plans to reduce its capital expenditures, and continue divesting noncore assets. In July 2013, the company sold 55,000 net Eagle Ford acres to EXCO Resources for $680 million.

“While our guidance today does not reflect the impact of potential divestitures, we continue to pursue opportunities to high-grade our portfolio through asset sales. We believe these transactions will be value accretive and enable us to further reduce financial complexity and improve overall leverage. Over the last eight months, we have conducted an extensive review of Chesapeake’s portfolio. Due to the size and quality of the asset base, I am confident that by remaining focused on our strategic priorities we can deliver long-term production growth per debt-adjusted share of 5 – 9% annually, while maintaining a disciplined capital spending profile.”

— Doug Lawler, Chesapeake's CEO

Average daily production estimates for 2014 are 680,000 - 695,000 boe/d company-wide, with an estimated 1,300 gross operated wells to coming online in 2014, or approximately 115 fewer wells than in 2013.

Chesapeake December 2013 Production and 2013 Well Inventory

For the month of December, net production of an Eagle Ford well was 90,000 boe/d.

At the end of 2013, 109 gross operated wells had been drilled in the Eagle Ford, but were awaiting completion. That figure represents the third highest total of un-completed wells at the end of 2013 in Chesepeake's play interests, with the Utica Shale and Marcellus Shale ranking at 195 and 112 respectively.

Chesapeake at a Glance

2014 Capital Budget in Eagle Ford is $1.82 billion
Chesapeake plans on divesting more noncore assets in 2014
Net production of an Eagle Ford well in December 2013 was 90,000 boe/d
109 gross operated wells awaiting completion in Eagle Ford at the end of the year
680,000 - 695,000 boe/d company-wide, with approximately 1,300 gross operated wells to sales in 2014

How Thick Is the Eagle Ford?

November 22, 2013 R.T. Dukes

The Eagle Ford Shale's thickness varies several hundred feet across the region and there's not a significant correlation to thickness and well productivity. The play's thickness ranges from less than 100 ft to 400 feet near the Mexico border. The average thickness is 250 ft across the most commonly targeted portions of the play.

Read more at our Eagle Ford Geology page.

Cookie Settings