CHK Conference Call -- Overview of Several Plays -- Oklahoma to Ohio; Very Candid About The Bakken

Note: the editors of the New York Times need to listen to the Chesapeake conference call -- the folks who said the natural gas industry in the US was a sham and set up for failure. They especially need to read about Buffalo Creek 1-17 (see below) which has paid for itself 37x over.

The Chesapeake conference call was one of the  more exciting and surprising conference calls I've heard in awhile -- this is how it started:

Because the quarter progressed quite smoothly, operationally and financially, I will focus my comments on providing an update on 4 of our best liquids plays, about which you haven't heard much from us until now. These 4 would be the Mississippi Lime play in northern Oklahoma and southern Kansas; the Cleveland and Tonkawa tight sand plays in the Anadarko Basin of western Oklahoma and last, but certainly not least, the Utica Shale play in eastern Ohio.

Some data points:

• Mississippi Lime: huge play in western Oklahoma, 1.1 million net acres; pedal to the metal in 1H12
• Cleveland / Tonkawa: also in the Anadarko Basin of western Oklahoma, 720,000 net acres; CHK has most of it to itself; discovered in 2008
• Buffalo Creek 1-17, one of the 6 most productive gas wells ever drilled in Oklahoma; has paid out its capital investment more than 37x since it was drilled
• CHK now operates 4 of the 6 largest gas wells every drilled in Oklahoma
• Anadarko and Permian are the two premier liquids-focused basins in the US at the present time; CHK owns > 2 million net acres of leasehold in the Anadarko; 720,000 acres prospective for the Cleveland/Tonkawa
• EURs: 600,000 bbls/well with development costs of ~ $12/barrels (you do the math)
• Currently 16 rigs in these plays; will increase to 25 - 30 in next few years; 160-acre spacing
• Therefore: up to 4,400 net Cleveland/Tonkawa wells; 2 billion bbls of unrisked oil equivalent
• These two plays (Cleveland/Tonkawa): primary drivers of CHK surging lease liquids production 
• Utica: confirmed market rumors that CHK has discovered a major new liquids-rich discovery in the Utica Shale of eastern Ohio

From the transcript:

Importantly, we're the only company that has drilled a producing horizontal Utica Shale well in Ohio.

Economically, the Utica looks similar, but is likely superior to the Eagle Ford Shale in South Texas. The similarity is that we expect the Utica to have 3 phases: a dry gas phase on the eastern side of the play, a wet gas phase in the middle and an oil phase on the western side. Their difference is that we believe the Utica will be economically superior to the Eagle Ford because of the quality of the rock and the location of the asset.

CHK estimates of the Utica: $15 to $20 billion for CHK shareholders

CHK was very, very candid about the Bakken -- and hints at what CHK might do in the Bakken -- see the transcript's Q&A