Updates
June 28, 2020: Chesapeake files for bankruptcy. Even before the Saudi surge (2020) and Covid-19, Chesapeake was having problems. But the Saudi surge (2020) and Covid-19 was just too much.
February 12, 2018: Chesapeake exits the Mississippi Lime at $1,000 / acre. Mostly legacy vertical wells; maybe a quarter of the wells are horizontal Miss Lime.
July 1, 2015: Chesapeake sells assets in western Oklahoma for almost $1 billion.
July 1, 2014: Chesapeake's oil services company, Seventy Seven Energy (ticker symbol SSE) begins trading today.
February 25, 2013: Chesapeake to sell 50% stake in Oklahoma assets to China's Sinopec.
January 1, 2013: well, that's a wrap. The biggest failure in the recent oil history of North Dakota.
October 2, 2012: Reuters' "special report" on CHK and accusations that it "strong arms" mineral rights owners. Going back on leases is one thing but suggesting that CHK went too far trying to hide "front men" involved in leasing is a non-issue. Everyone works to keep the identity of their front men hidden. I also don't have a lot of sympathy for someone who doesn't understand Rule 37 in Texas.
September 12, 2012: CHK loses Texas court case in which it tried to walk away from a lease; $20 million, rounded. Implications for the Bakken.
September 12, 2012: CHK sells Permian assets to CVX, Shell, EnerVest; more
This is the WSJ link and data points:
- Chevron, Shell, and EnerVest: will buy Permian Basin acreage for $3.3 billion (CVX has at least $20 billion in cash as reported elsewhere)
- "The Permian Basin holdings were the most-valuable of several assets...[that were] put up for sale this year to raise cash, avoid a credit-rating downgrade, ...
- Global Infrastructure Partners will pay $2.7 billion for most of Chesapeake's pipeline and processing operations
- two unnamed companies will buy additional oil-gathering pipelines in the Eagle Ford for $300 million
- Chesapeake is also selling Utica shale acreage to an undisclosed buyer for $600 million
At least one oil and gas company claims to have figured out the tricky Niobrara shale play in the Powder River Basin in Wyoming.
Chesapeake Energy executives told investors Tuesday that results from the basin are picking up.
“In the Powder River Niobrara play, we’ve finally cracked the code with numerous recent wells” into newly identified drilling areas, said Steven Dixon, Chesapeake’s chief operating officer and vice president of operations and geosciences.August 7, 2012: Even with recent asset sale helping 2Q12 revenues, CHK plans additional asset sales.
If the Wyoming Oil and Gas Conservation Commission’s production and permitting numbers are any indication, the company won’t be alone for long.
Nearly 430 drilling permits — which precede but don’t guarantee actual wells — have been doled out for operators in Campbell and Converse counties already this year, just less than 2011’s total of 485 permits. In 2010, drillers in the two counties requested only 168.
Chesapeake Energy Corp. said it expects to put more assets up for sale even as the company closes in on sales of its holdings in the oil-rich Permian Basin, the company chief executive said Tuesday.August 6, 2012: Cash crunch.
Chesapeake, the second-largest natural gas producer after Exxon Mobil Corp., sold $7 billion in assets so far in 2012 as it seeks to cut its debt to $9.5 billion by year's end. Chesapeake and its competitors have been hurt by low natural gas prices, which fell to a decade low in April because new drilling technology increased production while a warmer-than-usual winter cut demand for home heating.
Chesapeake is identifying further assets to sell in the next year and a half, planning on up to $5 billion in sales for 2013, Chief Executive Aubrey McClendon said on an earnings conference call.
McClendon has pledged to raise as much as $20.5 billion by the end of next year to fund drilling and maintain debt covenants. Without the sales, the cash-flow gap will widen to $18.6 billion by the end of 2013 and force Chesapeake to cancel drilling projects and reduce production targets, ...May 24, 2012: Chesapeake to sell its southern DJ (Niobrara) assets.
May 15, 2012: That $3 billion loan? Make it $4 billion.
May 15, 2012: Chesapeake bond investors jarred by harsh terms of loan.
Chesapeake Energy Corp.'s effort to reassure investors worried about its cash shortage backfired with bond investors who were rattled by the harsh terms of the $3 billion short-term loan the company detailed Monday.May 15, 2012: Chesapeake dismantling their asset base. They may have "best rock" but they are behind the technological learning curve. This is one of the best summaries out there.
The price of the company's junk-rated bonds dropped sharply in heavy trading, as bondholders digested the steep interest rates on the new loan and the large funding gap that forced Chesapeake to agree to it.
But the flexibility doesn't come cheaply. The unsecured loan carries an initial interest rate of 8.5% that increases to 11.5% if it isn't repaid by the end of the year. Chesapeake will use the proceeds to pay down the balance on its credit line; the company said Monday it has drawn down more than $3 billion on the line, which carries a 2.75% interest rate. So the new loan will increase its costs by about $173 million, and far more if the rate rises next year.
May 14, 2012: the sharks are circling; they know Chesapeake is in trouble -- the question is who will be the first to start buying CHK assets; once the buying starts, how high will the auctions go?
April 20, 2012: Motley Fool on Chesapeake CEO borrowing $1.1 billion using wells as collateral.
April 17, 2012: CHK to spin off Chesapeake Oilfield Services in IPO; hopes to raise nearly $1 billion.
April 12, 2012: Analysis by RBN Energy; does not mention CHK by name but certainly sounds like that is exactly whom RBN is writing about.
April 9, 2012: Chesapeake raises $2.6 billion in cash; sells some non-core assets, including Oklahoma acreage to XTO.
April 9, 2012: Chesapeake removed its hedges for 2012 and 2013 at at time when natural gas was around $4, and just before natural gas plummeted to ten-year low, around $2.00. It will be interesting to see how this plays out.
March 21, 2012: Chesapeake issued a permit for a wildcat well in Stark County; this is the first permit for Chesapeake in North Dakota in quite some time. Very, very significant.
February 8, 2012: CHK pulling out of North Dakota and reneging on leases. This company with a market cap of $14 billion has $12 billion in debt, and is focused on a commodity (natural gas) in free fall. As far as I know, leases can be broken, but come with a cost if written into the contract. My hunch there was nothing in the contract to protect the mineral rights owner.
January 3, 2011: Folks were guessing who CHK was going to partner with in the Utica: the news out -- Total (France), for the tune of $2.3 billion.
December 28, 2011: CHKM now the industry’s largest gathering and processing master limited partnership as measured by throughput volume. Chesapeake Midstream Partners, L.P. (CHKM) today announced it has agreed to acquire Appalachia Midstream Services, L.L.C. (AMS), the wholly owned subsidiary of Chesapeake Midstream Development, L.P. that holds its Marcellus Shale midstream assets, for total consideration of $865 million.
August 1, 2011: CHK confirms "hype" regarding Utica in Ohio. This is a game changer for CHK and perhaps the US. For much, much more on this story, click here.
June 27, 2011: We're starting to see increased Chesapeake activity in the Williston Basin; see the July, 2011, NDIC hearing dockets.
Chesapeake is getting much more active, asking for about 12 new 1280-acre spacing units. Eight of those new units will be in Stark County (case #15234).
Original Post
CHK reecently established position in the Three Forks/Bakken in the Williston Basin with 190,000 net acres [with plans to reach as much as 300,000 net acres].That's a fairly significant investment in the Williston Basin Bakken, especially if they get to 300,000.
Some time ago, "anonymous" said Chesapeake was in the Williston Basin, but not necessarily the Bakken. The comment is technically correct, but the tone of the comment suggested Chesapeake was not in the Bakken. See comments at this post.
In today's earnings conference call, CHK expanded on two separate million-plus net acreage plays in the US (outside the Bakken) but limited further discussion regarding the Bakken.
The first of these is the 1.2 million net acres that we have acquired in Utica Shale play of far Western Pennsylvania and eastern Ohio. The second is the 1.1 million net acres that we have acquired in the Mississippian Carbonate play in Northern Oklahoma and Southern Kansas.Talk about the Bakken was "cut off" during the Q&A:
Brian Singer - Goldman Sachs Group Inc.
Can you provide a little more color on your Williston position and activities there. I may be recollecting incorrectly, but I believe you've mentioned in the past that you're testing more new concepts as opposed to the Three Forks/Bakken, but I think you mentioned the Three Forks/Bakken here. Can you just give us an update on what you're seeing there?
Aubrey McClendon
Yes. We actually haven't started to drill there yet, Brian, so I can't update you but I can just confirm that we have around 200,000 acres in the play and I think we'll end up in the 250,000 to 300,000 range. And probably we'll look for a partner during the course of the year, but that's all that we have mentioned about the Williston at this point.
Brian Singer - Goldman Sachs Group Inc.
Okay. Are these new concepts or is this the same kind of Bakken/Three Forks that others are pursuing?
Aubrey McClendon
We just need to limit it to conversation about the Williston if I can at this point.