61.8 MMcf/d from a single well
Chesapeake Energy (ticker: CHK) reported net earnings today, showing results of $470 million, or $0.47 per share. Revenues for Q2 were up by 41% year-over-year, mostly due to improved commodity prices. Total production was flat sequentially, but oil production was up by 6%.
Chesapeake reports that one of its newest Marcellus wells has set a new productivity record. The well has a 10,400’ lateral, and utilized enhanced completions to produce at a peak rate of 61,759 Mcf/d. This is the highest-rate operated well in the Marcellus shale in the company’s history.
Chesapeake looks to Powder River basin
Chesapeake is also currently investigating the Powder River basin, testing the Mowry formation for productivity. The company’s first well targeting the formation was drilled with a 4,200’ lateral and placed on production in July. The company reports that the well has reached a peak rate of 6,629 Mcf/d and is expected to continue to increase as it unloads stimulation fluid. Further test wells, which will use longer laterals and target different areas, are planned in 2018.
Source: Chesapeake Energy
Q&A from CHK Q2 conference call
Q: On the Marcellus, you highlighted the very strong well there and your interest in potentially reallocating capital. Can you talk a little bit more to that point to the degree that we have new pipeline capacity coming online to – that improves local prices in Appalachia, how aggressively should we look to Chesapeake to add capital and what do you think the production impact could be?
A – Frank J. Patterson: First, I just really, really have to call out the team on this. They were looking around the organization at the completions that have changed many of our fields and said, hey, what if we do that in the Marcellus? So they did a great job of challenging themselves and coming up with, okay, how could we optimize and make the best Marcellus completion possible? Kudos, also, to the field team for safely and efficiently bringing a well that magnitude on. That’s an incredible achievement. We had to basically redesign the surface facilities. As you can imagine, we’re not used to bringing on 60 million a day wells in the Marcellus. So, that’s great.
As far as the Marcellus as we see it today, we’ve been producing pretty steady in the 2 bcf to 2.2 bcf a day. That’s our capacity as far as being able to get pipe – gas out of the field. We are still looking for more opportunities because this is great rock and we can step on the accelerator. But I think the more important thing about the big well is it tells you how – first, how good the rock is because this is in a developed portion of the field. It’s not an outlier. It’s kind of in the heart of the field.
Secondly, as we push these better completions and longer laterals, it’s going to speak to the capital efficiency. We’re going to have less capital in the ground for the same amount of gas, which is pretty substantial.
And then, the third and probably the most important thing for the future is, this is in the core of the field. But just like in the Haynesville, this completion design – this well design, if we move it out into what we consider the less prospective area, the less core area, we can actually change what the core is in this field, and our footprint of really high quality gas now probably expanded substantially.
Q – Charles A. Meade: Those are really impressive results and it’s good color you’ve given on the Marcellus well, but I wonder, keeping with your theme of capital efficiency, can you give us an idea for what the incremental cost of this well was over your typical design? Or maybe if you don’t want to give that, a sense of what that incremental capital efficiency was and if it’s not where you want it to be, whether it can improve?
Robert Douglas Lawler: Are you sitting down, Charles?
Q – Charles A. Meade: No, I have a standing desk in my office. I’m teasing. Yes, I’m sitting down.
A – Robert Douglas Lawler: Okay, Charles, hold on to your sideboards of your desk there. So this well is a little bit more expensive than the wells we’ve drilled. This is a 10,500 foot lateral with a relatively aggressive frac on it, about $8.5 million. That’s the field estimate today. These are early numbers, of course, because we’ve been only been on for about six days or seven days, but we believe that we can get that cost down as we go forward.
Q – Charles A. Meade: Well, I tell you what, I’m out of my chair and on the floor, now.
A – Robert Douglas Lawler: Okay. Jason’s team has done a great job. I’d love Jason to put a little color on that as well.
A – Jason M. Pigott: Well, it’s funny. The team, again, they were trying to figure out how to get 60 million a day out of one of these wells, and they actually call it the Rambo frac because they needed to attack that formation like Rambo would a POW camp. So they increased the cluster efficiency and packed it with 32 million pounds of Hell on Earth. So we succeeded in setting the captive gas molecules free.
