Chesapeake Energy Corporation Q2 2009 Earnings Call Transcript

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2009-08-04 11:23:16.0

Tags: Well, Call Transcript, Earnings, Financial Accounting, Finance, Seeking Alpha, Chesapeake Energy Corp.

Question-and-Answer Session

Operator

(Operator Instructions) And we will take our first question; it comes from Jason Gammel with Macquarie Capital.

Jason Gammel - Macquarie Capital

I wondering if you could address the decision to increase drilling CapEx in 2009 and 2010 and may be also address where that incremental drilling is going to be done?

Marc Rowland

Sure, Jason, this is Marc, good morning,. We have got a little bit of an increase, Steve, I know going on in the wash plays specifically

Aubrey McClendon

And continue to ramp up in the Haynesville and Marcellus. We're trying to get ahead of schedule, really with low capital cost in those areas.

Marc Rowland

So Jason I would say it is principally in those three areas. I don't think we have increased in the Barnett at all and don't intend to, and -- of course we are ramping up some in the Marcellus as well.

Jason Gammel – Macquarie Capital

Okay great and maybe one more if I could. There was a little bit of a change to the profile of the average Haynesville well, where you're expecting higher initial production rates and higher first-year declines. Can you talk about whether that is more a decision on how you're fracking and the lateral link or is this really just more an issue of not having some production history from the rock.

Steve Dixon

This is Steve Dixon. It is really more production history. Though, we are making, we think, improvements in our fracking processes, but the last 15 wells have averaged over $14.3 million IPs and we are just continuing to see higher initial rates and keep that curb at 6.5, just higher initial declines to stay there.

Operator

Our next question comes from Michael Hall with Stifel Nicolaus.

Michael Hall - Stifel Nicolaus

Quickly; in the Marcellus, I was wondering if you could talk to distribution by aerial extent of the wells you have drilled thus far and any color on variability in the play?

Aubrey McClendon

Michael, this is Aubrey. We're probably not at the point of wanting to say a whole lot more about the Marcellus. There is still some acreage available in our two key areas and those I define as Northeastern PA where we're strongest and counties like Bradford and Susquehanna. It’s a pretty wide distribution in those two counties, probably across 25, 30 miles would be my guess but, maybe much more or so. And the other is in Northwestern West Virginia, particularly in our Victory Prospect area, and that's an area we are focused in.

 

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