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Aug. 2 (UPI) — Chesapeake Energy announced that drilling activity in highly profitable natural gas basins is expected to nearly double compared to the second quarter.
Chesapeake is one of the largest natural gas producers in the United States. In the period ending in June, the company reported production of nearly 3.6 billion cubic feet of reserves, with 96% of it being natural gas.
While this figure is close to the projected natural gas production from the Bakken formation alone, it is the lowest-producing gas basin among the seven primary inland shale basins in the United States.
Chesapeake’s focus, however, is on the Appalachian and Haynesville basins. The Appalachian basin alone produces about ten times the company’s average net production for the second quarter. The Haynesville shale play, located along the border of Louisiana and Texas, is the third-largest inland natural gas producer in the country.
This production increase supports Chesapeake’s ambitions in the liquefied natural gas (LNG) sector, as well as its supply agreement to provide gas to the Lake Charles LNG export facility in Louisiana.
In terms of production activity, the company drilled 53 new wells and brought 27 into operation during the second quarter.
“The company expects to drill 30 to 40 wells and place 40 to 50 wells into production in the third quarter of 2023,” Chesapeake stated. “The company’s operating plan remains flexible and is prepared for further adjustments based on market conditions.”
Energy companies have faced challenging market conditions, with oil majors such as ExxonMobil and Shell reporting a decline in profits due to low oil prices during the first half of the year.
Chesapeake reported profits of $391 million for the second quarter, a significant decrease from the $1.24 billion reported during the same period last year.
Similarly, U.S. natural gas prices averaged $2.42 per million British thermal units in the second quarter, approximately 60% lower than prices at the same point last year. This decline in prices can be attributed to the loss of Russian oil and natural gas due to sanctions imposed in response to the Russian invasion of Ukraine. However, the market has since adjusted, with support from U.S. oil and LNG exports.
