Monday, January 23, 2012

"Chesapeake Energy Corporation Updates Its 2012 Operating Plan in Response to Low Natural Gas Prices"

Highlights from the press release this morning:

  • plans to further reduce its operated dry gas drilling activity by 50% to approximately 24 rigs by the 2012 second quarter
  • operated dry gas drilling capital expenditures in 2012, net of drilling carries, are expected to decrease to $0.9 billion, a decrease of approximately 70% from similar expenditures of $3.1 billion in 2011.
  • plans to immediately curtail approximately 0.5 billion cubic feet (bcf) per day, or 8%, of its current operated gross gas production of 6.3 bcf per day, which is about 9% of the nation’s natural gas production. If conditions warrant, the company is prepared to double this production curtailment to as much as 1.0 bcf per day.
CHK common and the pref are up on the news. Meanwhile, a correspondent writes in about the Apache takeover of Cordillera Energy Partners.
"CHK has 2.4 million acres in the Anadarko Basin (Mississippian, Cleveland/Tonkawa, and Granite Wash). Of this, 1.4 million acres is Mississippian, leaving 1 million acres that is analogous to the deal below. This is just about four times the size of the below deal, suggesting a value for CHK of $11 billion for this portion of the Anadarko Basin. CHK's (soon to be JV'd) Mississippian acreage is probably worth $4 billion based on the recent SD/Repsol deal. This puts a total value of $15 billion on CHK's mid-continent position. This is slightly more than their market cap today."
Good stuff...

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