ST. CLAIRSVILLE - Chesapeake Energy Chief Executive Officer Aubrey McClendon knows how important the Utica shale is to his company and to potential investors in the gas industry.
On Friday, while discussing the company's quarterly performance, McClendon put its significance in terms many Ohioans can relate to.
"Utica shale is the biggest thing to hit Ohio since the plow," he said of the shale, which has been valued at about $500 billion.
Hoping to take advantage of the Utica shale boom, Chesapeake announced Thursday its plans to monetize a portion of its 1.5 million net acres of leasehold in Eastern Ohio, which includes portions of Monroe, Belmont, Noble, Harrison and Jefferson counties.
Chesapeake has entered a joint venture with an undisclosed international company, which will acquire an undivided 25 percent interest in about 650,000 acres of leasehold. Of this acreage, roughly 570,000 net acres are owned by Chesapeake and about 80,000 net acres are owned by Houston-based EnerVest Ltd. - a firm that manages oil and gas assets for institutional investors - and its affiliates. McClendon said the name of the other company involved would not be released until the transaction is completed. However, he said the company is "very large, respected and well known."
Chesapeake will serve as the operator of the venture and will conduct all leasing, drilling, completion, operations and marketing activities for the project.
As part of the agreement, Chesapeake is required to drill 50 wells per year through 2016. Officials said the agreement grants "considerable operating and financial flexibility."
"Through the financial transaction ... our drilling program ... is almost entirely funded for the foreseeable future, including cash flow from anticipated production," McClendon said.
"We have achieved very strong initial drilling results in the wet natural gas and dry natural gas areas of our Utica shale play and are beginning to accelerate our evaluation of the oil area of the play."
The joint venture is the latest in a line of moves Chesapeake has made over the past several months to stake a larger claim to Utica shale leases.
Earlier this year, McClendon said the company plans to invest an average of $5 million to $6 million per well for drilling and fracking costs in Harrison County.
In October, Belmont County officials announced Chesapeake plans to construct administrative offices on nearly 30 acres of land at Fox Commerce Park. Though company officials declined to give specifics on the project, they did confirm plans to build administrative offices at the St. Clairsville location.
