We’ve got more big shale boom news, this time coming out of the Utica shale.
Last Wednesday, reports revealed that the formation spanning from eastern Ohio and into western Pennsylvania and West Virginia had quite the third quarter in natural gas production — so big, in fact, that one company was able to grow more than 90 percent from the second quarter of 2013 into the third.
Production is leaps and bounds ahead of any numbers we’ve seen come out of the Utica before now, thanks in large part to more wells being connected to pipelines that serve the formation. And with fracking technologies being employed, there’s little to limit the Utica’s natural gas output from going even higher.
The Players
Chesapeake Energy (NYSE: CHK), the No. 1 player in Ohio’s Utica shale, was able to see its natural gas production shoot up. Its output grew 91 percent from the second quarter to the third.
The Oklahoma-based energy company has drilled 377 wells in the Utica, according to the Akron Beacon Journal. Of that number, 169 are producing, while 208 are in some stage of development and awaiting completion. 164 million cubic feet of natural gas equivalent is coming from the producing wells daily.
For the third quarter alone, Chesapeake had 11 drilling rigs up and running and connected 63 wells to pipelines. From those, the company was producing about 6.6 million cubic feet of natural gas equivalents per day.
Chesapeake’s production seems to be right in place with the amount of infrastructure coming online in the Utica, connecting pipelines and processing facilities in the region. In turn, the bottlenecks in the region have greatly decreased. And that’s good news for everybody.
Gulfport Energy Corp (NASDAQ: GPOR) is another Oklahoma-based energy player who has been very pleased with its early results in Ohio. Its first big gas-only well has come up very big.
Gulfport’s Irons 1-H well is producing more than 30.3 million cubic feet of natural gas per day, the company said in its third quarter earnings report released last Tuesday, as the Akron Beacon Journal reports. At its onset, the well’s production makes it the No. 2 best-producing well in Ohio.
This early-stage well is a good indicator of things to come for Gulfport, which retains nearly half of its holdings in the same type of dry-gas shale. Thus far, Gulfport, has seen success in oil, as well as liquids like ethane, butane, and propane.
Antero Resources Corp (NYSE: AR) recently added a fifth drilling rig in the Utica, while also adding 3,000 acres to its holdings, according to the Akron Beacon Journal, giving it a total of 104,000 net acres in the play.
The Colorado-based company has had some of the most productive wells to date in the Utica, with 12 in production, most of which are top producers, and another dozen nearing completion.
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For the Investor
As winter approaches, this is good news for those operating in the Utica. After a couple years and some mild winters, this winter is supposed to be brutal. If that happens, natural gas prices will jump and energy companies will benefit. Barring any kind of recession, companies will see sales revenues increase.
Chesapeake is in the midst of redefining its exploration and production business, putting added focus on Utica developments as it cuts drilling activities across other plays and reduces capital spending for 2014. The Utica will be a base point for its long-term endeavors.
Gulfport is sitting pretty with its Irons 1-H well, and it will be drilling a number of wells in 2014. Look for it to start leasing a lot of acres, too, as it has freed up enough money to add significant holdings to its portfolio.
Antero will also be adding wells in early 2014. It is in the process of constructing a new private water system to facilitate fracking procedures in both its Utica and Marcellus shale projects, supplying those operations with much-needed water.
Look for some of the other giants out there to be making moves, too. Exxon Mobil (NYSE: XOM) and smaller players like Rex Energy (NASDAQ: REXX) are worthy of a look.
As pipelines start connecting everything, it’s going to be one heck of a New Year and a very kind 2014.
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