Chesapeake’s Eagle Ford VPP Plans Could Mean $1 Billion

Chesapeake Energy announced plans to sell a volumetric production payment (VPP) related to its Eagle Ford Shale assets earlier in the year. The plans were outlined with other assets sales to help fill a funding gap created by decade low natural gas prices.

Since the initial announcement, the company has delayed plans to sell the VPP in the Eagle Ford. I’ve seen two reasons given in the press. The reason I believe to be accurate is that Eagle Ford assets were retained to hold output and cash flow at levels required by debt covenants. With favorable oil prices and production additions in the tens of thousands of barrels per day in 2012, it stands to reason the Eagle Ford is becoming a significant contributor to the company’s bottom line. [Read more…]

Chesapeake Shifts One-Third of Capital to the Eagle Ford – Production Hits 75,000 boe/d

Planning a VPP in the Eagle Ford and Setting Weekly Production Records

Chesapeake Energy’s Eagle Ford assets will receive 30% of the company’s capital budget in 2012 and 40% in 2013. The company is shifting capital from natural gas developments to oil in areas like the Eagle Ford and the Utica.

Low natural gas prices are driving the shift to oil for many operators. Natural gas focused companies like Chesapeake are literally evolving before our eyes. The company grew crude oil production in the Eagle Ford from 25,000 b/d at the end of the year to over 55,000 b/d at the end of April. Bringing 30,000 b/d of crude onto the market in just a few short months is no small feat. [Read more…]