Chesapeake Energy held a conference call yesterday to address the company's leadership transition. The call also provided an interim operations update.
The Eagle Ford is Chesapeake's staple liquids asset and the beneficiary of 35% of the company's $6 billion capital budget in 2013. The play also accounts for approximately 35% of the company's oil production.
Highlights from the call include:
- Recently hit a daily production record of 124,000 gross (56,000 net to CHK) barrels of oil per day in the Eagle Ford
- Second largest oil producer in the Eagle Ford
- Eagle Ford oil is fetching a premium to WTI, with prices tracking LLS
- Total daily production average of 80,000 boe/d net, with a target of 92,000 boe/d net by year-end
- 80,000 boe/d net is after subtracting the 5,000 boe/d net that will be sold with the company's northern acreage block
- Spud to spud well cycle time down from 26 to 18 days year over year
- Costs down from $9 million to $7 million for average 6,300 ft lateral wells
- Target is for $6 million well costs when all acreage is held by production
- Testing 350 ft or roughly 50-acre spacing from 500 ft or 70-acre spacing
- Have 584 gross operated producing wells in the Eagle Ford
Chesapeake's Northern Eagle Ford acreage package is still on the market and I suspect we'll hear news of a deal sometime in the second quarter. The sale is part of the company's plan to divest $4-7 billion in assets in 2013.
Steve Dixon, acting CEO, stated "We will remain focused on increasing our liquids production, driving capital efficiencies across our business and enhancing our financial flexibility to prudently fund our future growth."