By CASEY JUNKINS
WHEELING - It may be a little soon to declare northern West Virginia black gold country, but Chesapeake Energy drew an average of 290 barrels of oil per day from a single Ohio County well last year.
A second Chesapeake Ohio County well yielded 195 barrels of oil each day, while a Marshall County well produced 305 barrels of oil daily.
"We continue to deliver on our liquids growth targets, led by a year-over-year increase of nearly 40,000 barrels per day in oil production," said Steven Dixon, Chesapeake's chief operating officer, as the Oklahoma City-based driller released its 2012 earnings and operational report Thursday. "We believe this performance ranks Chesapeake among the top three organic oil growth stories in the industry for 2012."
To this point, most of the focus for drilling in the Marcellus and Utica shale formations has been on dry methane natural gas, in addition to liquids such as ethane, propane and butane. However, Chesapeake's report confirms these materials - as well as the oil - are being drawn in West Virginia's Northern Panhandle.
In the Ohio Utica Shale, Chesapeake does not show any oil production from the Cain South 8H well in Jefferson County. Instead, that well yielded 425 daily barrels of liquids and 6.7 million cubic feet of natural gas. Chesapeake does show Ohio oil production to the north, however, as one Carroll County well produced 525 barrels of oil daily.
Chesapeake notes that it holds 1.8 million net acres in the Marcellus formation. Three wells it sites as examples of its production are as follows:
"I am very proud of what our team has accomplished thus far and look forward to driving further liquids production growth and capital efficiencies in 2013," Dixon added.
However, Chesapeake believes production in the wet zone of the Marcellus will "remain relatively flat" until the ATEX Express pipeline opens later this year. The company has agreed to send much of its ethane to the Gulf Coast for processing via this pipeline, largely because there is no ethane cracker in the local region.
Appalachian Resins and Aither Chemicals are two companies hoping to build crackers in West Virginia, while Royal Dutch Shell has the option to build one on property near Monaca, Pa. Mountain State oil and gas industry leaders said they do not believe Chesapeake's ethane plans should curtail efforts to build a cracker.
In the Ohio Utica Shale, Chesapeake holds 1 million net acres. To this point, the company has drilled 184 wells, 45 of which are now producing. The company still has $1.15 billion to spend for drilling and fracking in the Utica region.
Despite all these results, Chesapeake reported a $940 million loss for stockholders for 2012. Fortunes improved as the year progressed, however, as the company reported $257 million in income for stockholders during the final three months of 2012.
"Chesapeake delivered strong results during the 2012 fourth quarter. I am pleased to reaffirm our 2013 guidance for liquids production growth and drilling and completion capital expenditures, while at the same time reducing our cost guidance for many significant categories," said Domenic Dell'Osso, the chief financial officer.