Chesapeake details spending plan

A Chesapeake vice president on Tuesday addressed concerns about the company's drilling budget at the UBS Global Energy & Gas Conference.
by Adam Wilmoth Published: May 23, 2012
Advertisement
;

A Chesapeake Energy Corp. executive on Tuesday detailed the company's drilling program and addressed some concerns about its financial strength.

Speaking at the UBS Global Energy & Gas Conference in Austin, Texas, Chesapeake's Senior Vice President of Investor Relations and Research Jeff Mobley said the company is continuing to change its focus to oil and natural gas liquids.

The company will spend about 85 percent of its drilling budget this year and more than 90 percent next year on oil and natural gas liquids, Mobley said.

“We're working hard to escape the gravitational pull of natural gas prices, and we've had some success in doing that in 2011,” Mobley said. “To date, 2012 has been more challenging with $2 gas prices, but we certainly have a plan in place that we are working to execute, and hopefully will be able to deliver some nice results for you in the weeks to come.”

Tulsa money manager Jake Dollarhide said he is pleased that the company has discussed its plans.

“I think what investors want to hear is that they want to scale down their overreliance on natural gas,” Dollarhide said.

“To hear that Chesapeake will soon have 25 percent of its production in oil and natural gas liquids is just what the doctor ordered.”

Mobley also addressed concerns about the company's cash flow and spending plans.

He said the company is only obligated to spend about $1 billion next year, even though its budget calls for spending $6.5 billion to $7 billion on drilling projects.

“The majority of our spending is discretionary and drilling to hold leasehold acreage. We think it's a very valuable proposition to hold oil leasehold, but we're not obligated to it,” Mobley said. “We could choose to hold by production 80 percent or 90 percent if we so choose, but we think it's a valuable proposition to drill when oil prices are $90 to $100 a barrel.”

Chesapeake plans to secure its leases by drilling at least one well on each property, allowing it to be held by production. The company has the option to save money by drilling fewer wells.


by Adam Wilmoth
Energy Editor
Adam Wilmoth returned to The Oklahoman as energy editor in 2012 after working for four years in public relations. He previously spent seven years as a business reporter at The Oklahoman, including five years covering the state's energy sector....
+ show more


Trending Now


AROUND THE WEB

  1. 1
    Todd Akin Takes Back Apology Over 'Legitimate Rape' Theory
  2. 2
    22 Things You Should Never Do Again After 50
  3. 3
    Bartender Returns $200 She Stole 15 Years Ago
  4. 4
    Study: Most US Teens Can't Read Their Own Pay Stubs
  5. 5
    It's official. It's true. Rosie's coming back.
+ show more