Chesapeake Energy Corp. officials are optimistic about the future, with a stable of "legacy assets” they expect will provide revenue for years to come.
Officials touted Chesapeake’s strengths Wednesday in New York at a conference for investors and analysts that was broadcast live via the company’s Web site. They pointed out Chesapeake is the most active driller in the United States, with substantial lease holdings in the most lucrative shale gas plays. "We do feel like we have the No. 1 resource base in the nation,” said Steve Dixon, Chesapeake’s chief operating officer. Dixon said Chesapeake’s shale holdings will continue producing for years to come, despite "misguided” predictions from an analyst at an industry conference in Denver earlier this week. "We’re very confident that these types of rocks will continue to bleed gas for decades and decades,” he said. Jeff Fisher, the company’s senior vice president of production, said the unique size of Chesapeake’s assets will allow the company to develop new technology to maximize production. "We’ve achieved great results to date, and we’re just getting started,” Fisher said. Chesapeake detailed its holdings in the nation’s two largest shale plays: more than 500,000 acres in the Haynesville shale in Louisiana and Texas and 1.45 million acres in the Marcellus shale in West Virginia, Pennsylvania and New York. The company produces an average of 210 million cubic feet equivalent per day of natural gas in the Haynesville shale, a "world class” asset Chesapeake discovered in 2007. "We’re just scratching the surface on the production side,” geoscience manager John Sharp said of the Haynesville operation, which is being supplemented by additional plays in Louisiana. Chesapeake is the most active driller in the Marcellus shale, a massive play close to the best gas markets in the northeast. Tom Layman, the company’s vice president of geoscience for the eastern division, said Chesapeake is determined to make its efforts count in that area. "We are gathering data and learning about the play like no other company,” he said. Marc Rowland, Chesapeake’s chief financial officer, said Wednesday’s technical presentations were meant to show analysts the value embedded in the company’s assets. Officials project Chesapeake will produce 5 trillion cubic feet equivalent a year for the next several years, while finding an additional 3 trillion cubic feet equivalent each year, Rowland said. CEO Aubrey McClendon said he expects gas production to decline, but he is optimistic prices will continue to rise, which will lead to an increase in drilling and production. "We think all of the elements are in place for gas prices to be higher in 2010 than they are today,” McClendon said. He also said gas prices could be affected by increased demand from China, much the same as other commodities. McClendon said he and other natural gas company executives are working to increase demand, focusing on making inroads into transportation and power production, which is reliant on coal and transportation. He borrowed a line from fellow gas advocate T.