By Linda Hsieh, managing editor
Under a new corporate strategy focused on financial discipline, Chesapeake Energy expects to stay at an operational level of approximately 60 to 80 rigs per day, CEO Doug Lawler said at the 2014 IADC Drilling Onshore Conference in Houston on 15 May. Although this is a significant change from previous years – when the operator was running as many as 175 rigs – Mr Lawler said he still expects to achieve a strong 9-12% production growth rate. “From 2012 to 2013, we reduced our operating expenses by about 15% and are expecting continued improvements there by about another 10%,” he added.
Chesapeake is currently running between 60 to 65 rigs per day in the US, and capital expenditure for the year is expected to range from $5.2 billion to $5.6 billion. “In 2013 we significantly reduced our capital and brought that down to a level that was much closer to our cash flow. We’re very pleased with the progress that has been made,” Mr Lawler said.
He emphasized that Chesapeake continues to maintain leading positions across the US shale market, with approximately 13 million net acres of leasehold. “That leasehold position gives us a significant amount of opportunity to grow and develop in our oil and gas plays,” he said, noting that the industry will be supported by increasing demand for natural gas. LNG exports alone could reach 8 bcf/day by 2020 in the US, and overall natural gas demand could be double that if you factor in natural gas vehicles, power generation and other industrial demands.
This means the US would need another Marcellus-size development, he said, highlighting both opportunities for growth and the need to capture more efficiency gains. “Think about the significant amount of money that has been invested in the Marcellus and how the industry has grown the infrastructure and services provided there, and the learning curve we’ve traveled on the operations side, the safety side and the environmental side.”
Around the world, too, significant opportunities exist for replicating the North American shale boom, and Mr Lawler reiterated Chesapeake’s interest in unconventional development in the international arena. In fact, he said he expects US independents and drilling companies to play key roles outside the US as they have at home. “It’s very important to note that the independents have been the key contributors to the US energy production growth… In my mind, it will be those independents that lead the rest of the world as well,” he said. “We believe we have the expertise and the experience to participate in the energy growth in the rest of the world.”