By OGJ editors
HOUSTON, July 27 -- Chesapeake Energy Corp., Oklahoma City, said it believes it has built the largest onshore US inventories of leasehold and 3D seismic data in the industry at more than 3 million and 8 million acres, respectively.
The independent said it has identified more than 5,000 undrilled locations that could contain up to 4 tcfe of probable and possible undeveloped reserves.
Chesapeake said three acquisitions are adding 310 bcfe of proved reserves, 50,000 net acres of leases, and 60 MMcfed of production to its portfolio for a combined $590 million.
The properties, 92% natural gas, contain a further 453 bcfe of probable and possible reserves and are located 56% in the Midcontinent and 44% in South Texas.
Chesapeake said it believes it can hike the properties' production to at least 90 MMcfed by yearend 2005 and at least 120 MMcfed by yearend 2006.
The company's proved reserves at June 30 were 3.8 tcfe excluding the three acquisitions.
Chesapeake is buying the assets from three private companies: Bravo Natural Resources Inc., Tulsa, Legend Natural Gas LP, Houston, and Tilford Pinson Exploration LLC, Oklahoma City.
Bravo held 20,000 acres in Granite Wash-producing Stiles Ranch and Allison Britt fields of the Anadarko basin in Wheeler and Hemphill counties, Texas, and Roger Mills County, Oklahoma.
The Granite Wash and the deeper Cherokee/Atoka washes have produced more than 1.2 tcfe from 10 major fields in the Anadarko basin and are the subject of intense industry drilling. Chesapeake's position exceeds 200,000 net acres where well costs average $1.2-1.5 million for recoveries of 1.5-2 bcfe on 40 acres.
Legend's producing assets and 18,000 net acres of leasehold are in Roleta, Haynes, Comitas, and En Seguido (Wilcox) fields in the Zapata County, Texas. Closing is set for late August.
Most of Legend's assets lie 3-7 miles south and east of properties Chesapeake acquired from Laredo Energy LP in October 2003. Those properties are producing a net 50 MMcfed compared with 30 MMcfed at time of acquisition.
Tilford Pinson's producing assets and 12,000 net acres of leasehold are in Northwest Scipio, Northwest Reams, and South Pine Hollow in Pittsburg County, Oklahoma. Major zones of production range from 2,500 ft Hartshorne sands to 6,000-8,000 ft Cromwell and Caney shale plays.
The Cromwell and Caney shale formations are particularly active, and the Caney shale is considered by some to have characteristics similar to the Barnett shale in the Fort Worth basin. Chesapeake has become the largest gas producer in Pittsburg County, Oklahoma's eighth largest gas producing county.