Niobrara Shale

Chesapeake Energy Signs Joint Venture Agreement In Niobrara Shale

Chesapeake Energy Corporation (CHK) announced the signing of a joint venture agreement to help develop the company’s acreage prospective for the Niobrara Shale in Wyoming and Colorado.

CNOOC Limited (CEO) will purchase a 33.3% interest in 800,000 net acres that Chesapeake Energy has under lease in the Denver-Julesburg and Powder River Basins. The company has agreed to pay $1.267 billion, with $570 million up front, and then to fund two thirds of Chesapeake Energy’s future drilling and completion costs until a $697 million drilling carry has been reached.

Chesapeake Energy - Niobrara Shale Update

Chesapeake Energy (CHK) disclosed additional detail on the Niobrara Shale and the company’s development plans there at an analyst meeting held in October 2010.

Chesapeake Energy drilled and completed the Spillman Draw Unit State 16-1H and reported an initial production rate of 705 barrels of oil equivalent per day. This production was composed of 655 barrels per day of oil and 300,000 cubic feet per day of natural gas.

The Niobrara Shale has a reservoir porosity ranging from 5.5% to 7.5% in the Powder River Basin and from 7% to 9% in the Denver Julesburg Basin. The Niobrara Shale is more pressurized in the Powder River Basin since it is at a deeper depth.

Chesapeake Energy reported that industry wide 33 wells have been drilled to date so far in the Niobrara Shale, and 9 wells are being completed. There have been 175 well permits issued to ten exploration and production companies.

Chesapeake Energy Reports Niobrara Shale Development

Chesapeake Energy (CHK) issued a second quarter of 2010 operational update on the company’s activities in the Niobrara Shale. The company has 675,000 net acres spread across the Powder River Basin in Wyoming and the Denver Julesburg Basin in Colorado and Wyoming.

Chesapeake Energy has drilled two gross wells in the Niobrara Shale to date, and is starting negotiations to bring in a third party here for a joint venture to accelerate development of its Niobrara Shale properties. The company will increase its rig count here over the next two years to six rigs in an attempt to boost production from oil and other liquids.