Chesapeake Energy reports 4Q production, plans Mississippian Lime exit

Mikaila Adams

Editor-News

As part of its fourth-quarter 2017 production release, Chesapeake Energy Corp., Oklahoma City, noted plans to exit the Mississippian Lime play of the northern Anadarko basin.

Chesapeake reported average fourth-quarter 2017 production at 593,000 boe/d, an increase of 15% year-over-year, and 10% sequentially when adjusting for asset sales. The production consisted of 100,000 b/d of oil, 2.6 bcfd of natural gas, and 59,500 b/d of natural gas liquids. The increase in production was primarily driven by stronger oil production from the company's Eagle Ford operating area, as well as from higher gas production from its Marcellus and Haynesville operating areas.

The company expects lower sequential production in first-quarter 2018 from fourth-quarter 2017, with production building throughout 2018 to ultimately result in flat production growth year-over-year as it works to achieve cash flow neutrality.

The company has reduced the number of wells to be placed on production in January and February-curtailments associated with extreme cold temperatures in certain regions, along with planned asset sales.

In fourth-quarter 2017 and first-quarter of this year, Chesapeake signed three separate sales agreements for properties in its Mid-Continent operating area for $500 million.

One sale closed in January. The other two are expected to close by this year's second quarter. Included in the sale are producing properties, related property, plant and equipment and undeveloped acreage in the company's Mississippian Lime operating area. With the sale, Chesapeake would exit the Mississippian Lime play of the northern Anadarko basin and other properties in central and western Oklahoma. In total, the proposed dispositions include 238,000 net acres and 3,000 producing wells currently producing 23,000 boe/d (25% oil) net to Chesapeake.

The company delivered the production volumes with a fourth-quarter 2017 capital spend of $525 million, inclusive of capitalized interest and expects cash flow of $470 million after changes in working capital for the quarter, said Chesapeake Chief Executive Officer Doug Lawler.

Chesapeake will continue to pursue additional asset divestitures in 2018, the company said.