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Chesapeake Touts Anadarko Basin Discovery

Poking around in the Anadarko Basin in the Texas Panhandle and western Oklahoma above its Granite Wash holdings, Chesapeake Energy Corp. said Friday it made "a significant new discovery" of oil in the Hogshooter play.

Chesapeake owns about 30,000 net acres in the play, which are more than 90% held by production from its legacy deeper Granite Wash production. The company has completed two horizontal wells in the Hogshooter formation to date. The Hogshooter play was originally discovered by Apache Corp. in 2010.

"We expect this new Hogshooter discovery to provide a significant boost to Chesapeake's focus on harvesting its existing assets for growth and value creation rather than on pursuing new leasehold," said CEO Aubrey McClendon, apparently alluding to past criticism that the company had overspent on acreage (see Shale Daily, Dec. 6, 2010). "In addition, this new Hogshooter development area should further enhance our growing liquids production, which we expect will have transformational effects on our company's operational and financial performance in the years ahead."

Chesapeake is struggling under the weight of debt coming due soon and low natural gas prices (see Shale Daily, June 1).

The Thurman Horn 406H well was drilled to a vertical depth of 10,000 feet with a lateral section of 4,900 feet. This well was drilled more than five miles from established Hogshooter production but in a section of land where three wells had already been drilled to other formations, Chesapeake said.

During its first eight days of stabilized production, the well averaged daily production of 5,400 bbl of oil, 1,200 bbl of natural gas liquids (NGL) and 4.6 MMcf of natural gas, or about 7,350 boe/d. Total cumulative production, which includes five days of flowback testing, is 68,400 boe. Current daily production is about 7,000 boe.

"...[B]ased on production results to date and our research of industry production records, we believe the Thurman Horn 406H well is one of the best oil wells drilled onshore in the Lower 48 in the past several decades," McClendon said.

The Meek 41 9H well, located about five miles from the Thurman Horn 406H, was drilled to a vertical depth of 10,500 feet with a lateral section of 4,800 feet. During its first 27 days of stabilized production, the well averaged daily production of 1,300 bbl of oil, 365 bbl of NGLs and 1.4 MMcf, or 1,900 boe/d. Total cumulative production, which includes five days of flowback testing, is 53,500 boe. Current daily production is 1,400 boe.

Chesapeake also has drilled two Hogshooter wells that are awaiting completion: the Zybach 6010H and the Hamilton 39 10H. The company's average working interest in the four wells is about 88%. The company said its acreage position contains at least 65 more Chesapeake-operated Hogshooter locations to drill during the next few years.

Drilling and completion of these 65 wells will be a part of the already budgeted Anadarko Basin drilling program and should result in no increase to capital expenditures, Chesapeake said.

Drilling activity in the Granite Wash Basin has cooled a bit in recent months. According to NGI's Shale Daily Unconventional Rig Count for the week ending June 1, there were 80 rigs drilling for oil and gas in the play, down from the nearly 100 rigs that were operating there last fall.

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