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Chesapeake Exec Says 'Big Data Analytics' Key to Oil/NatGas Growth Trajectory

Chesapeake Energy Corp. is focused on getting leaner next year with two “front and center” goals of spending within cash flow and keeping optionality in its expansive onshore portfolio by approaching core development through the lens of “big data analytics.”

An old hand in the unconventional fields, Chesapeake management wants to “retain some posture for growth” as it looks to take $2-3 billion of debt off the books, said operations chief Jason Pigott Thursday at the Bank of America Merrill Lynch Global Energy Conference.

The Oklahoma City-based independent, he said, is testing or plans to test new completion designs in the Haynesville, Eagle Ford, Marcellus and Utica shales that could eventually translate to additional prospects in the Powder River Basin (PRB) or redefine core areas.

Chesapeake returned to the PRB in 2016, a leasehold it once had for sale, to reexamine drilling and completion techniques there. The company revamped the approach and now touts the acreage as a “game-changer” that could lift oil volumes.

Pigott dubbed the PRB a “great new area” and a “huge asset” as Chesapeake moves ahead with a “big data journey.” That journey, he said, began in 2005 when the company automated production fields to return reams of data to optimize development.

Everything from hydraulic fracture (frack) fluid, proppant loading and cluster spacing, to reservoir characterization, lateral length efficiency and formation targeting are now at the heart of efforts to push its next phase of growth.

“We realized that we don’t know it all necessarily; we’re trying to go from a ‘know it all’ culture to a learn it all’ culture,” Pigott said.

For example, the company is drilling its first 15,000-foot lateral Haynesville well, where the analytics team has helped increase production by 30% over the last two years. Rigs have been flooding the play, but Pigott said Chesapeake has consistently operated only three to achieve the growth rate.

In the Eagle Ford, considered the “oil growth engine,” Pigott said a recently completed 16,000-foot lateral well had a peak rate of 2,350 b/d of oil. Enhanced completions have also helped double Eagle Ford production over the last two years, he said.

Earlier this year, Chesapeake began flowing a Marcellus well that reached a peak rate of 61 MMcf/d. The company plans to continue employing enhanced completion designs in Appalachia, where it also plans to test a Utica well with new techniques next year.

The data-driven approach, Pigott said, is going to reinvent areas such as the PRB, where the company is trying to “create a new play from scratch.”

Chesapeake hasn’t unveiled its official plans for 2018, but it continues a mission to reduce debt. The company’s plans to achieve cash flow neutrality in 2018 include even more divestitures. Since last year, it has sold more than $2 billion worth of assets.

Pigott said the company sold 23,000 acres in the Midcontinent this month for $170 million. Chesapeake works mostly in the Midcontinent, Eagle Ford and Haynesville shales, as well as the PRB and Appalachian basins.

While management has said previously that it wouldn’t rule out selling one of its six major assets, Pigott said the company is focused now on divesting properties that don’t impact its bottom line or production too much. 

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