Chesapeake Energy Corp. has agreed to acquire approximately 2,000 net undeveloped leasehold acres in the heart of the Barnett Shale play in Tarrant County, TX, from Western Production Co. and a partner, the Oklahoma City-based producer said. Chesapeake also said it has entered into a land services agreement (LSA) whereby Western affiliate Axia Land Services LLC has agreed to work on an exclusive basis in certain areas of Tarrant County to acquire leases on Chesapeake's behalf. This arrangement is intended to complement similar LSAs that Chesapeake has in place with Dale Property Services LLC, Four Sevens Oil Co. Ltd. and Sinclair Oil Co. covering different portions of Tarrant County. Chesapeake now has approximately 235,000 net acres of leasehold in the Barnett play, including 200,000 net acres in the Core and Tier 1 area of Tarrant, Johnson and Western Dallas Counties. Chesapeake's drilling inventory in the play has expanded to more than 2,700 net locations. Including the LSAs and its own landmen and lease brokers, Chesapeake now has a substantial competitive advantage with nearly 1,000 landmen and lease brokers dedicated to acquiring additional undeveloped leasehold and surface drillsites in Tarrant County, the company said. Chesapeake said it believes its drillsite and leasehold acquisition commitment to Tarrant County should enable it to continue acquiring up to 40,000 net leasehold acres per year in what is quickly becoming the most prolific county in the Barnett Shale. This anticipated yearly addition to the company's leasehold inventory should provide up to an additional 500-600 drilling locations per year, largely offsetting the number of wells Chesapeake plans to drill in Tarrant County during the next few years. Chesapeake said it recently initiated production of approximately 30 MMcfe/d of gas from the first 11 wells on its 18,000-acre Dallas/Fort Worth International Airport lease (see NGI, Nov. 5).

The Idaho Public Utilities Commission approved a request from Spokane, WA-based Avista Utilities to lower retail natural gas rates 4.6%. The decrease in the utility's annual purchased gas cost adjustment (PGA) affects the 70,000 households in northern Idaho served by Avista. For Avista's average retail customer using 65 therms each month, the decrease means lowering monthly bills by $3.65 on average. Avista cited more stable wholesale gas prices, increased storage capacity and no supply interruptions in the Gulf of Mexico production basin from hurricanes as happened two years ago. The PUC said the rate adjustment is separate from fixed costs for supplying gas and some variable costs of gas supply that are covered in base rates and reviewed in periodic general rate proceedings. Variable costs, such as the wholesale market prices for gas, transportation and storage are adjusted yearly through the PGA process.

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