Acre by acre, Chesapeake Energy Corp. continues to build its Barnett Shale leasehold — and the company is focused on ending the year with production in the play approaching 1 Bcfe/d.

The Oklahoma City-based producer Wednesday announced an agreement to acquire another 8,600 net undeveloped acres in the heart of the Texas play in Tarrant and Johnson counties from privately held Paloma Barnett LLC. The purchase for an undisclosed sum gives Chesapeake about 255,000 net acres in the Barnett Shale, including 215,000 net acres in the core and Tier 1 areas of Tarrant, Johnson and western Dallas counties. Chesapeake’s drilling inventory in the play also has grown to more than 2,800 net locations.

In addition to the sale, Paloma agreed to work exclusively for Chesapeake to acquire more acreage in Tarrant County. The land services agreement (LSA) complements similar agreements Chesapeake has in place with Dale Property Services LLC, Four Sevens Oil Co. Ltd. and Western Production Co. that cover different portions of the North Texas county (see Daily GPI, Nov. 6, 2007).

“Clearly Chesapeake has become the partner of choice for smaller companies in the Barnett and we are proud to join Dale, Four Sevens and Western on Chesapeake’s Barnett lease acquisition team,” said Paloma President Chris O’Sullivan.

Including the LSAs, Chesapeake said it has more than 1,000 landmen and lease brokers dedicated to acquiring additional undeveloped leasehold in Tarrant, Johnson and western Dallas counties. The strength of its brokerage business, said Chesapeake, may enable it to acquire about 40,000 net leasehold acres per year “in what are the most prolific counties in the Barnett Shale play.” And the anticipated annual addition to its leasehold inventory “should provide an additional 500-600 drilling locations per year, largely offsetting the number of wells Chesapeake plans to drill in the Barnett during the next few years.”

Chesapeake is using 38-40 operated rigs to develop its Barnett leasehold, and at this pace, the producer estimated it will complete, on average, a new well there every 15 hours “through at least 2010.”

Gross production now exceeds 600 MMcfe/d, and net production is about 400 MMcfe/d, which would put Chesapeake in second place behind the Barnett production leader Devon Energy Corp. Devon is now producing more than 800 MMcf/d in the Barnett and is on pace to be at a rate of 1 Bcf/d by early 2009 (see Daily GPI, Nov. 8, 2007). XTO Energy Corp. had claimed to be the second leading producer in the Barnett with a position of about 240,000 net acres. In November XTO said its Barnett production was around 490 MMcf/d gross (see Daily GPI, Nov. 16, 2007).

Chesapeake CEO Aubrey K. McClendon said the company’s Barnett production “compares very favorably to our 2006 gross production exit rate of 250 MMcfe/d, and we now will focus on achieving our 2008 gross production exit rate target of 900-1,000 MMcfe/d.”

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