8-KOther Events

EXPAND ENERGY Corp 8-K Report (Jul 22, 2002)

Filed July 22, 2002For Securities:EXEEXEELEXEEWEXEEZ

Summary

Chesapeake Energy Corporation (CHK) has announced a significant natural gas discovery at its Cat Creek 1-19 well in the Comanche Lodge Prospect, located in the Greater Mayfield area of western Oklahoma's Anadarko Basin. The well has demonstrated strong initial production rates of 17 million cubic feet of natural gas equivalent per day from the Upper Hunton formation, with a notable flowing tubing pressure of 5,700 lbs. This discovery is particularly significant as it taps into the Upper Hunton formation, which has historically been less explored for production compared to the Middle Hunton in this region. The company estimates gross proved reserves from this well to be approximately 25 billion cubic feet of natural gas equivalent (bcfe), with 10 bcfe attributed to the Upper Hunton and an additional 15 bcfe projected from the Middle Hunton. Chesapeake management expressed strong optimism about the discovery, highlighting its potential to significantly contribute to the company's organic production growth. The company plans to accelerate drilling activity, with two additional wells planned to spud within the next 60 days to further develop the Comanche Lodge prospect. These new wells are expected to target similar depths and formations, with projected reserves of 25-35 bcfe per well. The company is also leveraging attractive drilling costs and new state severance tax incentives for deep gas wells to drive exploration efforts in the Greater Mayfield area and across Oklahoma, aiming to capitalize on anticipated higher natural gas prices in the coming years.

Key Highlights

  • 1Significant natural gas discovery announced at the Cat Creek 1-19 well in the Comanche Lodge Prospect (Greater Mayfield area, Oklahoma).
  • 2Initial production rate of 17 mmcfe/day from the Upper Hunton formation with high flowing tubing pressure (5,700 lbs).
  • 3Estimated gross proved reserves of 25 bcfe for the Cat Creek 1-19 well, split between Upper (10 bcfe) and Middle (15 bcfe) Hunton formations.
  • 4Discovery in the Upper Hunton formation is considered especially significant due to its historical underdevelopment compared to the Middle Hunton in the area.
  • 5Plans to drill two additional offset wells within 60 days to further develop the Comanche Lodge prospect, with projected reserves of 25-35 bcfe per well.
  • 6Company is benefiting from attractive drilling costs (30-50% lower than 2001) and a five-year severance tax abatement for deep gas wells (<17,500 ft) to spur exploration.
  • 7Chesapeake has a substantial inventory of over 1,500 undrilled locations, including approximately 50 ultra-deep (>19,000') prospects, indicating significant organic growth potential.

Frequently Asked Questions

The Cat Creek 1-19 well represents a major natural gas discovery for Chesapeake Energy in the Comanche Lodge Prospect. It has demonstrated strong initial production and is estimated to hold substantial reserves. Notably, the discovery of production in the Upper Hunton formation is significant, as this zone has been historically less developed for production in the Mayfield area compared to the Middle Hunton.

Chesapeake estimates the gross proved reserves for the Cat Creek 1-19 well to be approximately 25 billion cubic feet of natural gas equivalent (bcfe). This includes an estimated 10 bcfe from the Upper Hunton formation and a projected 15 bcfe from the behind-pipe Middle Hunton formation.

Chesapeake plans to accelerate its drilling activity by spudding two additional wells within the next 60 days that will offset the Cat Creek 1-19. The company anticipates these new wells will target similar deep formations and aims for projected reserves of 25-35 bcfe per well, indicating a strong focus on expanding production from this promising area.

Chesapeake is strategically increasing its drilling activity due to several factors. They are benefiting from significantly lower drilling costs (30-50% less than in 2001) and are taking advantage of a new five-year severance tax abatement program in Oklahoma for wells targeting formations below 17,500 feet. This incentive could offset up to 40% of a well's cost, encouraging exploration of ultra-deep gas reserves.