We are now entering one of my favorite times of the year – the release of quarterly results and operational updates from oil and gas operators. If you take the time to go through these releases, a wealth of information is available. Over the next several weeks I will be providing my thoughts on what I am seeing in these updates.
We’ll start this week with Chesapeake. With the sale of its Ohio portfolio to Encino, Chesapeake is almost completely out of the Marcellus/Utica play. Its only remaining acreage sits in Northeast Pennsylvania, a dry gas area. The most noteworthy item from Chesapeake’s update is that it drilled a new record well, the JOEGUSWA 5HC, in Sullivan County, PA with an initial production (IP) rate of 73.4 million cubic feet per day. This is the highest reported IP rate of any well in the United States, beating out an EQT Utica well in Greene County, PA in 2015. What makes the JOEGUSWA 5HC even more impressive is that it is a Marcellus well and only 9,800 feet long. Many of the wells being drilled in the Utica shale are now exceeding 12,000 feet, with some being as long as 18,000 feet.
Initial production rates are not the end all be all of a well’s performance. This is just a 24-hour measurement of production. When measuring the initial production rate the gas company will often leave the well wide open, allowing the maximum flow of gas through the wellbore. When operating the wells long term, gas companies typically choke the well to restrict the flow of gas. This is because they believe that the unrestricted flow of the gas will make the decline of the well steeper and result in less gas ultimately being produced from the well. Just like with the lateral lengths, the oil and gas companies are still determining which method of operating the well provides the best recovery of gas.
The other noteworthy item from Chesapeake’s release is the location of JOEGUSWA 5HC in relation to other wells. The JOEGUSWA 5HC was drilled in between two existing wells, approximately 1300 feet from each. This suggests that these wells did not negatively impact the JOEGUSWA 5HC. Well spacing is an item that we will continue to keep an eye on through the Marcellus and Utica plays.