Chesapeake Energy revises outlook because of Hurricane Harvey

Shale oil and gas company said it expects to see an impact on production, but it would last only through the third quarter.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   Sept. 26, 2017 at 9:12 AM
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Sept. 26 (UPI) -- U.S. shale oil and natural gas company Chesapeake said it expects it will take until the fourth quarter to see production gains following Hurricane Harvey.

In the U.S. south, Chesapeake Energy has assets in the Eagle Ford shale basin in Texas and the Haynesville shale, situated mostly in Louisiana. Both states were in the direct line of Hurricane Harvey, which made landfall in late August.

In a statement Tuesday, the company said it was updating its guidance for the rest of the year to reflect the impact of Harvey. Third quarter production for oil should be around 86,000 barrels per day, compared with 88,400 barrels per day last year.

"We expect these impacts to be limited to the third quarter, but are revising our guidance for the full year," CEO Doug Lawler said. "Last week we averaged approximately 555,000 barrels of oil equivalent per day and 91,000 barrels of oil per day, and we anticipate our volumes will continue to grow substantially in the 2017 fourth quarter as our current production rate has recovered from the delays noted above."

Data from the first quarter, the last full period for which the company provided the information, show six rigs in service in the Eagle Ford shale and 3 rigs in Haynesville. A drilling productivity report from the U.S. Energy Information Administration forecasts a slight decline in production from Eagle Ford through October and no change to Haynesville output.

Lawler said his company would focus on operations in Texas and further north in Colorado for new production during the fourth quarter.

"Accordingly, we now project that our oil volumes will average approximately 100,000 barrels per day for the 2017 fourth quarter," he said.

Second quarter revenue declined 17 percent from the first quarter because of a decline in Chesapeake's average realized commodity price.

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