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More drilling planned for U.S. shale natural gas, Chesapeake Energy says

Chesapeake Energy said it plans to place as man as 50 wells into production over the remainder of the year, nearly double the level from the second quarter. That supports its ambitions to bring that gas to an export facility planned in Louisiana. File Photo by Gary C. Caskey/UPI
1 of 2 | Chesapeake Energy said it plans to place as man as 50 wells into production over the remainder of the year, nearly double the level from the second quarter. That supports its ambitions to bring that gas to an export facility planned in Louisiana. File Photo by Gary C. Caskey/UPI | License Photo

Aug. 2 (UPI) -- Drilling in some of the most lucrative natural gas basins in the country is forecast to nearly double levels from the second quarter, Chesapeake Energy said.

Chesapeake is among the largest natural gas producers in the country. During the three-month period ending in June, the company said it produced nearly 3.6 billion cubic feet of reserves, of which 96% was in the form of natural gas.

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That's close to the expected natural gas production from the Bakken formation alone, though that's the lowest producing gas basin among the seven primary inland shale basins in the United States.

Chesapeake, however, is focused on the Appalachian and Haynesville basins, the former of which yields about 10 times the company's net average for the second quarter. The Haynesville shale play straddles the border of Louisiana and Texas and is the third-largest inland natural gas producer in the country.

That supports its ambitions for liquefied natural gas and its supply agreement to feed the Lake Charles export facility for LNG slated for Louisiana.

On activity related to production, the company said it drilled 53 new wells and placed 27 into production during the second quarter.

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"The company expects to drill 30 to 40 wells and place 40 to 50 wells on production in the third quarter of 2023," it stated. "The company's operating plan remains flexible and is prepared for further adjustments based on market conditions."

Market conditions, however, have hit energy companies hard. Oil majors from ExxonMobil to Shell reported a downturn in profits because of a low-price climate during the first half of the year.

Chesapeake on Tuesday said its profits over the second quarter totaled $391 million, a sharp contraction from the $1.24 billion reported over the same period last year.

Similar to crude oil prices, which are a good $40 per barrel lower than 2022 peaks, U.S. natural gas prices averaged $2.42 per million British thermal units during the second quarter, some 60% lower than prices at the same point last year.

Prices last year came as a result of the loss of Russian oil and natural gas due to sanctions imposed in response to its invasion of Ukraine. Markets have since adjusted, with support from U.S. oil and LNG exports.

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