Chesapeake Energy and the Utica Shale
The Utica Shale is an emerging play located primarily in eastern Ohio and western Pennsylvania. The play gained publicity in late 2011, as Chesapeake Energy (CHK) revealed that it had been purchasing acreage rights in the area. Aubrey McClendon was the former CEO of Chesapeake, but he recently left the company because investors were unhappy with his management. Since his departure, the former CHK head has lined up ~$1.2 billion in financing for investment in Ohio, according to an article in the Wall Street Journal. McClendon now heads a new company, American Energy Partners, which has acquired Ohio assets from EnerVest Ltd. and affiliate EV Energy Partners LP (EVEP) as well as Royal Dutch Shell (RDS.B).
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The fact that McClendon is investing such huge sums of money in the area shows the potential of the play. McClendon has had extensive experience in the upstream oil and gas industry, having built Chesapeake from the beginning until his ouster into one of the largest independent energy companies in the United States. Plus, because CHK is one of the most active players in the Utica Shale, McClendon would have been privy to much information about the potential of the play. As he’s trying to build a new company, the ex–Chesapeake head could have chosen any area to operate in, but it looks as if he’s making a large, fundamentally unilateral bet on the Utica Shale. This should be a strong signal to the market and other energy players as to the potential of the Utica Shale.
Latest Utica Shale statistics
Chesapeake is the largest player in the Utica Shale at the moment. In its 2Q13 results, it gave the following update on the play.