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Chesapeake Energy’s Production Plan for 2017

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Jul. 21 2017, Updated 7:06 a.m. ET

2017 production guidance

For 2017, Chesapeake Energy (CHK) has provided a production growth guidance range of 0%–4.0%. As we discussed before, CHK’s production should be driven by the increase in its oil volumes in the Eagle Ford, the Powder River Basin, and the Mid-Continent.

CHK’s management commented on its operational expectations for 2017, “Looking ahead, we believe we’ve seen the low in our oil production in February and our production ramp in the second half of the year looks very strong, fueled by a significant increase in wells placed online over the next three quarters.”

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CHK has also been concentrating on drilling longer laterals in the Eagle Ford. According to the EIA (US Energy Information Administration), longer laterals are a sign of increasing drilling efficiency. CHK’s peer Anadarko Petroleum (APC) has also been focusing on drilling longer laterals in the Eagle Ford.

Another company that’s focusing on the Eagle Ford this year is Cabot Oil and Gas (COG). Prominent players in the Eagle Ford include Noble Energy (NBL) and Sanchez Energy (SN).

Key Powder River Basin operators include Devon Energy (DVN) and EOG Resources (EOG).

CHK’s production growth expectations beyond 2017

CHK plans to grow its production by 5%–15% annually by 2020. The company also plans to achieve 10%–20% annual oil growth by 2020.

Chesapeake’s hedge position for 2017

Chesapeake Energy’s (CHK) has hedged 75.0% of its natural gas (UGAZ) volumes and 64.0% of its oil (UCO) volumes for 2017. The company is also hedged for 2018. Other upstream companies that are hedged in 2017 include Bill Barrett (BBG), Oasis Petroleum (OAS), Sanchez Energy (SN), and Callon Petroleum (CPE).

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