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Chesapeake Energy’s Production Expenses: Lowest among Peers

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Chesapeake’s production expense

Chesapeake Energy’s (CHK) production expense in 2016 was $3.05 per boe (barrel of oil equivalent). Its 2017 production expense guidance range is $2.50–2.70 per boe.

According to CHK’s June 2017 presentation, that’s the lowest among its peers, including Apache (APA), Anadarko Petroleum (APC), Hess (HES), and Noble Energy (NBL).

CHK management noted in the 2Q17 earnings conference call, “We expect our combined production and G&A expenses to move lower in the second half of 2017 on a per unit basis. This is despite a modest increase in G&A costs, primarily as a result of asset sales.”

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Break-even prices

CHK’s break-even prices in the Eagle Ford, Powder River Basin, and Mid-Continent are $40 per barrel, $35 per barrel and $40 per barrel, respectively. In the Haynesville, Marcellus, and Utica, its break-even prices are $2.50 per Mcf (thousand cubic feet), $2.10 per Mcf, and $2.50 per Mcf, respectively.

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