A day after announcing $3.4 billion worth of joint ventures in Ohio's Utica Shale, Chesapeake Energy CEO Aubrey McClendon said Friday in a conference call with analysts that the company is looking to sell partial stakes in three more shale oil plays as joint ventures.
In the conference call to discuss Chesapeake's third-quarter earnings, which were released after markets closed Thursday, McClendon said the Oklahoma City-based company is seeking partners for its acreage in the Williston Basin in North and South Dakota, the Mississippi Lime on Oklahoma and Kansas, and a third "stealth play" that McClendon would not identify.
McClendon said Chesapeake is accumulating 500,000 acres in the mystery play. Later in the call, he ruled out plays in California and in Louisiana's Tuscaloosa Marine Shale as too expensive.
Thursday, Chesapeake said it signed a $2.14 billion joint venture with a major international energy company for a 25% stake in 650,000 acres of Chesapeake's 1.35-million-acre position in the Utica's wet gas window. McClendon said Friday that the identity of the joint venture partner would be disclosed at the close of the deal.
Chesapeake Energy's Q3 profits were $879 million, up 71% from the same quarter a year ago, as it nearly doubled the volume of oil and liquids it produced while holding natural gas production constant.
Stripping out a $385 million one-time gain in the value of the Oklahoma City-based company's hedging portfolio, Chesapeake's Q3 adjusted profits of $496 million were 4% higher than those of a year ago.
Oil and liquids now make up 17% of Chesapeake's production mix, while delivering 40% of its revenues, the company said. Production of those commodities nearly doubled in the Q3 to 94,228 barrels/day, a 91% increase over the same period a year ago and Chesapeake realized $63.03/barrel for that output, up 4% from the 2010 quarter.
Chesapeake's gas output of 2.76 Bcf/d was flat compared with last year's quarter, but the company realized $4.82/Mcf on that production, down 7%.
McClendon said Friday that Chesapeake's growth over the next five years will come from oil and liquids as it continues to hold gas output flat. By 2015, McClendon said Chesapeake's oil and liquids production will more than triple to average 250,000 b/d in 2015.
