In “Stellar” Earnings Report, Chesapeake Announces Utica Shale Push

Scott Detrow / StateIm­pact Pennsylvania

A Chesa­peake Energy sign in Brad­ford County

Chesa­peake Energy reported its earn­ings today, and accord­ing to Barron’s, they were “stellar.”

Chesa­peake reported second-quarter net income of $528 mil­lion, or 76 cents per diluted share before spe­cial items includ­ing a loss on cur­rency deriv­a­tives. The result was 5 cents bet­ter than Street expec­ta­tions. Second-quarter rev­enue of $3.3 bil­lion was 65% above the year-ago period. Chesa­peake also reported that after two years of drilling, it had suc­cess in the Utica Shale, and acres it leases there — its third largest posi­tion in land mass — could add $15 to $20 bil­lion in value to the company.

The Oklahoma-based com­pany is dou­bling down on the Utica Shale, and has snatched up thou­sands of acres of leases in Ohio. More on that from Bloomberg:

Chesa­peake, based in Okla­homa City, has leased 1.25 mil­lion acres in the Utica Shale, a for­ma­tion that stretches beneath the East­ern U.S. from Ten­nessee into Canada. Chesa­peake said its acreage in the Utica, which is con­cen­trated in Ohio, may be worth as much as $20 bil­lion. It is seek­ing to sign a con­tract with a joint ven­ture part­ner by the end of the year.

The Utica is “likely most anal­o­gous, but eco­nom­i­cally supe­rior to, the Eagle Ford Shale in South Texas,” accord­ing to the statement.

“They’re say­ing it’s as good as or bet­ter than the Eagle Ford,” Biju Per­incheril, a New York-based ana­lyst for Jef­feries & Co. said today in an interview.

Per­incheril, who rates the shares “buy,” and owns none, said results for the quar­ter were 2 cents bet­ter than his esti­mate, appar­ently on higher pro­duc­tion of oil and petro­leum liquids.

Chesa­peake holds more than a thou­sand Mar­cel­lus per­mits in Penn­syl­va­nia,  and oper­ates about 30 rigs drilling for Mar­cel­lus gas.