Chesapeake Energy, the largest player in the Marcellus shale, has just released its Operational Update, discussing developments through 4th quarter of 2009. Although it doesn’t go very far in breaking things out by New York versus Pennsylvania or West Virginia, we can get some idea of what direction they’re going in overall. And that direction is down — drilling down, that is.

Since January 1, 2008, Chesapeake has drilled and completed 56 company-operated horizontal wells in the Marcellus. During the 2009 fourth quarter, Chesapeake’s average daily net production of approximately 45 mmcfe in the Marcellus increased approximately 26% over the 2009 third quarter and approximately 530% over the 2008 fourth quarter. Chesapeake is currently producing a company record monthly average of approximately 65 mmcfe net per day (115 mmcfe gross operated) from the Marcellus and anticipates reaching approximately 270 mmcfe net per day (515 mmcfe gross operated) by year-end 2010 and approximately 450 mmcfe net per day (855 mmcfe gross operated) by year-end 2011.

To further develop its 1.6 million net acres of Marcellus leasehold, Chesapeake is currently drilling with 24 operated rigs and anticipates operating an average of approximately 32 rigs in 2010 to drill approximately 175 net wells.

That is, they’re increasing the number of drill rigs they’ll be using in order to drill 175 new wells next year (across the whole Marcellus). And they’re expecting the output of these wells to significantly increase the amount of gas they’re extracting.


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