A recent report by ITG Investment Research estimates Chesapeake Energy's proved developed producing gas reserves in the Barnett and Haynesville shale plays, before volumetric production payments, at approximately 2.8 trillion cubic feet (Tcf), or 1.2 Tcf short of the approximately 4 Tcf booked by Chesapeake.
ITG Investment Research also sees negative value on the 3 Tcf of proved undeveloped reserves in these two plays, the firm told Rigzone in a statement, adding that Chesapeake's low price realizations compromise its gas asset economics as Barnett prices averaged approximately 40 percent of NYMEX last year.
Chesapeake reported total proved reserves of 18.8 trillion cubic feet equivalent (Tcfe) at year-end 2011, 54 percent of which is proved developed and producing, the firm said in a statement. About 42 percent of the company's proved reserves, or 7.9 Tcfe, came from the Barnett and the Haynesville.
"Chesapeake owns relatively high-quality assets with unencumbered single-well economics ranking well against industry averages," said ITG.
However, many of these assets are burdened by financial engineering which yields increased royalties, higher operating costs and lower working interests.
The company has confidence in the accuracy of reserve reports done by Netherland, Sewell & Associates and Chesapeake's public filings based on them, said Michael Kehs, vice president of strategic & public relations at Chesapeake, in a statement.
"Our independent engineers at Netherland, Sewell & Associates have been determining reserves for over 50 years and evaluating Chesapeake reserve assets for over 10 years using the most comprehensive data set available," said Kehs.
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