Chesapeake to Cut Rigs to Reduce CAPEX in 2019

After a strong fourth quarter in 2018, Chesapeake Energy Corporation is stepping into 2019 with a bit of caution.
The Oklahoma City-based oil and gas company produced an estimated 462,000 to 464,000 barrels of oil equivalent per day in 4Q 2018. Chesapeake’s oil output during that period was an estimated 86,000 to 87,000 barrels of oil per day despite selling its Utica shale assets in July.
“The divested daily oil volumes associated with the Utica sale, which represented 10 percent of our third quarter oil production, were replaced in the last two months of the year through our legacy South Texas and emerging Powder River Basin oil engines,” Chesapeake CEO Doug Lawler said in a Jan. 9 company statement.
The company also reduced its debt by $1.8 billion.
But a decline in crude oil prices in late 2018 seems to have been the catalyst for a more moderate approach as Chesapeake undergoes a strategy change.
Lawler said the company plans to reduce its CAPEX in 2019 by lowering the rig count and focusing on high-margin oil investments.
“We plan to reduce our 2019 capital expenditures by lowering our rig count by approximately 20 percent, expecting to average 14 rigs versus our current rig count of 18,” Lawler said. “Further, we expect our capital efficiency to improve in 2019 as total net capital per rig line is projected to decrease by 15 to 20 percent compared to 2018. The improvement in our capital efficiency, along with our focus on our high-margin oil investments, should result in higher operating cash flow and stronger margins in 2019 compared to 2018.”
Lawler also said the company plans on operating four rigs this year on WildHorse acreage, an acquisition Chesapeake announced in October 2018.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- FID For $13.2B Louisiana LNG Project
- African LNG Projects To Look Out For
- UK Slaps 25 Percent Windfall Tax on Oil and Gas Profits
- Equinor Submits Plan For Halten East Subsea Developments
- Most UKCS Operators Paying Invoices Promptly
- Bankrupt Sri Lanka Still Seeking More Oil and Fuel Imports
- EU Plan To Escape Russian Fossil Fuels May Fall Short Of Objectives
- Shell Completes Sale of Russian Assets to Lukoil
- Markets Remain Tight Nearly 3 Months into Ukraine War
- EU Forms Task Force To Support Departure From Russian Fossil Fuels
- ADNOC Announces 650MM Barrel Oil Find
- Finland Loses Main Gas Supply
- Oil Inventories Down to Dangerously Low Point
- USA Fuelmakers Shifting Into Higher Gear
- Brent-WTI Oil Price Spread Inverts
- ExxonMobil Selling Shale Assets for $750MM
- Shots Fired During Tanker Loading
- 6 Power Generating Facilities in Texas Just Tripped
- NPD Grants Slew of Drilling Permits
- BlackRock Told Texas It Will Still Invest In Oil And Gas
- Russian Oil Producers Start Using Tankers the World Did Not Want
- ADNOC Announces 650MM Barrel Oil Find
- Finland Loses Main Gas Supply
- This Is Where the Oil Price Would Be Without the War
- Ban on Excessive Gasoline Prices Heading for Vote
- Oil and Gas Discovery Confirmed at Hamlet
- Top Headlines: Be Prepared to Pay More at the Pump from June
- Oil Inventories Down to Dangerously Low Point
- Gas Prices Could Rocket in the Near Term
- Exxon Does It Again - Three More Discoveries Offshore Guyana