A couple months ago I mentioned the "awful choice" that gas E&P companies would be facing for wells they had just started drilling:Here's the current status of Chesapeake's Ohio projects from the Utica Shale blog:
Do they shut in new wells upon completion, after literally throwing money down a hole or do they start producing, knowing that, as storage topped off, they would be forced to sell on the cash market?...
Chesapeake(CHK) is the largest operator in the Utica Shale and has 1.3 million acres under lease. The company is operating 10 rigs and plans to average 13 rigs in 2012 and 22 rigs in 2013.So even if the company completely stopped drilling today they would have 50 more wells coming on online.
Chesapeake Energy has drilled 59 wells into the Utica Shale:
Producing – 9 wells
Undergoing completion – 15 wells
Waiting for completion – 15 wells
Waiting on Pipeline – 20 wells
And they aren't going to stop drilling the Utica. CHK absolutely needs the natural gas liquids the Utica is rich in if they are to have any chance of meeting their cash-flow needs.
Repeat for the rest of the drillers and you see why we'll see, at best, single digit production drops when the April report comes out on the 29th.
Also at Utica Shale:
Chesapeake Energy Reports Three Utica Shale Wells
Dear Natural Gas Bulls: Chesapeake Is NOT Cutting Back on Drilling in the Utica Shale (CHK)
As Chesapeake Sells the Family Jewels--Buy the Company that Buys Their Ohio Properties (CHK)
NatGas: Chesapeake Energy Reports Two Utica Shale Completions (CHK)