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Shale Giant Chesapeake To Exit Oil As It Focuses On Natural Gas

Shale pioneer Chesapeake Energy will focus on its key shale gas plays in the United States and will consider its oil-producing acreage in the Eagle Ford as non-core business in a shift toward gas and deals with LNG exporters.

Chesapeake Energy, which went through bankruptcy in 2020 when oil and gas prices crashed, said in its Q2 results release this week that it is solidifying its strategic focus on its gas assets while reducing its Eagle Ford position.  

Chesapeake Energy, the pioneer of shale gas production during the first shale revolution, is looking to position its Haynesville assets for future growth, it said in a statement. At the same time, it will reduce activity in the Eagle Ford shale, which the company now views as non-core to its future capital allocation strategy.

"Given we now view our Eagle Ford assets as non-core to our future capital allocation strategy, we are increasing our capital allocation to the Haynesville in the second half of the year and into 2023 to position the asset for returns-driven growth," said Nick Dell'Osso, Chesapeake's President and Chief Executive Officer.

Chesapeake is now doubling down on natural gas and the opportunities to supply U.S. LNG export facilities as Europe is scrambling to get its hands on LNG cargoes and reduce its dependence on pipeline gas from Russia.

Chesapeake said it had entered into a term gas supply agreement with Golden Pass LNG Terminal Responsibly Sourced, independently certified gas, from Haynesville to Golden Pass's LNG terminal near Sabine Pass, Texas. Golden Pass, a joint project of ExxonMobil and QatarEnergy, is expected to begin operations in 2024.

"We stand to help the world through the gas that we deliver as much as anyone else," Chesapeake's Dell'Osso said, as carried by the Financial Times.

"The US is now connected more fully to the rest of the world through LNG exports and that connectivity is going to nearly double over the next five to seven years."  

By Tsvetana Paraskova for Oilprice.com

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Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.  More