Billionaire wildcatter Audrey McClendon, the co-founder and former CEO of oil and gas drilling giant Chesapeake Energy, is betting big on a new fracking front in Ohio. McClendon is hoping that southeast Ohio’s Utica shale formation will prove to be as profitable as North Dakota’s Bakken formation or Texas’s Barnett shale. The WSJ reports:
Mr. McClendon’s deal-making in the rustbelt echoes the wager he made as chief executive of Chesapeake Energy Corp., before being ousted by unhappy investors earlier this year. It offers the first glimpse of how he hopes his comeback will unfold after he lost control of the company he co-founded in 1989….Mr. McClendon’s new company, American Energy Partners LP, struck a deal earlier this month to buy drilling leases on more than 22,500 acres in southeastern Ohio for $284.3 million….The fortunes of the Utica shale remain in flux. Companies have drilled just over 500 wells since 2011, according to Ohio records, but a lack of pipelines there has stalled production.
The rig count in the Utica shale region has risen steadily over the past few years, and McClendon’s investment signals his confidence in the formation’s future potential. The Barnett, Eagle Ford, and Bakken shale formations make most of the headlines with their outsized shale oil and gas production numbers, but the US still has a number of underdeveloped plays with strong potential. The price of American natural gas is currently too low to justify drilling in many locations, but it won’t stay that cheap forever. If and when that price starts to rise, the oil and gas industry will have plenty of new drilling opportunities.[Oil rig image courtesy of Shutterstock]