Shale patch pioneer Chesapeake to ditch oil in favor of natural gas

Driller that spearheaded US fracking revolution to shift away from crude amid LNG export boom

ft.com

The company most associated with the dramatic ups and downs of the US shale patch is taking

another gamble, planning to offload prize oil assets and double down on American natural gas.

Chesapeake Energy, a pioneer of the shale revolution that went bankrupt during the coronavirus

pandemic crash, said on Tuesday it planned to exit oil altogether and return to its roots as a natural

gas producer, instead pinning its future on a wave of demand for US exports of the commodity. The

company — which grew from obscurity in the late 1980s to become the best-known player in the

fracking revolution that made America the world’s biggest producer of oil and natural gas — said it

would offload oil producing assets in south Texas’s Eagle Ford basin, allowing it to focus solely on

gas production from Louisiana’s Haynesville basin and the Marcellus in Appalachia.

Chief executive Nick Dell’Osso said the decision was made due to better returns from its gas assets,

where it has had more success driving down costs and improving efficiency compared with oil. But

he said the company also wanted to double down on natural gas production amid surging demand

for US liquefied natural gas exports, following a global scramble for  the commodity fuelled by the

war in Ukraine. Russia’s weaponisation of its exports in the wake of Vladimir Putin’s invasion

has created a global shortage and sent prices soaring. “We stand to help the world through the gas

that we deliver as much as anyone else,” said Dell’Osso. “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.” Chesapeake’s former chief Aubrey McClendon pioneered the widespread

use of hydraulic fracturing and horizontal drilling at the turn of the 21st century to become the

biggest US gas producer after ExxonMobil. At its peak in 2008, Chesapeake was valued at $35bn

and McClendon became  the best-paid executive in the US. He died in a car crash in 2016, a day

after he was indicted on charges of rigging bids for drilling rights.