HOUSTON Aug 4 The global recession and low energy prices put the brakes on a lot natural gas exploration, but Anadarko Petroleum Corp (APC.N) and Chesapeake Energy Corp (CHK.N) are sinking dollars into the Marcellus shale, the companies said on Tuesday.
The Marcellus shale, located in the northeastern U.S. in parts of Pennsylvania, New York and West Virginia, is said to contain enough natural gas trapped in rock to meet U.S. needs for a decade or more.
"Early success from our Marcellus activities indicates this play possesses some of the most compelling economics in our onshore portfolio," Anadarko Chief Executive Jim Hackett told investors on the company's second-quarter earnings conference call.
At a time when U.S. rig counts have dropped near seven-year lows as weak demand depresses gas prices, Anadarko said it expected to have an interest in as many as 14 rigs in the Marcellus by the end of 2009.
Anadarko estimates each Marcellus well holds 3 billion to 6 billion cubic feet of recoverable natural gas that can be produced, even with New York Mercantile Exchange gas futures prices as low as $2.50 per million British thermal units.
Shale gas once was too expensive to produce, but advances in technology and last year's record natural gas prices prompted exploration and production companies, both large and small, to lock up as much acreage as possible.
Chesapeake, a natural gas producer based in Oklahoma City, said it was hiking its 2009 drilling budget by $300 million to as much as $3.2 billion, and some of that money is earmarked for its acreage in the Marcellus.
Chesapeake has about 1.3 million acres in the Marcellus, where it has a joint venture with Norway's StatoilHydro (STL.OL).
U.S. oil major Exxon Mobil Corp (XOM.N) has about 20,000 acres in the Marcellus. The company told investors on its earnings call that it was evaluating new areas in the field.
Both Chesapeake and Anadarko reported better-than-expected results on Monday after the close of regular trading.
On Tuesday, shares of Chesapeake climbed 5.1 percent to $23.49 on the New York Stock Exchange, while Anadarko rose 2.2 percent to $50.71. (Reporting by Anna Driver; Editing by Lisa Von Ahn)