Chesapeake Energy aiming for more oil now

HOUSTON (Reuters) - Chesapeake Energy Corp Chief Executive Aubrey McClendon, dubbed "Mr. Gas" in a 2008 magazine profile, now wants to be "Mr. Oil."

Chesapeake's output is currently made up of about 93 percent natural gas, but the Oklahoma City, Oklahoma, exploration company is adding more profit-boosting oil to its portfolio, it said on Thursday.

"Our liquids production is set to begin expanding rapidly, due to the success we have established in six large new unconventional oil plays," McClendon, who was called "Mr. Gas" in a Fortune magazine article, told investors on the company's earnings conference call.

Chesapeake, which already holds the right to drill for natural gas on nearly 3 million acres in many of the nation's vast shale formations, now owns about 600,000 acres that it plans to explore for oil using horizontal drilling, McClendon told investors.

This year, Chesapeake aims to add another 400,000 oil acres, he said.

U.S. energy companies have pioneered the use of technology such as horizontal drilling and hydraulic fracturing to produce natural gas from rocks and hard impermeable sands. But recovery of oil from similar structures is not as widespread.

That search has intensified as crude oil prices trade around $70 per barrel and natural gas prices trade around $5 per million British thermal units.

Still, Chesapeake plans to drill 3,000 to 5,000 oil wells in its six new oil plays that it estimates contain about 1 billion to 2.5 billion barrels of recoverable oil.

Shares of Chesapeake, which reported fourth-quarter earnings on Wednesday, rose 70 cents, or 2.6 percent, to $27.07. That compares with a fractional decline in the American Stock Exchange Index of natural gas companies.

(Reporting by Anna Driver in Houston, editing by Maureen Bavdek)