Chesapeake Energy (CHK) recently sold $750 million worth of shares in its Utica Shale Holdings to a group of private investors to fund the project development of the shale oil and natural gas deposit.

Although Chesapeake is looking to reduce its natural gas position in favor of the more profitable oil drilling, several reports suggest there is huge potential for the country to reduce its energy deficit and unemployment rate through more shale gas drilling.

Chesapeake Energy boasts the largest inventory of natural gas shale play leaseholds in the country (2.5 million net acres), and it is also the second-largest producer of natural gas in the U.S., after ExxonMobil (XOM).

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Natural gas extraction from shale deposits currently accounts for around 34% of the total U.S. output. IHS Global Hindsight estimates that the natural gas production from shale deposits will constitute a greater percentage going forward, adding 870,000 jobs and $118 billion by 2015.

Shale gas added $76 billion to the country's economy last year and has the potential to add close to $230 billion to the gross domestic product by 2036. Moreover, according to IHS Global Hindsights' report, the cheap fuel can cut the country's electricity costs by as much as 10% and will also raise the industrial production 2.9% by 2017 and 4.7% by 2035.

Chesapeake has lease agreements for drilling at shale gas deposits in the Utica basin that hold around 15.7 trillion cubic feet of natural gas. Apart from this, it also jointly holds agreements with Ernvest Ltd. for extracting oil and gas deposits in area spanning 650,000 acre in the region.

Unlike the normal gas extraction, chemically treated water is forced upon the rock underground to fracture it releasing the gas in the process. The capital intensive setup and expensive drilling procedure leaves very low margins for the drilling companies at the current natural gas rates.

Cheap gas and environmental benefits of natural gas over the conventional coal and diesel has caught attention, and various industrial units and furnaces are now being converted to natural gas-powered units. Even some large-scale road transport fleets have switched to natural gas due to the cost effectiveness of the fuel. As the infrastructure and distribution network develop, we see more customers switching to natural gas, which will eventually help the companies attain sustainable profits out of shale gas drilling as the natural gas prices rise.

For Chesapeake, it was becoming inevitable to sell interest in the shale gas holdings to fund the development projects and to reduce its debt position. In the current scenario, it makes perfect sense for the company to focus on the more profitable oil drilling; however, we see enough upside for natural gas prices and a robust demand for the commodity going forward.