Marcellus Shale

Ultra Petroleum - Q1 2010 Marcellus Shale Comments - Part Three

Ultra Petroleum (UPL) reported earnings for the first quarter of 2010, and held a conference call to discuss the results. During the call, the company made comments on its activities in the Marcellus Shale in Pennsylvania.

Ultra Petroleum is building the infrastructure needed to handle the increased production from its development program in the Marcellus Shale, and the company believes it is being conservative in estimating production growth out of the Marcellus Shale through 2012. 

Production

“We anticipate a strong increase in our Marcellus production in the second half of 2010…our exit rate for 2009 was 24 million cubic feet per day. We fully expect to exit 2010 at 130 million cubic feet per day net.”

“On the production side, we were very, very, very conservative in estimating growth of Marcellus production, our 2010 plan. Our style normally is to under-promise over-deliver, and we're going to be consistent with that. I think we only have about 20 BCF of production from Marcellus in our 215 Bcfe target for 2010.”

Estimated Ultimate Recovery

“The preliminary ultimate recovery estimated for our produced horizontal Marcellus wells consistently supports the tight curve used in our model, with an expected EUR per well of 3.75 Bcfe, with recent results suggesting that our tight curve maybe overly conservative.”

“For the higher-pressured Centre County area, the estimated EUR is 5 Bcfe. Assuming 80-acre spacing, we estimate that we have more than 5,100 gross, 2,300 net remaining well locations across Ultra's 225,000 net acre position. If we apply expected EUR for these locations. The risk resource potential is over 8 Tcfe and to Ultra in the Marcellus.”

Source: Seeking Alpha

Atlas Energy Comments On Marcellus Shale - Part One

Atlas Energy (ATLS) held a conference call to discuss the company’s earnings report for the first quarter of 2010, and made comments on its operations in the Marcellus Shale.

The company has drilled 42 wells to date on its acreage in Pennsylvania, and has increased its estimated ultimate recovery (EUR) for its wells here.

“We have now spud 42 horizontal Marcellus Shale wells in our core area of Southwestern Pennsylvania. 29 of these wells have been successful drilled to total depth and cased. The remaining 13 wells are in the process of being drilled. Atlas has turned 17 of these horizontal wells into line; six wells in the wet gas area and 11 wells in the dry gas area. A clear picture has now emerged. Mature Atlas wells are now averaging actual production of 4.5 Mmcf per day, some 70 days after initial production.”

“As a result, we have actually had to make upward revisions in our budgetary and planning projections to provide for average anticipated EURs of 6 billion cubic feet equivalent per well. That is a sharp increase from our original estimates of 4 billion cubic feet equivalent.”

“Production declines have now proven significantly shallower than originally anticipated. Accordingly, while we had ourselves conservatively anticipated average production during the first year of 1.35 Mmcf per horizontal Marcellus well and to be sure some bolder analysts had projected as much as 1.6-1.7 Mmcf per year.”

“We have now had to adjust our expectations upward again to anticipated average production above 2 Mmcf during the first year of a well’s full operations, approximately 50% higher than our original expectation.”

Source: Seeking Alpha

Ultra Petroleum - Marcellus Shale Update - Part I

Ultra Petroleum (UPL) held a conference call on February 12, 2010, to discuss its fourth quarter of 2009 earnings report. The company has a large amount of future proved reserves accruing on its Marcellus Shale acreage in Pennsylvania. Ultra Petroleum has also published an updated production curve based on 13 Marcellus shale wells.

Ultra Petroleum Marcellus Shale Production Curve

Marcellus Shale Reserves

“We added 1,638 gross Marcellus horizontal locations to our 3P database this year. Each of these locations have a planned drilling unit that are incorporated into our development plans. Using a 100 acre spacing per well, our 3P reserves in Pennsylvania correspond to 164,000 gross acres or only ½ of our Marcellus acreage at year-end 2009.”

“Ultra’s 3P reserves are reported using a $6 gas price and a $60 oil price. At these prices the pre-tax PV 10 value for the 1P reserves is $7.9 billion. For the 2P reserves this value is $12.1 billion. For the 3P reserves the pre-tax PV 10 value is $16.5 billion.”

Marcellus Shale Estimated Ultimate Recovery

“A preliminary ultimate recovery estimate for these wells was the type curve used in our Marcellus models which yields an expected EUR per well of 3.75 BCFE with early performance of some wells indicating EURs in excess of 6 BCFE.”

“The results of our wells in 2009 affirm our 3.75 BCF type curve for our current Marcellus acreage. The 13 well average actually exceeding our type curve.”

Source: Seeking Alpha