National Fuel Gas Co. (NFG) held its fourth fiscal quarter earnings conference call on November 6, 2009, and discussed its operations in the Marcellus Shale. The company is in a joint venture with EOG Resources (EOG) to develop part of its acreage in the Marcellus Shale.
The agreement with EOG Resources requires the drilling of a minimum number of wells each calendar year during the term of the agreement:
2009 - 10 wells
2010 – 20 wells
2011 – 30 wells
2012 – 40 wells
2013 – 50 wells
2014 – 60 wells
EOG Resources Joint Venture
“Our joint venture with EOG continues to accelerate. Ten horizontal wells were completed by EOG during the fiscal year and four more were in some stage drilling their completion at fiscal year-end.”
“Two wells were brought on line recently and I expect sales from several or more by the end of the quarter. EOG has been operating with one to two horizontal drilling rigs and one top hole rig developing our Punxsutawney focus area. I expect 25 to 30 horizontals to be drilled by the joint venture this fiscal year.”
“In total, including both Seneca operated and EOG operated wells, we now have 17 vertical wells and 18 horizontal wells drilled across our Marcellus shale acreage. 12 of the horizontals have been fraced and completed, and three are producing. By the next earnings call I expect to have at least 10 wells online and possibly as many as 16 or 18.”
“Given our success over the past few months we have decided to ramp up our drilling activity for fiscal 2010. We will add a second Seneca operated rig later this month and now expect to drill a total of at least 50 Marcellus shale wells in fiscal 2010 including the previously mentioned 25 to 30 wells operated by EOG.”
“EOG’s minimum requirement as part of the joint venture agreement maybe 20 wells in calendar 2010; now from what Dave have indicated, I expect will be at a significantly higher level than that in calendar ‘10, and our best guess for fiscal 2010 would be, as I said, 25 to 30 for fiscal 2010.”
Source: Seeking Alpha
