Marcellus Shale

Noble Energy and CONSOL Energy - More Details On Marcellus Shale Joint Venture

Here are some additional details from the conference call held by Noble Energy (NBL) and CONSOL Energy (CNX) to discuss the Marcellus Shale joint venture. 

• Noble Energy is paying $160 million for a 50% stake in the proved developed producing (PDP) reserves of CONSOL Energy.  The company held 89 Bcf of PDP reserves which converts to $1.80 per Mcf.
• CONSOL Energy estimates that the company has proved undeveloped reserves in the Marcellus Shale totaling 770 Bcf.
• CONSOL Energy will be the operator on the 570,000 net acres that are in the dray gas area of the play, and Noble Energy will be the operator on the 95,000 net acres that are in the wet gas area of the Marcellus Shale.

The rig count and gross wells drilled in the joint venture will ramp up according to this schedule through 2015:

2011 - Four rigs and 35 wells.

2012 - Eight rigs and 140 wells.

2013 - Twelve rigs and 227 wells.

2014 – Fifteen rigs and 318 wells.

2015 - Sixteen rigs and 354 wells.

CONSOL Energy paid $1.88 billion or $3,827 per acre in 2010 for the Marcellus Shale assets held by Dominion Resources (D).  The company said that the joint venture deal values the acreage at $9,650 per acre.

Stone Energy Updates Marcellus Shale Operations For Fourth Quarter Of 2010

Stone Energy Corporation (SGY) provided an update on its oil and gas operations in the Appalachian Basin for the fourth quarter of 2010.  The company has 75,000 net acres under lease and is active in developing the Marcellus Shale formation.

Stone Energy has drilled a total of 16 wells into the Marcellus Shale since April 2010, with 12 in West Virginia and 4 in Pennsylvania.  The company has completed 10 of these wells and reported initial production rates ranging from 3 million to 10 million cubic feet per day.

Stone Energy is working with Caiman Energy to arrange gathering infrastructure and expects this to be operational by the third quarter of 2011.  The company plans to operate one rig in 2011 and drill between 16 and 18 wells.

Talisman Energy - Marcellus Shale - First Quarter 2010 Update

Talisman Energy released an operational update on its exploration and development activities, and reported on its Marcellus Shale acreage in Pennsylvania.

Talisman Energy said that production from the Marcellus Shale was 150 million cubic feet per day at the end of April, and should exit 2010 at a rate of from 250-300 million cubic feet per day.

In the first quarter of 2010, Talisman Energy drilled 35 gross wells, brought 22 wells on line and has 41 wells waiting on completion. The company has 8 rigs operating in the play.

Management Comments

“Today our Marcellus wells have a breakeven significantly lower than the realizations and that’s before the impact of any hedging.”

“At the end of April, we were producing a 150 million cubic feet from the Marcellus and I am confident that we will exit the year as we said between 250 and 300 million cubic feet a day.”

“Couple of things to say on the Marcellus as you quite rightly say we have planned this year on average IPs in the Marcellus of 3 and EURs of 3.5, the well results in the first quarter have been better than that. In the first quarter we have seen average IPs of 5 and average EURs of 6”

Source: Seeking Alpha