Marcellus Shale

XTO Energy - Marcellus Shale Update

XTO Energy (XTO) updated its drilling operations in the Marcellus Shale when it released earnings for the second quarter of 2009. XTO Energy has 280,000 net acres under lease, and is at a very early stage of its development in the Marcellus Shale.

The company has only one rig drilling with a second expected in the third quarter of 2009. The company has completed two horizontal wells and is currently waiting on pipeline. XTO Energy plans to drill up to 12 horizontals in 2009 into its Marcellus acreage.

During the second quarter earnings conference call, Keith Hutton, the CEO of XTO Energy, said, “I wish I had some wells to tell you about on IPs. We do not. We do have three horizontals down, two of them are completed, but we're waiting on a pipeline. And I would rather wait and tell you about how good those wells are once we have them on line and know exactly what they'll flow into the pipeline. That should happen during this quarter.” ___________________________________________________________________

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The Marcellus Shale - XTO Energy

XTO Energy has significant acreage positions in most of the major shale plays in North America, including the Marcellus Shale.  The company had 280,000 acres under net lease in the Marcellus Shale and was utilizing 1 rig to develop this play.  In 2009, XTO Energy plans to drill 10-12 horizontal wells, and 5-10 vertical wells on its acreage.  XTO Energy estimates that its well costs for drilling and completion will range from $3-4 million per well in 2009. 

The company has an inventory of 200-220 drilling locations in the Marcellus Shale with a reserve potential of 500 Bcfe.  The economics of the basin are still good, and XTO Energy estimates that at a price of $5.00 per Mcf, the company will earn a 70% rate of return in the Marcellus Shale with the following assumptions:

 

Well Cost - $3.5 million

Gross EUR- 3.0 Bcfe

Finding and development costs - $1.34 per Mcfe.