Tag Archives: Eagle Ford

Business, Finance, Occupation & Industry

The Surprising Paradox of Record U.S. Natural Gas Production

Leave a comment

By Arjun Sreekumar, The Motley Fool

Filed under:

Most people probably know that the past few years haven’t been kind to natural gas producers, who saw prices for their product plunge to a decade low last spring. In response, most decided to curtail gas drilling as much as possible in favor of drilling for oil.

This tendency of energy producers to avoid the out-of-favor commodity is perhaps most evident in the U.S. rig count data. Over the past year and a half, the number of rigs drilling for natural gas has plunged by more than half. Yet U.S. natural gas production continues to shatter records.

Last year, total marketed production came in at 25.3 trillion cubic feet, the highest ever level of output. And production continues at astonishing levels of just under 65 billion cubic feet per day. What explains this paradox?

The nature of oil and gas wells
There are at least two important factors to consider here. The first has to do with the technicalities of drilling for hydrocarbons.

Despite industry jargon characterizing individual wells as “oil wells” or “gas wells,” most wells actually produce a mixture of crude oil, natural gas liquids, and dry gas. Some plays, such as the Marcellus or the Haynesville, produce much more natural gas and gas liquids than oil, while others, such as the Bakken and the Eagle Ford, crank out much higher proportions of crude oil.

Many drilling rigs have been migrated from plays that produce mostly dry natural gas to those that produce greater proportions of oil and gas liquids. Still, these liquids-rich plays give off substantial quantities of so-called “free” gas as an associated byproduct of liquids drilling. In some plays, much of it is collected and marketed, while in others, like the Bakken, much of it is flared off and wasted.  

Drilling efficiency gains
The second, and more important, reason why gas production has continued at record levels despite the plunge in gas-directed rigs has to do with the massive efficiency gains that have become a common feature of the industry.

If you sift through energy producers’ quarterly conference calls, you’ll notice just how staggeringly frequent some of these gains are, occurring not just year over year but each quarter and, in some cases, each month.

Not only are operators able to drill wells much faster than before and, in some cases, cheaper than before, many have been able to increase production while employing the same or fewer number of rigs. For instance, Bakken operator Kodiak Oil & Gas reported a drastic reduction in the number of spud-to-rig release days, which were down to the low 20s in the fourth quarter, as compared with nearly 35 in the year-earlier period.

And in the Eagle Ford shale of Texas, quicker movement between wells helped Chesapeake Energy slash the number of days it took to get from one well to another. In the fourth quarter, the company said it averaged just 18 days to move rigs between

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Why a Spill Along Keystone XL Could Be Disastrous

Leave a comment

By Arjun Sreekumar, The Motley Fool

Filed under:

If the numerous protests against Keystone XL — the proposed TransCanada-operated pipeline that would link production from Alberta’s oil sands to refiners along the US Gulf Coast — haven’t already made clear by now, a lot of environmentalists and other groups are staunchly opposed to the line’s construction.

In addition to their argument that allowing the pipeline to be constructed would lead to accelerated development in Alberta’s oil sands, which would spew materially greater quantities of greenhouse gases into the atmosphere, environmentalists are against Keystone XL for two additional reasons.

The first is because of the environmentally sensitive areas the pipeline would cross. One of the key areas pinpointed as the most environmentally sensitive is in Nebraska, where Keystone would cross more than 200 miles of the Ogallala aquifer. Some say that a spill near this region could be far more devastating than a spill in virtually any other area, since it would pollute the region’s groundwater, perhaps irreversibly.

The second cause for concern has to do with the physical qualities of the bituminous crude oil Keystone XL would move. Bitumen is a thick, viscous substance that doesn’t flow unless it’s heated or diluted. For it to be transported via pipeline, it has to be diluted with specialty chemicals that yield diluted bitumen, or “dilbit” crude. Some commentators argue that dilbit crude is much harder to clean up than lighter crude variants, such as those produced in the Bakken or Eagle Ford shales, especially when it spills into water.

For instance, consider the rupturing of an Enbridge pipeline in July 2010, which spilled more than a million gallons of dilbit crude into Michigan’s Kalamazoo River in what was the largest bituminous crude spill into a U.S. waterway.

Enbridge’s woes highlight dilbit cleanup issues
Nearly three years later, the cleanup effort isn’t over. When all that dilbit crude was released into the river, the dilutive chemicals rose to the surface and evaporated but left behind bitumen, which began sinking to the riverbed.

Though Enbridge has already been fined $3.7 million for the spill, which it paid in September, according to the federal Pipeline and Hazardous Materials Safety Administration, the Environmental Protection Agency isn’t satisfied yet. It notified the Canadian pipeline operator in October that further cleanup is required in the Kalamazoo River, upstream of the Ceresco and Battle Creek Dams, as well as in the delta upstream of Morrow Lake.

And last month, it gave the company an additional order, which requires it to dredge submerged oil and oil-contaminated sediment that still exists across some 40 miles of the Kalamazoo River. After factoring in these additional costs, the company now estimates the total costs of cleanup to approach $1 billion. That’s more than the company’s entire net income last year.

Lack of information about dilbit’s interaction within aquifer
As Enbridge’s example highlights, bad things can happen when dilbit crude spills into a river. But much less is known about dilbit crude’s interaction

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

1 State Taking Charge of Its Natural Gas Future

Leave a comment

By Matt DiLallo, The Motley Fool

Filed under:

Our national energy policy is akin to a tug of war between national security concerns, environmental issues, and determining what’s needed to keep our domestic economy humming. Energy itself usually plays a subordinate role in the discussion; the more pressing issues take precedence and we work our energy policy around them.

That’s created a number of stopgap measures, some of which are driven by the market and some are driven by government intervention. Where the government hasn’t intervened, at least on a national level, is in maximizing how we use our massive natural gas resources. One state is tired of waiting for direction from above and has decided to take matters in its own hands.

Currently, there are eight natural gas vehicle bills making their way through the Pennsylvania legislature. These bills range in content from tax credits to proposals to move funds from one program to another, all designed to spur the use of natural gas as a transportation fuel. Considering that Pennsylvania is sitting on one of the largest natural gas deposits in the world, it makes sense for the state to do something to increase its own use of that resource.

Natural gas has the power to change the face of the fuel industry. In the state we’ve seen drillers like EQT build its own natural gas fuel station, only to find it necessary to expand within 18 months. That’s without any help from the government, which gives a bit of an indication as to how powerful the economics of switching has become.

In the state, what’s coming out of committees isn’t addressing the refueling infrastructure; instead, it’s addressing the vehicle side of the equation. Nationally, companies like Clean Energy Fuels are addressing the infrastructure side of things. However, that infrastructure needs to be used in order for the investments to grow the infrastructure to continue flowing, which is why tax credits will be important.

The importance of tax credits does stretch beyond the funding of vehicles to switch to natural gas, of course. There is an important economic trickle-down effect for the state, which had been seeing reduced employment as drilling has slowed down due to the price of natural gas falling. By spurring increased demand for natural gas, the state is also hoping to turn around falling rig counts.

Drillers are incentivized to increase drilling activity if the profits justify doing so. Top Marcellus leaseholder Chesapeake Energy has slashed its overall drilling budget by 39% this year. It’s turning its focus on the most liquids-rich plays, which is why 35% of the drilling budget is going to the Eagle Ford. It’s still drilling in the Marcellus, but it’s reduced both its rig count and its capex.

The company has also shifted some of its attention to next-door neighbor Ohio’s Utica Shale. It’s not the only Marcellus driller to look to the higher profit potential in the liquids-rich Utica. Smaller drillers like Rex

From: http://www.dailyfinance.com/2013/04/18/1-state-taking-charge-of-its-natural-gas-future/

Business, Finance, Occupation & Industry

Do Rig Counts Even Matter Anymore?

Leave a comment

By Arjun Sreekumar, The Motley Fool

Filed under:

The number of rigs drilling for oil and natural gas has long served as one of the most important metrics for gauging the health of the energy industry.

But recently, the usefulness of rig count data has been called into question. Specifically, commentators have noted a sizable disconnect between the number of active rigs in a play and production from that play. Let’s take a closer look at why this is and whether or not rig counts are as important as they used to be.

Improvements in drilling efficiency
The disconnect between rig counts and production can largely be explained by one major factor — drastic improvements in drilling efficiencies.

Since hydraulic fracturing and horizontal drilling methods gained widespread commercial acceptance several years ago, oil and gas producers have continued to report efficiency improvements as they optimize their techniques even further.

Pad drilling methods have become especially popular, since they allow operators to more efficiently drill multiple wells from the same pad. This has enabled numerous companies to dramatically reduce the number of days taken to drill and complete a well.

Sharp decline in drilling days
For instance, in the Bakken shale of North Dakota, Kodiak Oil & Gas reported that fourth-quarter spud to rig release days were down to the low 20s for a typical 10,000-foot lateral well — a sharp reduction from nearly 35 days a year earlier. In fact, a recent Kodiak well completed in the fourth quarter was drilled in just 18 days — a company record.

Pad drilling methods have also allowed operators to use fewer rigs to drill the same number of wells. For instance, Whiting Petroleum , another major Bakken operator, reported a substantial decline in drilling expenses over the past year because of a successful transition toward multi-pad drilling, allowing the company to drill the same number of wells with fewer rigs.

Similar improvements can be seen in Texas’ Eagle Ford shale. In June 2012, operators in the play averaged just around 19 days to drill a horizontal well, down from an average of 23 days a year earlier. Chesapeake Energy , whose operations have focused intensely on the liquids-rich play, said it averaged just 18 days to move between Eagle Ford wells in the fourth quarter, down from 26 days two years ago. It also reported drilling a recent well in just under eight days — a company best.  

Previously, the process of moving a drilling rig between two locations was rather cumbersome. A rig needed to be disassembled at one well site and then reassembled at the new one, even if the new site was just a few yards away. But now, using hydraulic walking or skidding systems, a rig can be lifted and transported a short distance to the new drilling location.

In fact, improved rig mobility and the introduction of pad drilling techniques have even allowed operators to transport rigs between locations that are much further apart. For

From: http://www.dailyfinance.com/2013/04/14/do-rig-counts-even-matter-anymore/

Business, Finance, Occupation & Industry

Is This the Biggest Threat to OPEC?

Leave a comment

By Arjun Sreekumar, The Motley Fool

Filed under:

The Organization of the Petroleum Exporting Countries, or OPEC, describes itself as “a permanent intergovernmental organization of 12 oil-exporting developing nations that coordinates and unifies the petroleum policies of its Member Countries.”

Historically, the organization has exerted considerable influence on the world oil market, with many even characterizing it as a cartel. Over the past three decades or so, it has produced a little less than half of the world’s oil, with its Gulf State members still controlling most of the world’s crude oil spare capacity. By lowering their collective output, OPEC members can push global oil prices higher, or so the logic goes.

But now, there is convincing evidence that OPEC’s sway in the oil market is waning. Let’s take a closer look at some of the major recent developments that may be keeping OPEC members up at night.

OPEC’s glory days
In previous decades, OPEC‘s influence on the global oil market was almost undeniable. The surge in oil prices during 1973, for instance, can be attributed largely to OPEC actions, which included a dramatic increase in “posted prices” for their oil, as well as a wave of nationalizations among OPEC member nations and the organization’s temporary embargo against the U.S. and others.

But a lot has changed since those days. Since 2008, non-OPEC oil supplies have increased dramatically, fueled by growing production from U.S. shale, Canada‘s oil sands, and deepwater discoveries off the coasts of Brazil, Africa and other parts of the globe.

This year, non-OPEC supplies are projected to grow by almost 1 million barrels a day, largely because of advances in drilling technologies that have allowed energy companies to extract massive quantities of oil from leading U.S. shale plays such as North Dakota‘s Bakken and Texas’ Eagle Ford.

In the Bakken, for instance, Kodiak Oil & Gas roughly tripled its average production between 2011 and 2012 and is projecting to double this year’s production from last year’s levels. And in the Eagle Ford, Chesapeake Energy reported fourth-quarter daily net production of 62,500 barrels per day, representing a whopping 266% year-over-year increase.

Not surprisingly, North Dakota‘s field production of crude oil has increased more than fivefold over the past five years, going from 45.1 million in 2007 to 242.5 million barrels last year, while Texas’ crude oil production has almost doubled over the same period, from 391.1 million barrels to 721.4 million.

OPEC lowers its forecast
Though senior OPEC officials initially downplayed the threat of rising North American oil supplies, it looks as though the organization has now started to seriously consider the shale boom as a major threat.

Last month, it reduced its forecast of demand for its crude oil this year by 100,000 barrels per day to 29.7 million barrels a day, citing growth in U.S. shale production as a major factor underlying the downward revision. If the new forecast turns out to be accurate, demand for OPEC crude would be 350,000 barrels a day

From: http://www.dailyfinance.com/2013/04/14/is-this-the-biggest-threat-to-opec/

Business, Finance, Occupation & Industry

Forest Oil Announces Eagle Ford Shale Development Agreement

Leave a comment

By Business Wirevia The Motley Fool

Filed under:

Forest Oil Announces Eagle Ford Shale Development Agreement

Schlumberger to be Fully Aligned as a 50/50 Strategic Partner Providing Technology, Integrated Services and Capital Resources to Enhance Value of Eagle Ford Shale Asset

DENVER–(BUSINESS WIRE)– Forest Oil Corporation (NYS: FST) (Forest or the Company) today announced the signing of a definitive agreement with Schlumberger (NYS: SLB) , the world’s leading oilfield services company supplying technology, information solutions and integrated project management to the oil and gas industry, for the future development of Forest’s Eagle Ford Shale acreage in Gonzales County, Texas.

Patrick R. McDonald, Forest’s President and Chief Executive Officer, stated, “We believe that our Eagle Ford position is a valuable oil asset and being aligned and working together cooperatively with a strategic partner such as Schlumberger will greatly enhance the value of this important asset. Schlumberger Production Management (“Schlumberger”) will provide the technology, integrated services, and capital resources necessary for us to retain and develop a substantial portion of our acreage position. The development agreement allows for accelerated production growth and enhancement of our project economics as we integrate leading edge technologies across all aspects of our Eagle Ford development program. Forest anticipates increasing drilling activity to four rigs, from one to two rigs currently, by the end of the third quarter of 2013. The capital carry amount combined with the accelerated pace of development brings forward approximately $250 million in PV10 economics to Forest. We are pleased that Schlumberger, after several months of conducting their own technical due diligence, is partnering with us so that we can achieve the best possible results for our company and our shareholders.”

Carl Trowell, President, Schlumberger Production Management, commented, “We are pleased to be part of this exciting opportunity, in which Forest and Schlumberger are fully aligned and committed to the development of Forest’s Eagle Ford unconventional resources. Our primary goal will be to support and complement Forest’s current team, and to develop and deploy industry-leading technologies; develop the best unconventional resource workflows; and implement new reservoir management techniques in order to maximize production and reserves.”

Under the terms of the agreement, Schlumberger will pay a $90 million drilling carry in the form of future drilling and completion services and related development capital in order to earn a 50% working interest in Forest’s Eagle Ford Shale acreage position. Upon completion of the phased contribution of the drilling carry, Forest and Schlumberger will participate in future

From: http://www.dailyfinance.com/2013/04/12/forest-oil-announces-eagle-ford-shale-development-/

Business, Finance, Occupation & Industry

Forest Oil Details Accelerated Eagle Ford Shale Drilling Program

Leave a comment

By Business Wirevia The Motley Fool

Filed under:

Forest Oil Details Accelerated Eagle Ford Shale Drilling Program

Accelerated Development Program to Hold an Aggregate of 55,000 Gross (27,500 Net) Acres

Incorporate Four Drilling Rigs by the Third Quarter of 2013 and Drill 60 Gross (30 Net) Wells in 2013 and 80 Gross (40 Net) Wells in 2014

Eagle Ford Shale Average Net Sales Volumes Expected to Reach 6,500 Boe/d in 2014 from 1,600 Boe/d in 2012

DENVER–(BUSINESS WIRE)– Forest Oil Corporation (NYS: FST) (Forest or the Company) today provided an update on its Eagle Ford Shale drilling program for 2013 and 2014 and announced a teleconference call scheduled for April 12, 2013 at 7:00 AM Mountain Time to discuss the release.

Forest recently announced the signing of a definitive agreement with an industry partner for the future development of the Company’s Eagle Ford Shale acreage position. Under the terms of the agreement, the industry partner will pay a $90 million drilling carry in the form of future drilling and completion services and related development capital in order to earn a 50% working interest in Forest’s Eagle Ford Shale acreage position. In conjunction with the agreement, Forest plans to accelerate development by increasing drilling activity to four rigs, from one to two rigs currently, by the end of the third quarter of 2013. Forest projects that the capital carry amount combined with the accelerated pace of development will bring forward approximately $250 million in PV10 economics.

Forest anticipates that the accelerated development program will hold an aggregate of 55,000 gross (27,500 net) acres in Gonzales County, compared to 40,000 gross (40,000 net) acres based on the current development program. The increased acreage position has 688 gross (344 net) locations identified based on 80-acre spacing, and Forest anticipates being able to drill 80 gross (40 net) wells per year beginning in 2014. Based on Forest’s current estimated ultimate recovery of 300 Mboe per location, the Eagle Ford acreage contains a potential gross unrisked resource of over 200 MMboe (100 MMboe net).

Forest estimates that its share of capital expenditures in the accelerated development plan for 2013 and 2014 will total approximately $125 million and $220 million, respectively. The accelerated development plan will result in ten and

From: http://www.dailyfinance.com/2013/04/12/forest-oil-details-accelerated-eagle-ford-shale-dr/

Business, Finance, Occupation & Industry

Matador Resources Company to Present at the 2013 IPAA Oil & Gas Investment Symposium

Leave a comment

By Business Wirevia The Motley Fool

Filed under:

Matador Resources Company to Present at the 2013 IPAA Oil & Gas Investment Symposium

DALLAS–(BUSINESS WIRE)– Matador Resources Company (NYS: MTDR) (“Matador” or the “Company”), an independent energy company currently focused on the oil and liquids rich portion of the Eagle Ford shale play in South Texas, announced today Joseph Wm. Foran, Chairman, President and Chief Executive Officer, will present at the 2013 IPAA Oil & Gas Investment Symposium held in New York City on Tuesday, April 16, 2013 at 9:10 a.m. Eastern Time.

Investors and the general public are invited to listen to the live webcast of the presentation via the following link: http://www.investorcalendar.com/CEPage.asp?ID=170780. The webcast can also be found at www.matadorresources.com under the Events page of the Investors section of the website.

A copy of the Company’s latest investor presentation is available at www.matadorresources.com under the Presentations page of the Investors section of the website.

About Matador Resources Company

Matador is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with a particular emphasis on oil and natural gas shale plays and other unconventional resource plays. Its operations are focused primarily on the oil and liquids rich portion of the Eagle Ford shale play in South Texas and the Wolfcamp and Bone Spring plays in West Texas and Southeast New Mexico. Matador also operates in the Haynesville shale and the Cotton Valley natural gas plays in Northwest Louisiana and East Texas.

For more information, visit Matador Resources Company at www.matadorresources.com.

Matador Resources Company
Mac Schmitz, 972-371-5225
Investor Relations
mschmitz@matadorresources.com

KEYWORDS:   United States  North America  New York  Texas

INDUSTRY KEYWORDS:

The article Matador Resources Company to Present at the 2013 IPAA Oil & Gas Investment Symposium originally appeared on Fool.com.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The

From: http://www.dailyfinance.com/2013/04/11/matador-resources-company-to-present-at-the-2013-i/

Business, Finance, Occupation & Industry

3 Regions Where Natural Gas Production Is Growing

Leave a comment

By Matt DiLallo, The Motley Fool

Filed under:

If you haven’t noticed yet, natural gas prices have started to head higher. A combination of factors, including a surprisingly cold March, have led to resilient demand. As prices have inched up, two top Wall Street banks have seen enough momentum to raise their 2013 price target for natural gas. Morgan Stanley‘s price forecast was bumped up by 7% to $3.93 per million British thermal units, or MMBtu, while Goldman Sachs raised its forecast from $3.75 per MMBtu all the way to $4.40 per MMBtu.

That’s good news for those companies in regions where natural gas production is actually growing. Overall since the end of 2011, North American dry shale gas production has risen by 9.95% to 27.2 billion cubic feet of production per day as of the beginning of this past February. This rise has been driven primarily by production growth at three big plays. Let’s take a look.

Eagle Ford
While not known for natural gas, the Eagle Ford Shale has actually seen a 43.12% pop in natural gas production according to data from the Energy Information Administration, or EIA, over the past year. Most of this gas is associated with oil and liquids, as fewer companies are drilling in the dry gas window at the moment.

For example, Chesapeake Energy‘s core acreage is in the sweet spot of the oil window. Despite that, 19% of the company’s fourth-quarter production was natural gas. As Chesapeake increases its overall production, natural gas production increases as a byproduct of its liquids-focused drilling. Further, as the nation’s No. 2 gas producer, Chesapeake is one of the biggest beneficiaries of higher gas prices.

Marcellus
According to the EIA, natural gas production out of the Marcellus jumped 55.28% over the past year. Top producer, Range Resources , produced a total of 146 Bcf of natural gas last year. That production easily exceeded that of number two producer EQT‘s 103 Bcf of natural gas production last year.

These two companies hold one thing in common: Both are among the lowest-cost producers of natural gas in the country, which gives them a competitive advantage to make money when most of their competitors cannot. Investors in these low-cost producers have been served well as both have returned around 40% over the past year. 

Bakken
While the Bakken is known for its oil, natural gas production skyrocketed by 94.38% according to data from the EIA. Part of the reason more gas is being produced is because less of it is being flared — instead, it’s being put into pipelines. Most of this infrastructure simply didn’t exist until recently and now that companies have a way to get gas to market, they’re able to sell instead of flare.

The impact of this reduced flaring is clearly evident at Kodiak Oil & Gas . In 2011 the company produced 1,329 MMcf of gas, but flared 807 MMcf. That’s 61% of the gas! Last year the

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

What's Driving the Natural Gas Rally?

Leave a comment

By Arjun Sreekumar, The Motley Fool

Filed under:

If you haven’t noticed, natural gas prices have soared over the past month and a half, helping reverse a lengthy decline that began in the summer of 2011. Gas futures in New York settled at a 20-month high on Friday, led by colder-than-expected weather that helped reduce stockpiles below the five-year average for the first time since 2011.

Cold weather erases stockpile surplus
March saw uncharacteristically strong demand for home heating because of unusually chilly temperatures. The trend is expected to continue, with MDA Weather Services, a provider of meteorological forecasts, predicting colder-than-usual temperatures in the north-central states and hotter-than-usual weather for Texas and the Southeast for next week.

In the week ended March 29, the U.S. Energy Information Administration reported that 94 billion cubic feet, or bcf, of natural gas were withdrawn from underground storage, exceeding Wall Street‘s consensus for a draw of 92 bcf. That pushed the amount of working gas in storage down to 1.687 trillion cubic feet, or tcf, a decrease of 779 bcf from a year earlier and 37 bcf below the five-year average.

In addition to bullish storage data, gas price gains accelerated following the release of Baker Hughes‘ rig count data, which indicated that the number of rigs drilling for natural gas fell by 14 to end the week at 375 — the lowest level since May 1999.  

According to Johan Spetz, an analyst at Goldman Sachs, gas prices will have to rise further in the second half of the year to spur production growth. According to his calculations, prices will need to average about $4.50 per thousand cubic feet in the latter half of the year to balance the market.  

Winners and losers
If prices do end up moving higher still, some low-cost natural gas producers stand to see further gains. One company worth keeping an eye on is Ultra Petroleum , a pure-play gas producer whose stock price closely tracks the price of natural gas; since mid-February, shares are up almost 30%.

Ultra was one of the lowest-cost producers last year, with all-in costs of roughly $3 per thousand cubic feet equivalent, less than half the industry average of $6.31. If gas prices rise further, its Pinedale Field and Marcellus assets will become even more profitable — a catalyst that’s sure to send the company’s stock higher.

Some companies are already reacting to the surge in gas prices by resuming or ramping up gas drilling. For instance, Encana announced in February that it plans to increase the number of rigs it has running in the Haynesville shale by three this year, because of the play’s improved profitability.

Others, however, are opting to wait till prices rise much higher before they divert their resources away from liquids-rich plays.

For instance, Chesapeake Energy recently announced that it has no plans to resume drilling in gassier plays and is instead opting to ramp up operations in the oil-rich Eagle Ford play. Similarly, …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Diamond Offshore Sparkles in the Deepwater

Leave a comment

By David Lee Smith, The Motley Fool

Filed under:

You know about the tremendous increases in hydrocarbons production that have been generated onshore in just the past few years in the primary U.S. oil-centric unconventional plays. I’m referring primarily to the prolific Eagle Ford of south Texas, North Dakota’s Bakken/Three Forks, and the rejuvenated Permian Basin, which essentially straddles the lower border between Texas and New Mexico.

Nevertheless, it’s likely that in the future, the biggest discoveries of black gold will occur in progressively deeper offshore waters. I’m referring to the likes of the Gulf of Mexico — which was once thought to be on the road to depletion — Brazil‘s Santos Basin, the Cuanza Basin offshore Angola, the South China Sea, and potentially the Kara Sea of the Russian Arctic.

The offshore energy opportunities
From the perspective of how to play this expanding trend, there are a number of international oil companies that might fit the bill. For instance, unless the Russians return to their devious ways, ExxonMobil will operate in the Kara and Black seas through a newly hatched joint venture with state-controlled Rosneft.

And there’s very little drilling that occurs on our planet that doesn’t involve oilfield-services leader Schlumberger in some form or fashion. But from my perspective, it makes eminently good sense to become familiar with the deepwater drillers, such as Transocean and Diamond Offshore .

In the interest of full disclosure, I must admit to currently owning Transocean shares and to having served, as a wee lad, as a junior officer of a predecessor company of Diamond. So with those admissions as a backdrop, let’s take a quick gander at two of the world’s largest offshore drillers. Each has its own strengths, and, given the increasing tendency for oil and gas producers to splash around offshore, neither is likely to follow the fate of buggy-whip manufacturers during any of our lifetimes.

Transocean’s bevy of big rigs
Swiss-based Transocean is the largest of the deepwater drillers, with 82 rigs under its at least partial ownership and operation. Fully 27 of the units are classified as “ultra-deepwater,” meaning they’re capable of plying their trade in water depths of 7,500 feet or more. Another 14 are “deepwater” rigs, meaning that they typically operate between 4,500- and 7,500-foot depths. The rest of the fleet consists of harsh-environment rigs, midwater floaters, and jackups — both standard and high-specification types.

The company currently has at least five rigs working offshore Angola, Brazil, India, Malaysia, Nigeria, the North Sea, Norway, and the U.S. Gulf of Mexico. The last-mentioned locale leads the pack, with 15 busy Transocean rigs.

There are two issues regarding Transocean that bear monitoring by Fools thinking about investing in the company:

  • Transocean remains a defendant in a federal trial relating to the horrendous 2010 tragedy aboard its Deepwater Horizon rig in the Gulf of Mexico. The New Orleans trial will probably be followed by litigation precipitated by the Gulf states, claiming damages from the oil gusher …read more

    Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Magnum Hunter Cashes Out of the Eagle Ford

Leave a comment

By Matt DiLallo, The Motley Fool

Filed under:

Magnum Hunter Resources took advantage of its position in the hot Eagle Ford Shale to unload most of its acreage at a premium price. In a deal with Penn Virginia , Magnum Hunter is selling approximately 19,000 net acres in the Eagle Ford Shale for $401 million. Included in the deal are 49 producing wells with another 11 wells in various stages of completion.

This is a big deal for both companies, both in terms of size and what it means for each company’s respective future. The deal represents a big chunk of capital for Penn Virginia when you consider that its market capitalization is just $200 million. To pay for the deal, the company is planning to tack on another $400 million in debt through a senior notes offering. Pro forma, the company will have over a billion dollars in debt on its balance sheet. However, these assets are mostly adjacent to its current Eagle Ford position which yields both synergy and scale. It’s really a transformational deal for the company, but given that the acres are in the oil window it appears to be worth the risk. 

For Magnum Hunter, this deal is about cashing in on a high-value asset so it can reinvest into what it believes will become higher-value assets. The company is getting a good price and locking in a solid overall return. It entered the Eagle Ford in 2009 when it spent $2.35 million to acquire a small operator, after investing another $263 million in capital to develop the play, it has already yielded $80 million in cash flow. When you add it all up, that’s a three-year internal rate of return over 80%. Given that the Eagle Ford represented its smallest acreage position, it makes sense to cash out and move on.

Initially, Magnum Hunter plans to use the funds to reduce its debt. However, the company had just $115 million of liquidity against a $300 million planned capital budget so one way or the other these funds will be plowed back into its business. That capital budget is split pretty evenly between its Williston Basin and Appalachian assets with a focus on growing its liquids rich production.

It reminds me of the blueprint that Chesapeake Energy  has famously followed. The company is constantly cashing in on its acreage to fund the development elsewhere in its portfolio. In fact, Chesapeake currently has some of its own Eagle Ford acreage up for sale and the price Magnum Hunter received bodes well for Chesapeake’s fortunes. 

The bottom line here is that this deal gives Magnum Hunter a little more financial flexibility to fund the opportunities it sees in both the Bakken and the Uitca. The company remains an interesting growth story, with production expected to leap this year from just over 14,000 barrels of oil equivalent per day to a range of 18,500-20,000 barrels of oil equivalent per day. Even better, an increasing mix …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Chesapeake Energy Corporation Announces 2013 First Quarter Operational Update and Financial Results

Leave a comment

By Business Wirevia The Motley Fool

Filed under:

Chesapeake Energy Corporation Announces 2013 First Quarter Operational Update and Financial Results Release Date and Conference Call Information

OKLAHOMA CITY–(BUSINESS WIRE)– Chesapeake Energy Corporation (NYS: CHK) has scheduled to release its 2013 first quarter operational update and financial results before market open on Wednesday, May 1, 2013. A conference call to discuss the results has been scheduled for the same day at 9:00 am EDT. The telephone number to access the conference call is 913-312-0844 or toll-free 888-811-5445. The passcode for the call is 8842603. We encourage those who would like to participate in the call to place calls between 8:50 and 9:00 am EDT.

For those unable to participate in the conference call, a replay will be available for audio playback at 2:00 pm EDT on Wednesday, May 1, 2013 and will run through 2:00 pm EDT on Wednesday, May 15, 2013. The number to access the conference call replay is 719-457-0820 or toll-free 888-203-1112. The passcode for the replay is 8842603.

The conference call will also be webcast live on Chesapeake’s website at www.chk.com in the “Events” subsection of the “Investors” section of the company’s website. The webcast of the conference will be available on our website for one year.


Chesapeake Energy Corporation (NYSE: CHK) is the second-largest producer of natural gas, a top 11 producer of oil and natural gas liquids and the most active driller of new wells in the U.S. Headquartered in Oklahoma City, the company’s operations are focused on discovering and developing unconventional natural gas and oil fields onshore in the U.S. Chesapeake owns leading positions in the Eagle Ford, Utica, Granite Wash, Cleveland, Tonkawa, Mississippi Lime and Niobrara unconventional liquids plays and in the Marcellus, Haynesville/Bossier and Barnett unconventional natural gas shale plays. The company also owns substantial marketing and oilfield services businesses through its subsidiaries Chesapeake Energy Marketing, Inc. and Chesapeake Oilfield Operating, L.L.C. Further information is available at
 www.chk.com where Chesapeake routinely posts announcements, updates, events, investor information, presentations and news releases.

Chesapeake Energy Corporation
Jeffrey L. Mobley, CFA, 405-767-4763
jeff.mobley@chk.com
or
Gary T. Clark, CFA, 405-935-6741
gary.clark@chk.com
or
Media Contacts:
Michael Kehs, 405-935-2560
michael.kehs@chk.com
or
Jim Gipson, 405-935-1310
jim.gipson@chk.com

KEYWORDS:   United States  North America  Oklahoma

INDUSTRY …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

OriginOil Accelerates Commercialization of CLEAN-FRAC System with First Commercial Unit Planned for

Leave a comment

By Business Wirevia The Motley Fool

Filed under:

OriginOil Accelerates Commercialization of CLEAN-FRAC System with First Commercial Unit Planned for 3 rd Quarter

As OriginOil completes successful demonstration tour at Eagle Ford Formation in Texas, licensee plans to deliver first commercial unit by Q3 2013

LOS ANGELES–(BUSINESS WIRE)– OriginOil, Inc. (OTCBB: OOIL), the developer of a breakthrough energy production process for the oil and algae industries, recently introduced its CLEAN-FRAC™ system to the Texas oil and gas industry and its publications, while its first licensee plans to deliver a first commercial unit in the 3rd Quarter of this year.

Following the completion of field trials in the Lost Hills oil production area of Bakersfield, California, OriginOil launched two weeks of demonstrations for operators and service companies in the Eagle Ford shale region near San Antonio, and for industry analysts and reporters in Houston, Texas.

Guest operators and service companies remarked on the clarity of the effluent water and the amount of “sludge” separated from the water. Highlights are available in this video: https://vimeo.com/63063082.

The company is now helping its first OEM licensing partner, PACE subsidiary PearlH20, deploy a one barrel per minute integrated frack water cleanup system that uses its CLEAN-FRAC process as the first stage. The deployment of the mobile container-based system is initially slated for the 3rd Quarter in the Bakersfield area.

Dr. Gerald Bailey, former President of Exxon for the Arabian Gulf and OriginOil’s Oil and Gas Industry Advisor, was present for the technology demonstrations and commented, “The response by the operators was overwhelmingly positive. The discussion was all about how CLEAN-FRAC enables the recycling of frac flowback or produced water, resulting in significant cost savings and environmental benefits. With OriginOil’s technology, operators will be able to significantly reduce the amount of fresh water purchased for the fracing process.”

Basing its San Antonio area presentations in nearby Pleasanton, OriginOil used frac flowback water with a high amount of solids kept in solution by anti-coagulants, and a small trace of oil. CLEAN-FRAC coagulated the solids despite the presence of the anticoagulants, reducing organics by as much as 99 percent and suspended solids as much as 98 percent, as measured in the on-site mobile lab.

“CLEAN-FRAC represents a new generation of water treatment that is chemical-free, low energy and beneficial to the environment,” said Riggs Eckelberry, OriginOil CEO. “It not only generates significant cost savings through less trucking …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

How Big Is the Utica Shale's Potential?

Leave a comment

By Arjun Sreekumar, The Motley Fool

Filed under:

Since the Bakken and Eagle Ford shales took the energy industry by storm a few years back, another energy play has slowly crept into the limelight. It’s the Utica shale — an up-and-coming play that has drawn comparisons with the prolific Eagle Ford of Texas. Like the Eagle Ford, the Utica is expected to have a vast prospective area, massive hydrocarbon potential, and three zones containing oil, dry gas, and natural gas liquids.  

Though relatively very little is known about the play’s true potential, results thus far have been encouraging. Let’s take a closer look at the play itself, its potential, and some of the major companies hoping to strike it rich.

A primer on the Utica
The Utica is a shale rock formation located thousands of feet below the Marcellus. Because the play is still in the infant stages of development, its geology and production potential are less well understood than the Marcellus. Located in the Appalachian Basin, the Utica spans several states but is located primarily in Ohio, New York, Pennsylvania, Virginia, and West Virginia.

Like the Marcellus, the Utica is composed of sedimentary rocks that contain potentially massive quantities of oil and gas. But unlike the Marcellus, the Utica is believed to contain a greater proportion of “wet” natural gas, which includes natural gas liquids such as butane, ethane, pentane, and propane.

The play is also much deeper than the Marcellus, with much of the sought-after wet gas located at depths of 6,000 feet or less in the outer fringes of the formation.

The Utica’s hydrocarbon and economic potential
According to the first assessment from the U.S. Geological Survey, the results from which were announced last year, the Utica shale contains 38 trillion cubic feet of technically recoverable natural gas. That’s a little less than half the recoverable resource potential of the Marcellus, which USGS estimates to hold around 84 trillion cubic feet of recoverable natural gas.

Development of unconventional oil and gas resources has already been hailed as a major source of job creation over the next several decades. As the Utica’s potentially massive hydrocarbon reserves are gradually exploited, the play is expected to yield significant economic benefits for Ohio and for the country as a whole.

According to a report by IHS, a leading global energy research and consulting firm, development in the Utica will catapult Ohio to the third spot in the list of the top states by energy-sector employment by 2035. The report forecasts that Ohio’s unconventional oil and gas employment will surge to 144,000 by the close of this decade and come close to 275,000 by 2035.

If the Utica does turn out to live up to its expectations, it should provide a major boost to Ohio’s economy and help reverse decades of manufacturing-sector decline there.

Major Utica operators
Chesapeake Energy is by far the leading driller in Ohio’s Utica shale, with its core acreage concentrated in Carroll and surrounding counties. Steve …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

3 Companies Betting Big on This Emerging Shale Play

Leave a comment

By Arjun Sreekumar, The Motley Fool

Filed under:

The great thing about America’s shale oil and gas revolution is that new shale plays keep popping up from time to time.

Currently, the two hottest shale plays are arguably North Dakota’s Bakken and Texas’ Eagle Ford. These oil-rich formations are especially attractive because the price of oil is high, providing producers with a major incentive to keep drilling.

But there’s a downside to these plays. Because they’ve already proved their mettle and boast at least a few years of very impressive production history, land lease prices and production costs are sky high. That’s why energy companies continue to search for the next big resource play, hoping to establish a substantial acreage position while the land is cheap and competitors few and far between.

A case in point is the Utica, an emerging shale play that spans several states, though the majority of drilling activity so far has been focused in Ohio. Initial assessments suggest that the Utica’s resource potential could be on par with that of the Eagle Ford.

Based on encouraging initial test well results, several energy companies have expressed enthusiasm about the Utica’s prospects. Let’s look at three major ones.

Chesapeake Energy
First up is Chesapeake Energy . After discovering the Utica in 2010, Chesapeake remains one of the most active operators in the play. As it stands, it is the largest leasehold owner, boasting approximately 1 million net acres. To date, it has drilled a total of 184 wells in the play, of which 45 are currently producing.

Chesapeake’s well results so far have been quite impressive, with several of its wells reporting daily production rates in excess of 350 bbls of oil per day. Two recent well completions in the company’s core drilling area in Carroll County, Ohio — the 8H Houyouse “15-13-5” and 8H White “17-13-5” — posted rates of 465 bbls and 390 bbls of crude oil per day, respectively.  

Though the company was initially very bullish about the play’s oil potential, it has since scaled back its expectations. It even recently announced that it no longer views the Utica as central to meeting its oil production growth target for the year, though it remains optimistic about the play’s dry gas and gas liquids potential.

Going forward, it will be focusing its drilling efforts primarily in the wet gas window of the play inside of its joint venture with Total , where it commands 450,000 net acres. Within this area, the company is projecting expected ultimate recoveries of five to 10 bcfe.  

Magnum Hunter Resources
Next up is Magnum Hunter Resources , a Houston-based energy explorer and producer. In February, the company closed on the acquisition of about 15,500 gross leasehold acres located primarily in Noble County, Ohio, through Triad Hunter, its wholly owned subsidiary. That brings Magnum Hunter Resources‘ total position in the Utica shale to a little over 61,000 net  acres.

The company has announced plans to drill at least four …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Chesapeake Still Optimistic About the Utica

Leave a comment

By Arjun Sreekumar, The Motley Fool

Filed under:

The Utica — a shale formation underlying vast tracts of the Appalachian Basin — has attracted a significant amount of interest over the past couple of years. Though relatively little is known about its productive potential, encouraging initial test results in Ohio have drawn a bevy of energy companies into the emerging shale play.

Chesapeake Energy was the first entrant, having discovered the play back in 2010. Initially, the company was highly enthusiastic about the Utica’s potential. As late as May 2012, outgoing CEO Aubrey McClendon expressed a great deal of confidence that Chesapeake would report solid oil production numbers from its acreage in the play.

But by November, McClendon had changed his mind, suggesting that the Utica was unlikely to account for a significant portion of the company’s oil production going forward.

Despite this recent change of opinion, however, the company remains bullish on the play’s overall potential. McClendon even characterized the Utica as one of Chesapeake’s “foundational plays for decades to come.”

Chesapeake in the Utica
After discovering the Utica a few years ago, Chesapeake remains one of the most active operators in the play. As it stands, it is the largest leasehold owner, boasting approximately 1 million net acres. To date, it has drilled a total of 184 wells in the play, of which 45 are currently producing.

Though production in the Utica over the past year was fairly insignificant, the company said it plans a “significant ramp up” this year. With 14 rigs currently operating in the play, Chesapeake expects output to reach as high as 55,000 boe per day by year-end.

Of Chesapeake’s total acreage in the Utica, roughly a third is thought to lie in an oil-rich zone. But, as the company mentioned in its most recent earnings conference call, it will focus its future efforts primarily on drilling in the Utica’s wet gas window, inside of its joint venture with Total SA, where it boasts 450,000 net acres. Within this area, the company forecasts expected ultimate recoveries (EURs) of 5-10 bcfe.  

Like the company’s operations in its other core holdings, especially the Eagle Ford, Chesapeake has experienced substantial efficiency gains in the Utica. Average per-well drilling and completion costs have declined nearly 30% year over year, while spud-to-cycle times have come down to just 22 days, a nearly 40% decrease from 35 days a year ago. 

Encouraging well results
A recent well that the company drilled in Carroll County — the Co 34-12-41H — posted a staggering 24-hour initial production (IP) of 2,225 boe per day, of which a third was liquids. Encouraged by the results, the company’s COO Steve Dixon commented in the fourth quarter earnings conference call: “We believe we’ve captured the industry’s largest position in the Utica, and look forward to solid results in this play for years to come.” 

Though Chesapeake‘s wells have posted some of the best production figures to date, it’s not the only company seeing success in the Utica. Other …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

3 Opportunities in Booming South Texas

Leave a comment

By Aimee Duffy, The Motley Fool

Filed under:

Earlier this week, the Texas Railroad Commission announced that its preliminary numbers for oil production in the Eagle Ford Shale are outstanding. Production climbed 50% from 2011 to 2012, averaging 373,303 barrels per day. That growth is significant, and provides investors with some pretty compelling opportunities, so let’s take a closer look at what’s going on in southeastern Texas.

Eagle eye
The Eagle Ford shale seems to have come out of nowhere. In 2008, oil production in the region was a scant 358 barrels per day — but take a look at what’s happened since then:

Source: Texas Railroad Commission

You can see that the biggest production increase in the short four year history of the play came last year. Keep in mind that the slight uptick at the end of the graph is a mere month’s worth of production — and even that increased by more than 12,000 bpd.

What’s the story here?
The Eagle Ford Shale is a geologic wonder that stretches from the southern border of Texas up through to around Austin.

Source: Energy Information Association

The shale’s pay zone is thicker than most U.S. plays, with a higher percentage of carbonate material. On top of that, the distinct banding pattern of the Eagle Ford allows producers to target specific commodities for production. In the picture above, the green band is the oil region, the yellow band is for natural gas liquids, and the pink band is for dry gas.

Three winners
This sort of production growth is hard to ignore. The companies behind these staggering numbers are making a killing … so who are they?

The top producer in the play is EOG Resources . In fact, EOG cranks so much oil out of the Eagle Ford — 109,776 barrels per day in 2012 — that it’s actually the second largest oil producer in all of Texas.

Another winner here is ConocoPhillips . The company drills the cheapest wells in the industry, and is the second-biggest producer in the shale.

Finally, we have Kinder Morgan Energy Partners . All of the oil and NGLs produced in the Eagle Ford are worthless without transportation and processing infrastructure. Kinder Morgan had the pipeline asset base in the Eagle Ford, and its buyout of Copano Energy will give it a processing footprint, as well, when the deal closes in the third quarter of this year.

More to come?
Producers are increasingly targeting the region, which includes both the Eagle Ford and the Woodbine sandstone formations. This area, cleverly titled “Eaglebine,” is northeast of where the bulk of the oil activity is in the Eagle Ford right now. Halcon Resources is one company that plans to make the most of the new sweet spot. The company has nine wells there, and plans to spend $490 million on drilling and completing many more this year.

All this oil still needs a way to …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Data That Every Utica Shale Investor Needs to Know About

Leave a comment

By Arjun Sreekumar, The Motley Fool

Filed under:

The Utica shale may not ring any bells for the average investor. But, utter that name around energy industry professionals, and you’re sure to rouse a lively debate.

An up-and-coming shale oil and gas play, the Utica stretches across Ohio, New York, Pennsylvania, Virginia, and West Virginia, though drilling to date has centered primarily in Ohio. Due to some major similarities with Texas’ highly productive Eagle Ford play, energy companies are buzzing about the play.

Unfortunately, however, relatively very little is known about the Utica’s true potential due to Ohio’s lack of transparency in reporting production data. But, for those who have invested in companies with major operations in the Utica, especially those more leveraged to the play like Gulfport Energy , Rex Energy, and Magnum Hunter Resources , new, soon-to-be-released data should provide a much better glimpse into the play’s potential.

Next month, the state of Ohio will publish a comprehensive report detailing the Utica’s well results for 2012. These results are sure to have major repercussions for the handful of companies that have plowed millions of dollars into the play.

Let’s take a closer look at why Ohio has been so secretive, the specifics of the data it will soon reveal, and implications for some of the Utica’s major drillers.

Limited production data and regulatory constraints
Currently, Ohio state regulators request Utica operators to disclose production statistics only on an annual basis, whereas virtually every other state in the country publicly discloses production statistics and drilling data on a quarterly basis.

Moreover, major drillers in the Utica have only disclosed information about half of their producing wells in the Utica, according to an analysis by Reuters. In addition, much of the data is limited, and drillers aren’t required by law to release results on a per-well basis.

As Reuters highlighted, lawmakers last year were pushing to include a clause within a new energy bill that would have required Utica producers operating in Ohio to publicly release energy production statistics on a quarterly basis.

But, following discussions with oil and gas industry executives, lawmakers rejected the inclusion of the clause. In fact, the new law actually prevented Ohio’s government from releasing the quarterly production data it obtains from Utica producers operating in the state.

Crucial data to watch
At any rate, the time is upon us for that annual data to finally be publicly disclosed. The Ohio Department of Natural Resources (DNR) announced that it will be publishing a comprehensive report next month that will include new data from Ohio’s oil and gas wells.

Producers operating in the Ohio Utica are required to submit production data to the department on March 31, information which it will subsequently make available on its website in April. Though the department did not provide a specific date, it published the data last year on April 2.

The information provided will include only those wells that produced hydrocarbons in 2012, which equates to roughly between 50 and 60 wells. …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Is This Shale Oil and Gas Play Overhyped?

Leave a comment

By Arjun Sreekumar, The Motley Fool

Filed under:

A couple of years ago, Chesapeake Energy‘s outgoing CEO Aubrey McClendon touted the Utica Shale as “the biggest thing to hit Ohio since the plow.” In mid-2011, he even went so far as to claim that the 1.3 million acres of Utica property that Chesapeake had leased contained hydrocarbons worth roughly $20 billion.  

But since that time, McClendon has scaled back his expectations about the Utica’s oil potential substantially, as have executives at some other major companies operating in the play. This waning optimism, fueled by wells that yielded far less oil than initially expected, has led some commentators to question whether or not the play will live up to its initial hype.

As Utica drillers continue to derisk their acreage, will they stumble upon huge reserves of oil? Or will the Utica’s initial comparison to Texas’ prolific Eagle Ford prove overblown? Let’s take a look.

Any black gold? Or just a lot of gas?
To be sure, the Utica has yielded impressive quantities of dry gas and natural gas liquids thus far. But skeptics are worried that the play’s proportion of oil to natural gas and related liquids may end up being disappointingly low.

For instance, in the second quarter of last year, Devon Energy reported disappointing results from two wells it drilled in the oilier portion of the play. Arousing further suspicion that Devon may be giving up on the play, the company recently announced that it was looking to divest its Utica assets. In January, it placed some 244,000 of its gross acres (195,000 net) in the liquids-rich portion of the Utica in eastern Ohio up for bidding.

Yet while Devon’s retrenchment is discouraging, some operators’ results give reason for hope and suggest that some portions of the Utica may be brimming with oil. For instance, Gulfport Energy reported that its first 10 Utica wells averaged a peak rate of nearly 800 barrels of oil per day, plus 10 million cubic feet of natural gas and nearly 1,200 barrels of natural gas liquids.

At any rate, it’s tough to make a call on the Utica right now since the play is still very much in its infant stages and relatively very little is known about its various zones’ geologies and productive potentials. Drilling thus far has been of the experimental kind, as producers seek to get a better understanding of their acreage.

Contributing to the paucity of information about the play is Ohio’s lack of transparency in releasing data on oil and gas wells drilled in the state. As a Reuters analysis highlighted, Ohio state regulators only require Utica operators to disclose production statistics on an annual basis. In contrast, most other states publicly disclose production statistics and drilling data on a monthly basis.

Has the Utica’s oil potential been overstated?
The lack of data is compounding some investors’ fears that the Utica may turn out to be a flop. Even Chesapeake, the first company to …read more
Source: FULL ARTICLE at DailyFinance