CONSOL Energy Provides Latest Marcellus Shale Well Results; Acquires Nearly 90,000 Acres with Marcellus Shale and Upper Devonian Potential
PITTSBURGH, Dec. 10, 2013 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX), a leading Appalachian natural gas producer, is providing an update on Marcellus Shale well results from several CONSOL-operated drilling pads in Washington County, Pa. The eleven wells on three pads had an average lateral length of 5,300 feet and were completed with some combination of shorter stage lengths, reduced cluster spacing, and other enhanced production techniques. Initial production from the wells averaged 10.7 MMcfe per day, and ranged from 5.3 MMcfe to 18.4 MMcfe per day. While EURs1 have yet to be calculated for these wells, the company believes they should easily approach 2.0 Bcfe per thousand lateral feet. The wells were turned into line quickly after flowing back frack fluids.
Separately, in Barbour County, W. Va., CONSOL has recently completed its first pad, the six-well Philippi 13 pad, that employed the same short stage lengths, reduced cluster spacing, and enhanced production techniques with positive early results. Drillout and flowback activities are ongoing but the first well, PHL 13F which is 8,733 feet in lateral length, recently went into production with a maximum 24-hour flow rate of 13.6 MMcfe per day.
"While CONSOL Energy has experimented with various components of enhanced completion and production techniques over the past 18 months, these wells represent the first large-scale application," commented J. Brett Harvey, chairman and CEO. "These results are a splendid example of one of our core values – continuous improvement – that we strive for in all areas."
For the company's 2014 Marcellus Shale program, CONSOL Energy intends to make extensive use of these enhanced completion and production techniques.
In addition to providing well results, CONSOL Energy has acquired the gas drilling rights to nearly 90,000 contiguous acres from Dominion Transmission, a unit of Dominion Resources. The majority of the acreage, which is associated with Dominion's Fink-Kennedy, Lost Creek, and Racket Newberne gas storage fields in West Virginia, lies in the northern portion of Lewis County and the southern portion of Harrison County. CONSOL anticipates that over one-half of the acres will have wet gas.
CONSOL Energy has acquired the gas rights to both the Marcellus Shale and the Upper Devonian formations in the storage fields. A total gross consideration of up to $190 million will be paid in two installments – approximately 50% paid at closing last week, with the balance due over time as the acres are drilled. CONSOL has also committed to be an anchor shipper on Dominion's transmission system.
"This transaction reinforces CONSOL Energy's commitment to being a leading natural gas producer in the Appalachian Basin," continued Mr. Harvey. "These parcels represent what could be the largest untapped contiguous acreage in the southern core of the Marcellus Shale. They complement our already significant acreage position in Northern West Virginia. As CONSOL Energy accelerates its gas drilling in the next few years, and continues to improve its efficiency through enhanced production techniques, we believe this transaction could provide us with more than 350 risked long lateral Marcellus Shale drilling locations."
Noble Energy, CONSOL Energy's joint venture partner in the Marcellus Shale, is exercising its right to participate at a 50% level in this transaction.
1 The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible oil and gas reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We may use certain terms in this press release, such as EUR (estimated ultimate recovery), unproved reserves and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category.
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Exchange Act) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following with respect to the proposed transaction: The ability to obtain regulatory approvals for the transaction on the proposed terms and schedule; disruption to our business, including customer, employee and supplier relationships resulting from this transaction; risks that the conditions to closing may not be satisfied; and the impact of the transaction on our future operating results, our capital investment program, and our dividend, and other factors discussed in the 2012 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
SOURCE CONSOL Energy Inc.