Gulfport Says 'Wet' Utica Wells Show Strength
YOUNGSTOWN, Ohio -- The president and CEO of Gulfport Energy Corp. said Wednesday that five of the company's wells producing in the "wet" gas window of the Utica shale are performing better than expected.
"It's still early for some of these wells, but production history show that these wells are producing better than our forecasted type curve," said Jim Palm, speaking in Oklahoma City during a conference call with analysts to discuss second-quarter results.
Gulfport's drilling activity is focused on Harrison, Belmont and Guernsey counties. On average, the company's wells are producing over a 60-day period 3,322 barrels of oil-equivalent per day, and at a 90-day rate of 3,289 barrels per day, the CEO said.
"This is the actual production-to-sales from these wells," Palm emphasized. "The sustained level of production is validating our original thoughts that the wells in this phase of the play will experience little or no decline in the first months of production."
Palm told analysts that the company is still trying to ascertain the particulars of the Utica play, but the initial results in the "wet" gas window look promising.
Gulfport has 145,000 acres under lease across the Utica shale. About 22% of the company's leasehold acreage is in southeastern Ohio in what is considered the "wet" gas area. Another 27% is in the condensate window, another 8% is positioned in the oil phase of the play to the west, and 43% is situated in the "dry" gas area of the Utica to the east near the Ohio River.
Gulfport has reported nine active wells in the condensate window, Palm said, the results of which came in slightly below the company's initial estimates.
However, production results from a single dry gas well along the eastern edge shows that this area of the play is still very promising, Palm said. The Stutzman well produced at a 30-day rate of 3,105 barrel of oil-equivalent per day and now produces at a rate of 2,895 barrels per day.
"This well suggests that this dry gas phase will have quality economics and strong production results," Palm said.
No wells are producing in the oil window of the play, Palm said, but noted a well is scheduled for September in the condensate/oil window.
Palm also reported that two new wells in Harrison County -- the Boy Scout 2-33H well and the Boy Scout 4-33H well -- came online during the second quarter. The 2-33H well produced at an average seven-day sales rate of 1,308 barrels of oil-equivalent per day, while the 4-33H well averaged 1,043 barrels per day for the same sales period.
Also during the second quarter, Gulfport executed an agreement with Dominion East Ohio and Dominion Transmission Inc. to transport dry gas to markets throughout the Midwest from the MarkWest processing plant in Harrison County.
Under the agreement, natural gas would be shipped to Wisconsin, Indiana, Illinois, and Michigan.
"Our confidence in the Utica is evidenced by the additional acreage we continue to add to our position," Palm said, referring to 8,00 acres the company acquired last month in Belmont and Monroe counties. "We're in execution mode,” he remarked, “and we believe the impact of our 2014 cash flow will be significant."
Palm reported that the company would continue to add leasehold acres and drill at least 70 new wells next year.
Moreover, Palm said, the company is trying to improve efficiencies and reduce the cost of well development, which he said ranges between $9 million and $10 million per well. Among these measures is to use what is termed "slickwater fracking" instead of gelatin during the hydraulic fracturing process.
Palm said most of the company's seven operating rigs are drilling on the eastern edge of the play, rather than the more condensate and oily western edge. "We've got huge value from both the east and west side,” he commented, “so we're really pleased."
The CEO added there are few plays he's seen with wells as strong as the Utica: "I don’t know that I've seen very many plays like this one where the wells are so strong where they probably flow up the casing as well as they flow up the tubing."
Gulfport, based in Oklahoma City, reported net income of $43.8 million on revenues of $70.2 million during the quarter ended June 30.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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