Some Wells Flowing Here, Others in Testing Mode
YOUNGSTOWN, Ohio -- As companies such as Halcon Resources Corp. heap praise over early results of wells recently drilled and tested in Trumbull County, others are methodically assessing the potential of this northern tier of the Utica before they make any major commitments.
Meantime, others have shifted their focus from the north to counties in the southeastern portion of the state where the results have – at least for now – proven more productive.
“BP continues to assess the potential of its recently acquired acreage position in the Utica/Point Pleasant shale play,” emphasizes Curtis Thomas, spokesman for BP America, which last year acquired 105,000 leasehold acres in Trumbull County.
The company drilled its first appraisal well in April, Thomas says, and is developing five others across the county. “The data acquired through this process will help BP determine if we can build a material position in Ohio,” he says.
By early 2014, BP should have a better understanding of how the play in Trumbull County is developing, Thomas notes. “Only after sufficient data is gathered about BP’s acreage and reservoir capacity, which could include information from its own wells, state agencies and other operators in the area, will a concrete determination be made about BP’s operational plans in the area.”
Thus far, BP has drilled three wells, one in Johnston Township, another in Hartford Township, and a third in Mecca Township, Thomas says. The Johnston well is completed and production there should begin sometime in mid-September. The Hartford and Mecca wells will undergo hydraulic fracturing this month and next, and both wells should be in production by November.
Another well in Mecca is being drilled while a second well in Johnston was scheduled for drilling early this month, Thomas says. A sixth well in Vernon Township will be drilled by the end of August and in production by early 2014, Thomas reports.
Early reports from this section of the Utica look promising, according to results presented Aug. 1 by Houston-based Halcon Resources, which has drilled wells in Trumbull County plus Mercer County in western Pennsylvania.
During a conference call with analysts, the CEO of Halcon, Floyd C. Wilson, reported the company’s Kibler 1H well in Lordstown tested better than “all but 10 wells across the entire play.” He described the Kibler test, and the results of another well in Venango County, Pa., as “excellent”
The Kibler well tested at an average 2,223 barrels of oil equivalent per day, the company reported.
Halcon said it recently finished drilling its first nine wells in the Utica and is awaiting the results.
According to the report disclosing the company’s second-quarter earnings, Halcon said that it “has significant holdings in Trumbull and Mahoning counties, Ohio, and believes there is potential to drill hundreds of wells on its acreage over time.”
Halcon also said it’s in discussions with potential joint venture partners to “develop a high-pressure, rich-gas gathering system and scaled cryogenic gas processing for Halcon’s oil and gas assets in Ohio and Pennsylvania.”
Yet for megacompanies such as Royal Dutch Shell, whose subsidiary SWEPI LP, has drilled wells in Lawrence County, Pa., and has a permit to drill in Columbiana County, the shale business thus far has been a bust.
In its latest earnings report, Shell reported a 60% drop in its profits during the second quarter, pointing to a $2 billion write-down on its shale assets in North America. Shell did not specify which shale plays were to blame, but did note that some wells produced much less oil than it had hoped.
Other players in this part of the Utica have not warmed to Trumbull County or Mercer or Lawrence counties, and are instead concentrating on areas in the “wet” window in the southern tip of the play.
Pittsburgh-based Consol Energy Inc. reiterated in a recent financial report that it and its joint venture partner in the Utica, Hess Ohio Developments LLC, would focus on developing the 73,000 acres it holds in six counties in southeastern Ohio.
Another 63,000 acres “outside of the focus areas,” would be put up for sale, the company says.
Such sales aren’t unusual. Chesapeake Energy Corp., which holds the largest leasehold position in the play with more than one million acres under contract, is marketing about 100,000 acres of its position.
And, EV Energy Partners reported Aug. 9 that it reached an agreement with an undisclosed party to sell 22,535 acres in Guernsey, Noble and Harrison counties in the southern part of the play for $284.3 million.
Consol holds undetermined acreage in the Mahoning Valley and has drilled three wells in Mahoning County. Two were drilled in Jackson Township at the Cadle farm while another was completed at the Hendricks property in Ellsworth Township.
Another well in Trumbull County at the Wollam Farm in Vienna Township was permitted in 2011. However, work on the well pad abruptly stopped as Consol began to re-evaluate its position in this part of the Utica.
Instead, Consol selected to first develop its acreage in the south where energy giant Gulfport Energy Corp. is expanding its footprint and has found highly productive wells.
In a conference call Aug. 7, Gulfport CEO Jim Palm reported five wells in the wet gas window of the play are performing above expectations. “It’s still early for some of these wells, but production history show that these wells are producing better than our forecasted type curve,” he said.
“This is the actual production-to-sales from these wells,” Palm continued. “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.”
Gulfport holds 145,000 acres under lease in the Utica, mostly in the southeastern counties. The company recently announced two transmission agreements with Dominion East Ohio and Dominion Transmission Inc. to transport dry gas to markets in the Midwest.
Palm said his company would drill about 70 new wells next year and continue to search for additional acreage to expand its leasehold position. In July, Gulfport announced that it had acquired an additional 8,000 acres in the Utica for development.
“Our confidence in the Utica is evidenced by the additional acreage we continue to add to our position,” Palm said. “We’re in execution mode, and we believe the impact of our 2014 cash flow will be significant.”
EDITOR'S NOTE: This story appears in our MidAugust 2013 print edition, published this week.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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