companies

Companies Drilling or Leasing Marcellus Shale

Several companies are actively drilling or leasing Marcellus Shale properties. Range Resources, North Coast EXCO Resources, Chesapeake Energy, Chief Oil & Gas, East Resources , Fortuna Energy, Equitable Production Company, Cabot Oil & Gas Corporation, Southwestern Energy Production Company, and Atlas Energy Resources are some of the companies involved. Their combined investment in Marcellus shale is billions of dollars and encompasses millions of acres.

The information below is from a variety of reliable sources, most of it from 2008/9. It should be used only to gauge the scope of drilling activity in Marcellus Shale. One can’t help but think that the tremendous activity is a drilling "bubble" waiting to burst. Regardless, the NY DEC is going to be challenged once drilling is again permitted especially in light of staff reductions in state government. Towns and counties in NY will face the same challenges.

Range Resources has drilled 100 wells in the Marcellus Shale in Pennsylvania, New York and West Virginia, which gives them some insight into the potential of this newly realized resource. They currently have three rigs drilling and plan to increase that to eight for 2009. Their last ten horizontal wells have an average peak initial rate of 4.1 Mmcf per day.

EXCO Resources, Inc. is an oil and gas exploration and production company. EXCO's Marcellus leasehold consists of 361,000 net acres and continues to build. 215,000 acres are in the heart of the Marcellus play where the shale is over 100 feet thick and over pressured. The company's shale drilling program includes five vertical and two horizontal wells in the Marcellus.

Chesapeake Energy seeks to shore up its cash position by taking on a partner for its Marcellus shale. The company's latest investor presentation gives an implied value of $7,500/acre for its 1.8 mm acres of Marcellus leasehold (US $13.5B). So, a 25% share would be worth $3.4B.

Chief Oil & Gas unveiled a first of its kind horizontal drilling rig in September 2008. The rig was built especially for drilling horizontal wells in the Marcellus Shale. The drilling rig is 1,600 horsepower, moves on skids to allow for drilling multiple wells on the same pad site and reduce our carbon footprint. Also, the drilling rig is quieter and gives off fewer emissions than a conventional drilling rig.

East Resources has received a significant investment from private equity funds of global investment firm Kohlberg Kravis Roberts & Co. L.P. ("KKR"). Over the past few years, East Resources has accumulated more than 650,000 net acres in the Marcellus shale located in the southwestern and northeastern regions of the trend, particularly in northeastern Pennsylvania. Given the overall size of its acreage position, the company is increasingly focused on ramping up its development activities and investing for future growth. The Marcellus shale represents the most promising natural gas energy opportunity in North America and East Resources has one of the top acreage positions in the region.

Fortuna Energy Inc. is a subsidiary of Talisman Energy Inc., of Calgary, Alberta, Canada. Since its inception in 2002 it has acquired vast holdings of Trenton-Black River (TBR) drilling rights in the States of New York and Pennsylvania from several other energy companies. The company has dozens of successful TBR wells in New York State and is now the State's largest natural gas producer. A report in October, 2008 stated that Fortuna owns roughly 1 million acres of drilling rights in the Southern Tier of New York and in Pennsylvania. Some of their leases expire in 2009. One of the company's challenges will be to form units large enough to drill on out of what is left after these expirations.

Equitable has over 400,000 acres in the high pressure Marcellus play. The company has completed one horizontal well and three vertical wells this year; all four connected to pipelines and flowing to the sales meter. The first month average daily flow rate of the horizontal well was 1,900 Mcfe. The three vertical Marcellus wells are expected to produce first month average daily flow rates of between 500 and 700 Mcfe. In response to these results, the company plans to increase the pace of Marcellus development and drill 75 high pressure Marcellus wells by the end of 2009.

Cabot has drilled 28 wells in Pennsylvania to date. Eight are horizontals with laterals stretching up to 4000'. There are six rigs operating in Pennsylvania, drilling three horizontal and three vertical wells at the present time. Three horizontal and three vertical wells are waiting on completion, with one horizontal well currently flowing back.

Southwestern invested $58 million in the Marcellus Shale in 2008. In the first quarter of 2009, it purchased approximately 21,715 net acres in Lycoming County, Pennsylvania, for approximately $8.2 million. As a result, Southwestern currently has approximately 138,600 net undeveloped acres in Pennsylvania under which it believes the Marcellus Shale is prospective. During 2008, the company drilled its first four wells (three vertical and one horizontal) on its acreage in Bradford and Susquehanna Counties, three of which have been production tested.

Atlas Energy currently controls approximately 483,000 Marcellus acres in Pennsylvania, New York and West Virginia and continues to aggressively add to its position. The Company is currently focused on its approximately 224,000 existing Marcellus acres in southwestern Pennsylvania, where it has drilled all but one of its Marcellus wells.