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Ohio Utica Shale

Seneca Resources Corp. drills Utica well in McKean County

By Bob Downing Published: November 4, 2013

From Seneca Resources:

Total Production for Fiscal Year 2013 Increased 45%

Total Proved Reserves Reached 1,549 Bcfe

(Oct. 21, 2013) WILLIAMSVILLE, N.Y. – Seneca Resources Corporation (“Seneca”), the

wholly owned exploration and production subsidiary of National Fuel Gas Company (NYSE:

NFG) (“National Fuel” or the “Company”) reports that production volumes for the fiscal

year’s fourth quarter ended September 30, 2013, totaled 33.2 billion cubic feet equivalent

(“Bcfe”), a 35% increase over the prior year’s fourth quarter. Total production for fiscal

year 2013 was 120.7 Bcfe, which was a 45% increase over fiscal year 2012. Additionally,

Seneca’s proved natural gas and crude oil reserves as of September 30, 2013, increased

24% to a record high of 1,549 Bcfe.

Production Update

Seneca’s total production of 33.2 Bcfe, or 361 million cubic feet equivalent (“MMcfe”)

per day, was driven by the continued success of Seneca’s Marcellus Shale development

program in Lycoming County, Pa. Natural gas production increased 42%, to a total of 28.9

Bcf, despite nearly 3 Bcf of price-related curtailments. Crude oil production totaled 717,000

barrels, which was an increase of 1.6% from the prior year’s fourth quarter. Growth in

crude oil production was limited primarily as a result of a continued constraint in a thirdparty

pipeline used to transport associated natural gas production within the Sespe Field.

This is expected to be resolved by the end of January 2014.

Reserves Update (Preliminary)

During fiscal year 2013, Seneca replaced 351% of production to reach a total of

1,549 Bcfe of proved reserves as of September 30, 2013. Seneca’s success through the

drill bit in the Marcellus Shale led to a 311 Bcf, or 31%, increase in natural gas reserves,

which totaled 1,300 Bcf at fiscal year end. Crude oil reserves, which decreased by 3%

largely due to production, totaled 41.6 million barrels at September 30, 2013.

Of the total reserves, 71% were classified as proved developed reserves. This is an

increase from 67% proved developed reserves as of September 30, 2012. Proved

undeveloped (“PUD”) reserves totaled 29% of the total reserves at the end of the fiscal

year.

Finding and development costs are expected to be approximately $1.31 per Mcfe for

fiscal 2013. Seneca’s three-year average finding and development costs are expected to be

$1.67 per Mcfe, which is down from the $1.87 three-year average in fiscal 2012.

(more)

Guidance Update

As a result of continued better than projected performance of its Marcellus Shale

assets, the Company is increasing its fiscal 2014 production guidance to a range of 145 to

165 Bcfe, or a 20% to 37% increase over fiscal 2013. The previous guidance range was

134 to 146 Bcfe. This increase is primarily a result of decreased spud to sales timing in

Lycoming and Tioga counties within Seneca’s Eastern Development Area (“EDA”), increased

EUR assumptions, and a base of producing properties projected to decline at a slower rate

in part due to the start-up of compression within its DCNR Tract 100 acreage in Lycoming

County, Pa.

Operations Update

Seneca’s delineation efforts in the Western Development Area (“WDA”) are ongoing.

During the fourth quarter of fiscal 2013, Seneca tested two additional wells in its Owl’s Nest

area of Elk County. Both of these wells utilized a reduced cluster spacing (“RCS”)

completion design and achieved 24-hour peak production rates of 6.1 and 3.4 MMcfe per

day. The second well was completed using linear gel to place larger proppant near the

wellbore. Seneca believes longer laterals and standard RCS completion design are more

representative of expectations for this area. Both wells are currently shut-in awaiting the

completion of production infrastructure. Below is a summary of the delineation wells

completed in the WDA during fiscal 2013.

Prospect Area

County

(Pa.)

Stage

s

Treatabl

e

Lateral

Length

Reduced

Cluster

Spacing

24-Hour

Peak

Productio

n

(MMcfe)

Peak 7-day

Average

(MMcfe) Status

Rich Valley Cameron 42 6,372’ Yes 8.1 7.8 Producing

Clermont (9H) Elk 37 5,500’ Yes 11.4 10.0 Producing

Clermont (10H) Elk 23 5,565’ No 8.1 7.3 Producing

Ridgway Elk 37 5,537’ Yes 7.1 6.4 Tested

Church Run Elk 29 4,435’ Yes 4.8 4.5 Tested

Owl’s Nest (54H) Elk 41 6,139’ Yes 6.1 5.8 Tested

Owl’s Nest (59H) Elk 36 5,370’

Yes

(Gel Frac)

3.4 3.1 Tested

Tionesta Forest 35 5,100’ Yes Completed

(more)

On DCNR Tract 100 in Lycoming County, Pa., Seneca brought a new five-well pad on

line during the quarter. These wells achieved 24-hour peak production rates ranging from

14.8 to 22.1 MMcf per day. Over its first 30 days, this five-well pad produced 2.3 Bcf of

natural gas.

In the Utica Shale, Seneca tested a dry gas well at its Mt. Jewett prospect area in

McKean County. This well had a treatable lateral length of 5,777’ and was completed using

38 RCS stages. The 24-hour peak production rate was 8.5 MMcf per day and the well

averaged 6.8 MMcf per day over a seven-day period.

Ronald J. Tanski, President and Chief Executive Officer of National Fuel, stated, “The

fourth quarter capped off an outstanding year for Seneca. We achieved tremendous growth

in both production and proved reserves, and our delineation program in the Western

Development Area of the Marcellus Shale demonstrates the vast potential of our acreage

position. As we move into fiscal 2014, Seneca and our midstream businesses will be

executing a coordinated plan to develop our resources and install the infrastructure needed

to bring our production to market.”

Additional information on the Company’s operations and financial results will be

discussed during the 4

 

th Quarter Fiscal 2013 Teleconference, which is scheduled for Friday,

November 8, 2013, at 11 a.m. ET.

National Fuel is an integrated energy company with $6.3 billion in assets comprised

of the following four operating segments: Exploration and Production, Pipeline and Storage,

Utility, and Energy Marketing. Additional information about National Fuel is available at

www.nationalfuelgas.com

 

 

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