Three energy companies are reporting encouraging results from Ohio’s Utica shale.
A fourth company, however, is not sharing the enthusiasm expressed by Gulfport Energy Corp., Chesapeake Energy Corp. and Antero Resources Corp., who are drilling in eastern Ohio.
In an earnings call last week, Devon Energy Corp. spokesman David A. Hager told analysts the results from two wells — in Medina County’s Harrisville Township and Ashland County’s Clear Creek Township — “were not encouraging.”
It appears the geology failed to produce expected results, Hager said.
Devon, an Oklahoma-based company, is continuing to drill a well in Knox County’s Morgan Township and is optimistic those results will be different, spokesman Chip Minty said in a telephone call Wednesday.
“It’s very early on, and we’re moving slowly and methodically,” he said of prospects in the Medina-Ashland-Knox area. “There’s not a lot of information, and we’re learning a lot as we go.”
But the first two wells “did not produce the results we were hoping for,” Minty said.
The three wells are farther to the west than most wells being drilled in Ohio’s Utica shale formation deep underground and are on the northwest edge of its lease holdings, the company said.
Devon Energy had staked out leases farther west than other drilling companies and was focusing on oil, not natural gas or natural gas liquids.
Most of the Utica drilling has been through wells in Carroll, Harrison, Columbiana, Jefferson, Mahoning, Stark, Portage and Belmont counties. That area has been especially attractive because the prices paid for natural gas have dropped and drillers are finding such gas liquids as ethane, butane and propane, which are more lucrative on the current market.
Hager, Devon Energy’s executive vice president of exploration and production, said his company intends to continue drilling in Ohio’s Utica shale but is looking to move eastward.
“We will continue drilling in a liquids-rich window to the east,” he said, saying Devon expects to drill five new wells in eastern Ohio counties.
To date, the company has secured seven permits from the Ohio Department of Natural Resources, with one for Wayne County’s East Union Township.
The disappointing results Devon experienced should not be surprising, said Tom Stewart, executive vice president of the Ohio Oil and Gas Association.
“This is a difficult play,” he said, “and not everyone is going to succeed.”
Drillers are trying to determine “where it works and where it doesn’t,” Stewart said.
“What’s going on right now in Ohio is a great big experiment and we need to let the experiment happen. … Companies are still trying to identify core areas. When those areas are finally determined, some companies will be successful, and some won’t.”
Gulfport Energy, in its second-quarter earning report released Tuesday, outlined a very successful well in Ohio’s Harrison County.
At its peak, the Wagner well is producing 17.1 million cubic feet of natural gas per day, plus 432 barrels of oil and 1,881 barrels of natural gas liquids, the Oklahoma-based company said. That daily production makes the well one of the strongest the company has ever drilled, Gulfport CEO James Palm said in a conference call.
The typical non-horizontal well in Ohio produces about 50,000 cubic feet of gas per day and less than 1 barrel of oil. Such a well produces between 100 and 150 barrels of oil equivalents per day.
Palm also offered preliminary data from three wells in Harrison, Belmont and Guernsey counties, and his company is “very pleased and encouraged” by that data.
Gulfport offered a peek at the data because “everyone is hungry for information on the [Utica] play, Palm said.
Gulfport intends to drill 200 wells in Ohio in the next four years, he said. Fifty sites have been identified.
The Utica shale is “a blossoming play” and will be “a huge part of Gulfport’s future,” Palm said. It appears the Utica shale will be “a real company-changer for Gulfport.”
The No. 1 player in Ohio’s Utica shale, Chesapeake Energy, also reported successful wells in eastern Ohio in its quarterly filings.
Chesapeake has drilled 87 wells in eastern Ohio, but not all are operational. Its 28 completed wells are averaging about 1,000 42-gallon barrels of oil equivalents per day. Each well is daily averaging about 205 barrels of oil, 150 barrels of natural gas liquids and 3.8 million cubic feet of natural gas, the company said.
“We remain very pleased with our results to date in the Utica,” company spokesman Steve Dixon said.
Added CEO Aubrey McClendon: “But right now we love what we see on the wet gas side.”
“The Utica is clearly an area of intense interest for the industry,” McClendon said.
His company released data on three wells: two in Carroll County and one in Jefferson County.
The Bailey well in Carroll County is producing 205 barrels of oil per day, along with 270 barrels of natural gas liquids and 5.7 million cubic feet of natural gas, the company said. That’s about 1,420 barrels of oil equivalents.
It said the Snoddy well in Carroll County is daily producing 320 barrels of oil, 250 barrels of gas liquids and 4.2 million cubic feet of natural gas. (About 1,260 barrels of oil equivalents per day.)
The Brown well in Jefferson County is producing 8.7 million cubic feet of natural gas per day, about 1,445 barrels of oil equivalents. No liquids are produced at that well.
The company called those three wells and their initial production “notable.” The totals, however, are only about one-third of Chesapeake’s much-publicized Buell well in Harrison County, the state’s most productive horizontal well.
Chesapeake, in response to an analyst’s question, also offered a bit of information about a Tuscarawas County well. The Gribi well is producing 1.3 million cubic feet of natural gas plus 227 barrels of oil per day, company officials said.
Previously, production numbers from only a dozen Ohio wells had been released.
Chesapeake has leased 1.3 million acres in Ohio. It is eyeing additional joint ventures, but does not expect any new deals until 2013, company officials said.
It also expects to sell off fringe Utica acreage in the next few months, McClendon said. His company wants to sell about 337,481 acres in Ohio outside of its main core area as part of a debt-reduction strategy.
Colorado-based Antero Resources has one well in Noble County and one well in Monroe County.
In a report this month, the company called the liquid-rich results from the first two wells “encouraging.”
Bob Downing can be reached at 330-996-3745 or email@example.com.