Gulfport Energy Corp. is so pleased with its first dozen Utica shale wells in eastern Ohio that the Oklahoma-based energy company is prepared to spend up to $225 million next year to drill 50 additional wells.
Ohio’s liquid-rich Utica shale is “a once-in-a-lifetime play ... and a company changer,” Gulfport CEO James Palm said in a teleconference Wednesday on the firm’s third-quarter earnings.
Two other drilling companies, Rex Energy and Devon Energy, also released third-quarter earnings reports and discussed their Utica shale projects Wednesday.
Gulfport, Palm said, is making the Utica shale its primary focus and the center of its drilling operations.
“We will be a Utica-focused company,” he said.
The company, he said, is “pleasantly surprised” by the production results from the company’s first wells in Harrison, Belmont and Guernsey counties. They are producing equal amounts of oil, natural gas liquids and natural gas, he said.
Gulfport has arranged the financing to accelerate development in the Utica shale.
“Everything we’ve seen so far makes our original estimates appear pretty conservative,” company Chief Financial Officer Mike Moore said.
Production is expected to ramp up beginning in early 2013 with the completion of connecting pipelines and processing facilities built by Colorado-based MarkWest Energy Partners for Gulfport, Palm said.
Gulfport intends to drill two additional Ohio wells late this year and 50 wells in Ohio in 2013. It will own the rights to half of them, with an unnamed partner owning the rights to the other half.
Gulfport has said it plans to drill 400 wells in Ohio over the next four years.
The firm controls about 128,000 leased acres in eastern Ohio and has added about 3,000 acres in recent months, Palm said.
The company, which spent between $72 million and $76 million this year in developing Ohio’s Utica shale, boasts the three best-producing wells in the formation in eastern Ohio with its Shugert well in Belmont County and two wells in Harrison County. It released preliminary production numbers Wednesday on its sixth Utica well, the B.K. Stephens well in Harrison County’s Moorfield Township.
Drilled to a depth of 8,225 feet with a 5,276-foot horizontal lateral, the well was hydraulically fractured, or fracked, in 19 stages.
After a 30-day resting period, the well produced 1,224 barrels of oil per day, plus 6.9 million cubic feet of natural gas per day. It is believed the well also will produce an additional 770 barrels per day of natural gas liquids.
With a yield of 3,007 barrel oil equivalents per day, the well would be the company’s fourth most productive. It is expected to begin full production by the end of January.
Drilling companies must report production data next spring to the Ohio Department of Natural Resources.
Based in State College, Pa., Rex Energy reported strong results from the first Utica shale well it drilled and fracked in Carroll County and said it is continuing with plans to drill additional wells in Carroll, Guernsey, Noble and Belmont counties.
Rex Energy said it has completed acquiring 20,000 acres “in what the company believes to be the ‘wet’ corridor of Ohio.” The company’s first Utica well, named the Brace 1H in what is called the Warrior North Prospect in Carroll County, produced 730 barrel oil equivalents per day over a 30-day period, the company told industry analysts Wednesday.
The Brace 1H well is producing about 70 percent natural gas liquids, Thomas Stabley, Rex Energy’s chief executive officer, said in a conference call.
“We are encouraged by the results,” he said.
Rex Energy said the results from the Brace 1H site validated what the company calls its “Super Frac” process, which it said will make its Utica shale wells more productive. The company said it did a dual test of conventional fracking and the “Super Frac” process at the Brace 1H.
“Rex Energy plans to utilize the ‘Super Frac’ completion technology on all future Utica completions,” the company said.
In another part of its territory called the Warrior South Prospect — Guernsey, Noble and Belmont counties — Rex Energy has completed drilling three wells and will start fracking them this month, Stabley said. With the completion of drilling for those three wells, Rex Energy will move its drilling rig to the Warrior North Prospect site to start drilling a second well, he said.
The company said it invested $42 million to fund its Marcellus and Utica shale operations. The money was used to drill nine wells, frack nine wells and place six wells into service. It also spent $10 million on leasing in the Marcellus and Utica areas.
Oklahoma-based Devon Energy said it still intends to drill three or four wells this year in the eastern part of Ohio’s Utica shale.
The company in August had expressed disappointment in preliminary results from wells in Medina County’s Harrisville Township and Ashland County’s Clear Creek Township.
It said it still intends to drill farther to the east in the area where other drilling companies are reporting lucrative Utica results, spokesman David A. Hager said in a Wednesday teleconference on third-quarter earnings.
Devon has not said where that eastern drilling is planned.
The company has state permits to drill in Medina, Wayne, Ashland, Holmes, Knox. Coshocton and Guernsey counties.