And The Band Plays On

Eric is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Exploration and production companies are flocking to the Utica Shale as they look to find emerging plays that produce crude oil and other liquids.  Several of these operators have provided updates on recent activity in this play and investors should expect more news to emerge during the upcoming third quarter earnings season.  

First Ohio Well

Rex Energy (NASDAQ: REXX) has 72,200 net acres prospective for the Utica Shale spread across Pennsylvania and Ohio.  The company just reported the results of its first Utica Shale well drilled on its acreage in Ohio at the Warrior North Prospect in Carroll County.  Rex Energy said that the well produced approximately 1,000 barrels of oil equivalent (BOE) per day over the first five days of production.  The company plans to shut the well for 60 days prior to putting it onto sales.

Rex Energy had previously reported on a Utica Shale well drilled and completed in Butler County, Pennsylvania, which is in the dry gas section of the play.  The well was producing 3.7 million cubic feet per day of natural gas after 120 days of production.  Rex Energy’s 2012 program calls for five wells into the Utica Shale during the year, and in 2013, the company expects to drill 12 wells.

Go it Alone

PDC Energy (NASDAQ: PDCE) has abandoned efforts to find a joint venture partner to help develop its oil and gas properties in the Utica Shale.  The company has 45,000 net acres exposed to the Utica Shale in Ohio and said that the offers received did not meet its “value expectations.”  PDC Energy will develop the properties without a partner and estimates that it will spend $50 million here in 2013.

PDC Energy has already drilled two wells in 2012 into the Utica Shale and expects to spud two more wells before the end of 2012.  The company has allocated $95 million in 2012 for drilling and completion costs and the acquisition of additional leasehold.

Utica Shale Gusher

Gulfport Energy (NASDAQ: GPOR) reported results on the company’s latest well drilled and completed into the Utica Shale.  The company said that the Boy Scout 1-33H well produced at a peak rate of 3,456 BOE per day.  The production was composed of various amounts of natural gas, condensate and natural gas liquids.  Gulfport Energy expects to put the Boy Scout 1-33H well onto sales by the end of September 2012.

Gulfport Energy has 62,500 net acres prospective for the Utica Shale and has budgeted $74 million in capital spending here in 2012.  This level of spending will cover two operated rigs and allow the company to drill 20 gross wells during the year.

Leader

Although Chesapeake Energy (NYSE: CHK) is still the largest player in the Utica Shale, the company recently announced the divestiture of non-core acreage in the Utica Shale and various other plays.  The company received $600 million for this acreage and still has 1.3 million acres prospective for the Utica Shale after this sale. Chesapeake Energy received seven additional drilling permits through the first two weeks of Sept 2012 and now has more than 253 drilling permits into this formation.

Utica Derivative Play

Those investors that are looking for a derivative play on the Utica Shale and other onshore oil and gas areas might want to consider Worthington Industries (NYSE: WOR), a metals company with operations in the United States.  The company just announced the purchase of Westerman Companies for $70 million.

Westerman Companies manufactures tanks and pressure vessels used in the oil and gas and various other industries and has a customer base partially composed of operators active in the Utica and Marcellus Shale.

Golden Age?

Ohio is on the cusp of an oil and gas boom with the development of the Utica Shale as the primary driver of this activity.  Many exploration and production operators moved forward on drilling programs here over the last few months and investors should expect continued interest from the industry.


shaleplays has no positions in the stocks mentioned above. The Motley Fool has the following options: long JAN 2013 $16.00 calls on Chesapeake Energy, long JAN 2013 $25.00 calls on Chesapeake Energy, long JAN 2014 $20.00 calls on Chesapeake Energy, and long JAN 2014 $30.00 calls on Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

blog comments powered by Disqus