American Oil and Gas Reporter - November 2015 - 100

SpecialReport: Marcellus/Utica Activity
four-well pads. Antero is operating four
drilling rigs and three completion crews in
the Utica Shale play.
Antero notes that it also has executed
a 10-year agreement to sell 70,000 MMbtu/d of natural gas to Chubu U.S. Gas Trading LLC-a subsidiary of Chubu Electric
Power Co.-through the Freeport LNG Terminal in Freeport, Tx. Antero says it will
ship volumes once the facility is placed in
commercial service, which is projected to

begin in late 2018 or early 2019. Antero
will receive pricing based on the New York
Mercantile Exchange and deliver gas
from the Sherwood processing plant utilizing firm transportation on Columbia
Gulf Transmission Pipeline.
Antero adds that completion of a thirdparty regional gathering pipeline also
will provide the company with access to
firm transportation on the Tennessee
Pipeline to the Gulf Coast and Mid-At-

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100 THE AMERICAN OIL & GAS REPORTER

lantic areas through its long-term firm sales
agreement with WGL Midstream, a subsidiary of WGL Holdings LLC.

Focus On Dry Gas
Gary C. Evans, president and chief executive officer of Magnum Hunter Resources Corporation., says there is a good
reason why operators in the Marcellus and
Utica are focusing primarily on dry gas.
"You have to pay to sell the liquids, approximately $0.25 an Mcf," he laments.
"There is too much propane, too much
ethane, too much NGLs. We are anticipating some relief with a new NGL pipeline
coming on line, but it is not only a Northeast problem. The world is awash with too
much propane."
He indicates Magnum Hunter has
205,000 net acres straddling the Ohio River in three southeastern Ohio counties and
six West Virginia counties. The leasehold
is prospective for both the Marcellus and
Utica. The Marcellus acreage is for wet gas
in the 1,250-1,500 Btu range, Evans relates, while the Utica is a dry gas. He says
the Marcellus gets wetter as it goes east,
but Utica production tends to be wetter toward the west.
Evans says he agrees that the deep, dry
gas Utica is an especially attractive target
to most operators in West Virginia, Ohio
and southwestern Pennsylvania. Magnum Hunter has 44 net horizontal wells
producing from the Marcellus and four net
horizontal wells producing from the Utica. In its second-quarter report, the company stated midyear reserves grew to
801.8 Bcfe, a 60 percent jump from yearend 2014. Second-quarter production saw
a mix of 68 percent natural gas, 17 percent
NGLs and 15 percent oil.
Even so, Evans acknowledges, Magnum Hunter has not drilled a new well in
2015. "We stopped drilling on Jan. 1," he
says. "We completed a few wells in the
first quarter that were drilled last year, and
we may drill out a couple wells' plugs in
the fourth quarter, but otherwise, we have
not drilled or completed a well in 2015.
"We believe oil service costs, which
typically lag oil and natural gas price declines, have further to fall," Evans continues. "Our emphasis on lower costs, combined with our decision to protect our liquidity, drove our 2015 program."
That, however, could change next
year. "We are in the process of doing a
number of things, including a $430 million
Utica joint venture with a private equity

American Oil and Gas Reporter - November 2015

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