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Warren Resources Testing Its First Marcellus Wells Since Entering Play

Warren Resources Inc. said Tuesday that after two weeks on flowback, the company's first two Marcellus Shale wells are producing at a combined rate of 17 MMcf/d.

They're the company's first since it entered the play in July 2014 with the $352.5 million acquisition of privately-held Citrus Energy Corp. (see Shale DailyJuly 8, 2014). Warren has 5,289 net acres in Northeast Pennsylvania's Wyoming County, where the Marcellus wells are being tested at the company's Mirabelli and Ruark pads.

"Warren's first two upper Marcellus wells were drilled with the intent to test a wide swath of our acreage block," CEO Lance Peterson said. "Warren is very encouraged by the early results from these wells, and we expect to see these wells continue to clean up and experience increased flow rates."

Warren said that about 3% flowback has been covered from the wells. A successful test of the upper Marcellus, a 180-foot thick layer of the shale above a thinner stretch on Warren's acreage, could add more than 40 additional well locations to the company's inventory. At the time it acquired the property last year, Warren said the acreage was producing 82 MMcf/d, with an estimated 208.3 Bcf of reserves. It has not booked any reserves from its upper Marcellus, however.

Before it acquired Citrus, New York-based Warren had primarily focused on waterflood oil recovery in California and coalbed methane production in Wyoming. Traded on the NASDAQ its stock has plummeted with the fall in oil and gas prices from a 52-week high of $7.02/share to just 35 cents/share, near where it was trading on Tuesday. The company produced 85 MMcf/d in the second quarter, up from 18 MMcf/d in the year-ago period. 

It also recorded a net loss of $85.3 million ($1.05/share) for the period, which included an $83.5 million writedown of its oil and gas properties.

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