Increased Marcellus Shale production helped Seneca Resources offset production it lost after selling its Gulf of Mexico assets earlier this year, and now the company is pursuing partnerships to speed up that growth.

“On its own, this is a very compelling growth story, but we’d like to grow at an even faster pace. To that end, we continue to have discussions with potential joint venture partners,” President Dave Smith said during a quarterly earnings conference call on Friday.

While declining to discuss details, Smith said National Fuel has entertained “serious offers” and expects to have a decision by the end of June about whether or not it will accept one of those offers. “The good news is that given the production growth we anticipate, with or without a joint venture we have a very compelling long-term growth opportunity,” he said.

Seneca is a subsidiary of New York-based National Fuel Gas (NFG). Because NFG starts its fiscal year in October, the most recent earnings cover operations from the first three months of 2011 but are recorded as second quarter financial results.

NFG earned $115.6 million ($1.38/share) during the quarter, up from $80 million (97 cents/share) during the same period last year.

Seneca produced 18.2 Bcfe during the quarter, up 6.4 Bcfe from the same period of 2010. Almost half of that production, 9 Bcfe, came from the Marcellus. By comparison, Seneca produced 1.3 Bcfe in the Marcellus during the same period in 2010.

In the Marcellus Seneca is currently producing 100 MMcf/d from 32 operated wells and 30 MMcf/d net from 31 wells operated by EOG Resources Inc. The two long-time partners formed a joint venture in January (see Shale Daily, Jan. 11).

That transaction marked the beginning of Seneca focusing on the Marcellus, a strategy furthered on April 27 when the company completed a $70 million sale of its offshore Gulf of Mexico assets, which it considered to be riskier than its other properties.

“While the Gulf of Mexico was once a major component of Seneca’s production and reserve base, it was no longer able to compete with our other two divisions,” Seneca President Matt Cabell said. “We will now focus our resources on our high-margin California oil properties and on our outstanding Marcellus growth opportunity.”

Even without the Gulf of Mexico, Seneca production is the highest it has been in a decade, Cabell said (see Shale Daily, March 29; Feb. 7).Thatislargelybecauseofincreasedproduction in the Marcellus, where Seneca is currently running four rigs.

In Tioga County, in northeast Pennsylvania, Seneca is about to bring on a three-well pad and plans to hydraulically fracture 11 more wells in the coming months. In western Tioga County Seneca tested a well at a “somewhat disappointing” rate of 2.1 MMcf/d.

In Potter County, in northcentral Pennsylvania, Seneca flow tested two wells. The first, a Marcellus well, recorded an initial flow rate of more than 4 MMcf/d. The company expects to begin production from that well in fiscal 2012. The second well tested the Geneseo Shale, an Upper Devonian interval, reporting an initial flow rate of 3 MMcf/d. That result, Cabell said, “confirms the potential for commercial wells in this relatively unexplored interval.”

Two wells tested at the Owl’s Nest prospect in Elks County in western Pennsylvania flowed at 4 MMcf/d and 4.5 MMcf/d, respectively. The company is planning a three-well test in this summer at its Beechwood prospect in eastern Elks County.

In McKean County, in northwest Pennsylvania, Seneca recently completed a vertical test well into the Utica Shale. The company won’t have results for several months but is preparing to drill a second Utica test well in the region.

Seneca plans to bring a fifth rig into the Marcellus this summer.

Because NFG maintains both upstream and midstream operations, the company is able to place most of the wells it drills into service, Cabell said. NFG expects to have three new pipeline projects in service by the end of the calendar year.

National Fuel Gas Supply Corp., a subsidiary, is currently constructing its Line N and Lamont Phase II projects. Line N is a pipeline replacement and relocation effort in Greene and Washington Counties in southwest Pennsylvania. Lamont is a compression station designed to service Marcellus gas bound for the Tennessee Gas Pipeline 300 Line in northwest Pennsylvania.

Empire Pipeline Inc., another subsidiary, is planing a pipeline extension in Tioga County. That effort is delayed by a Federal Energy Regulatory Commission certification that NFG expects to receive “any day now,” according to NFG COO Ron Tanski.

Seneca also maintains exploration and production activities in California, where it is currently running two rigs.