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Gastar Aiming to Increase Production in 2011

Gastar Exploration Ltd. is ramping up its Marcellus Shale operations in West Virginia and Pennsylvania, the company said.

The Houston-based company hopes to take part in 21 wells in the Marcellus Shale this year, including 14 as operator. Gastar holds 103,500 gross (73,600 net) acres across two areas, its 19,000-net acre Marcellus West and the 54,600-net acre Marcellus East.

At Marcellus West the company is running two rigs in Marshall County, WV -- at the Corley and Wengred pads -- through a joint venture with South Korean investment firm Atinum Partners Co. (see Shale Daily, March 1; Daily GPI, Sept. 23, 2010).

Gastar completed the Wengred 1H well last December and the Wengred 7H well in late April and now plans to hydraulically fracture (hydrofrack) both wells within the next few weeks and begin production as early as August once midstream infrastructure is in place. The two wells have lateral lengths of 4,700 and 5,700 feet, respectively.

Also in late April, Gastar completed the Corley No. 1 well and said in first quarter earnings reports that it plans to drill five more wells from the pad, hydrofrack the wells in September and begin production in late October.

Gastar and Atinum are also minority partners in seven wells at the Grosick pad in Butler County, PA, operated by Rex Energy Corp. (see Shale Daily, May 9). Gastar said Rex plans to complete three wells in September and October and expects sales to begin in the fourth quarter. Gastar owns a 19% working interest in those wells.

Gastar and Atinum plan to drill at least 12 horizontal wells this year and 24 horizontal wells in both 2012 and 2013 on their existing acreage. The companies are also looking into acquiring leases in Ohio and New York in addition to their existing holdings in West Virginia and Pennsylvania, according to recent financial filings.

In Marcellus East, Gastar plans to bring a third rig into the play this month to drill the Hickory Ridge 2H well in Preston County, WV, on the 62,000 gross acres it acquired in three West Virginia counties last year (see Shale Daily, Dec. 27, 2010). The company owns a 100% working interest in that well.

Gastar produced 700,000 Mcfe/d in the first quarter in the Marcellus, up from 400,000 Mcfe/d during the first quarter of 2010. If Gastar meets its production timetable, it will likely see significant production increases in the coming year, the company said.

Aside from drilling, Gastar is aiming to create "continuous" operations at its well sites.

The company recently signed a contract with Baker Hughes for well completion services and signed two agreements with un-named parties for up to 15,000 b/d of fresh water for well completion work. The company also finished building a 131,000 bbl pond for produced water and is nearing completion on a second 50,000 bbl pond.

Looking ahead to future drilling, Gastar buried geophones across 13 square miles of its leases to collect microseismic data for future well completions. The company is also permitting two 3-D seismic surveys, one covering 103 square miles in Preston and Tucker Counties, WV, and another covering 20 square miles in Fayette County, PA. Those surveys, expected to be completed by the second half of 2012, aim to clear up some of the geologic complexity of its Marcellus East acreage, the company said.

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