National Fuel Gas Co. (NFG) will continue to go it alone in the Marcellus Shale, the company said during a quarterly earnings call last Friday.
The Williamsville, NY-based company began looking for partners after it sold its Gulf of Mexico assets, but CEO David Smith said several "good and serious offers" weren't quite good enough (see Shale Daily, May 11).
"And while discussions do continue with a few potential partners, as we've said in the past, unless a joint venture enhances shareholder value, unless it produces significant advantages above and beyond our existing robust plans for growth, which as I said is a pretty high bar, we will simply move forward on our own," Smith said. "At this point that's the likely outcome."
Although providing few details about the hunt for partners, Smith said it received offers from "large integrated oil companies to smaller companies" and came close to partnering on two different occasions in the past quarter.
NFG currently partners with EOG Resources Inc. (see Shale Daily, Jan. 11).
NFG earned $46.9 million (56 cents/share) in the third quarter, up $4.3 million (5 cents/share) year over year on increased production volumes.
Through its exploration and production arm Seneca Resources Corp., NFG produced 16.9 Bcfe during the quarter, up 3.6 Bcfe year over year, largely attributable to a 152.5% bump in Appalachian Basin production. Seneca produced 10.3 Bcfe from the Marcellus during the quarter.
NFG begins its fiscal year in October.
Seneca is currently running five rigs in the Marcellus across Tioga and Lycoming Counties in northeastern Pennsylvania and McKean and Elk counties in northwestern Pennsylvania. Seneca plans to begin drilling its second Utica Shale well this fall, a vertical well in Venango County in northwestern Pennsylvania. The company plans to partially fracture-stimulate the well to gather information about future horizontal drilling in the region.
Geographically, that well would be an outlier among the Utica test wells currently planned or under way. Chesapeake Energy Corp., Consol Energy Corp., Range Resources Corp., Rex Energy Corp. and others are discussing and drilling Utica wells in eastern Ohio and southwestern Pennsylvania (see Shale Daily, Aug. 5; Aug 3; Aug. 1; July 27).
NFG expects to spend $580 million in the Marcellus this year. In fiscal year 2012 the company intends to run a six-rig operation and spend between $740 million and $820 million drilling between 125 and 160 gross Marcellus wells.
Construction is under way on two midstream projects, the Line N Expansion and Tioga County Extension. NFG expects both to come online this fall.