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Consol JV Cracks Upper Devonian Code

Consol Energy has drilled its first Upper Devonian Shale well, in Greene County, PA, with results that bode well for the 300,000 acres it controls with commercial Upper Devonian potential.

In an update on its 2Q2013 operations, Canonsburg, PA-based Consol said it drilled its Upper Devonian Shale well in the Burkett formation, which it said is the deepest of numerous Upper Devonian shales. The formation is the only Upper Devonian shale which falls within the ownership of Consol's joint venture (JV) with Noble Energy Inc.

Consol said it chose to drill its first well in the Burkett in order to test the potential interaction with deeper Marcellus Shale wells and to benefit from jointly-owned surface infrastructure. Future Upper Devonian wells will include wells drilled in 100% Consol-owned strata, the company said.

The JV experienced an average casing pressure of 2,173 psi on a 42/64 inch choke at the NV 39F well, which was drilled to a total measured depth of 12,490 feet, with a lateral length of 4,889 feet. The well was completed in 17 stages and was fractured together with five underlying Marcellus Shale wells. NV 39F has been flowing at a sustained rate of approximately 3.0 MMcf/d. "Importantly, the NV 39F well seems to have concentrated and contained the fracture treatments in the Marcellus Shale wells below; specifically, the NV 39B and NV 39C Marcellus Shale wells, which are showing strong early results flowing at approximately 9.0 MMcf/d and 10.0 MMcf/d, respectively," Consol said.

The Upper Devonian, which lies above the Marcellus, tends to mirror some of the attributes of the Marcellus -- generally gassy where the Marcellus is gassy, and more liquids rich where the Marcellus is liquids rich (see related story).

It's early days to rate the overall potential of the play, but Rex Energy Corp. and Range Resources Corp. have also had some success in the Upper Devonian (see NGI, June 24). And Antero Resources and Ultra Petroleum have drilled test wells in the play.

Overall, Consol's operations "performed in line" during 2Q2013, according to CEO J. Bretty Harvey. The Gas Division produced 38.6 Bcfe, 3% more than the 37.3 Bcfe produced in 2Q2012, consistent with previously released guidance. 2Q2013 production included 418 MMcf/d of natural gas, 335 b/d of oil/condensates, and 655 b/d of natural gas liquids. "As we expected, our 2013 well completions will be weighted toward the back-end of the year," the company said.

Consol expects its 2013 natural gas production to be approximately 170-175 Bcfe (net to Consol), with 3Q2013 production expected to be approximately 43-45 Bcfe. The company also released a 210-225 Bcfe production estimate for 2014. If the company achieves the mid-point of its 2013 guidance range, it would represent a 10% growth rate over 2012 actual production of 156.3 Bcfe; the 2014 range represents a 22-30% growth rate over the 2013 forecast.

"Despite the uncertainty surrounding the upper bound of our initial 2014 gas production guidance, investors need to understand that Consol's 2013 investment in gas will have an important effect on our 2014 gas production. The Gas Division represents the growth vehicle for Consol's shareholders once the BMX Mine is completed next year." And the company expects to achieve Gas Division margin expansion through an increased emphasis on production in the liquids-rich portions of the Marcellus and Utica shales. "Our 2013 exit rate is projected to be 520 b/d of oil/condensates and 4,900 b/d of NGLs, with higher levels expected in 2014."

Consol drilled 13 horizontal shale wells during 2Q2013: nine in the Marcellus and four in the Utica. Consol completed 15 Marcellus Shale wells in the quarter and expects to initiate completion operations on the Utica Shale wells in 3Q2013.

Consol previously reported 10.7 Bcfe of production in the Marcellus Shale in 1Q2013, a 60% increase that signaled that the play is becoming increasingly important for the coal and natural gas producer (see NGI, April 29). The Marcellus accounted for just 8% of the 127.9 Bcfe of gas Consol produced in 2010, but its share grew to 17% in 2011 (153.5 Bcfe) and 23% in 2012 (156.3 Bcfe). Coalbed methane has been slowly falling during the same time frame, from 71% in 2010, to 60% in 2011 and 56% in 2012.

Consol's Marcellus JV partner, Noble., drilled 13 wells in the wet gas portion of the Marcellus, and completed and turned in line 11 wells in Marshall County, WV. Noble is currently operating three horizontal rigs, with the addition of a fourth rig expected in the third quarter. By the end of the year, Noble expects to operate five horizontal rigs, a decrease from previous guidance of six rigs, due to improvements in horizontal rig efficiency being realized by increased top-hole drilling.

In the Utica, Consol and JV partner Hess Corp. drilled four wells and Hess drilled four others. With natural gas prices increasing, the Consol-Noble JV recently announced plans to build a dry gas pipeline across two neighboring counties in north-central West Virginia.

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