Gastar Exploration Inc. was able to add 24 million boe to its estimated proved reserves during the first half of this year with a strong drilling program focused primarily on the Appalachian Basin and the Hunton Limestone formation in Oklahoma.
Proved reserves at the end of June 30 increased 43% to 78 million boe, from 54.6 million boe at year-end 2013. The Marcellus Shale in northern West Virginia and southwest Pennsylvania accounted for the bulk of proved reserves at 71%.
Last year's acquisitions in north-central Oklahoma, where the company is increasingly focused on the emerging Hunton Limestone, a liquids-rich stacked pay zones, accounted for 29% (see Shale Daily, April 11; Sept. 9, 2013; July 5, 2013),.
Oil production in the Hunton moved the present value (PV-10) higher from $592.5 million at year's end to $826.3 million in June. Proved reserves were 54% natural gas, 26% oil/condensate and 20% natural gas liquids (NGL).
More than half of Gastar’s 15 operated lower and upper Hunton wells have begun flowing this year. Gastar also has plans to test wells in other Oklahoma formations later this year, including the Meramec Mississippian, part of the Mississippian Lime formation, and the Woodford Shale (see Shale Daily, May 9).
Last month, the company also said it had reached total depth at its first Utica well in West Virginia; production should begin in August (see Shale Daily, June 17).
"We are excited about the opportunities for continued increase in oil production and reserve growth from our extensive Midcontinent acreage," said CEO J. Russell Porter. "We also anticipate strong future growth in NGLs from our Marcellus operation, and believe we have strong potential for adding high volume dry gas wells in the Utica/Point Pleasant formation that underlies the majority of our Appalachian acreage."
Wunderlich Securities Inc. analyst Jason Wangler is impressed by Gastar’s potential.
"What is even more impressive about this growth is the fact that Gastar has not yet included the potentially large Utica position within these results," said Wangler. "With initial results from the Utica expected during 3Q2014, as well as operated Hunton results in Oklahoma, we feel there are nice growth drivers for further reserve and production growth at Gastar."
Topeka Capital Markets analyst Gabriele Sorbara is in agreement about the Utica's potential and multiple targets in the Hunton, but he added that results in Oklahoma have varied widely thus far and said the company would face challenges in proving-up the acreage not included in proved reserves.