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Magnum, Rex Energy Report Solid Appalachia Output

Magnum Hunter Resources Corp. said Wednesday that it had finally completed test results at the Stewart Winland well pad in Tyler County, WV, releasing flow rates from the other three wells nearly a month after an initial well tested at 46.5 MMcf/d (see Shale Daily, Sept. 25).

The Stewart Winland 1300U was the company's first Utica Shale well in the state and one of the best yet in the entire formation. The other completed Marcellus wells remained shut-in to await a special air permit from the West Virginia Department of Environmental Protection (see Shale Daily, Oct. 8; Oct. 10).

Magnum CEO Gary Evans said the well’s results to date were a positive for midstream subsidiary Eureka Hunter, which financial analysts have said may be launched as a public entity. The Marcellus wells have an average lateral length of 5,733 feet and were tested at a peak rate of 17 MMcf/d, 17.1 MMcf/d and 16.8 MMcf/d respectively.

"Not only are the results better than nearby operators, these wells also have a greater liquids mix," said Topeka Capital Markets analyst Gabriele Sorbara, who added that liquids accounted for 46% of the Marcellus well's combined production. "Further, this pad contributes to building momentum into 2015 and contributes to the growth and valuation of Eureka Hunter Midstream."

The Stewart Winland was being watched closely by financial analysts as Magnum transitions as an Appalachian pure play and sells assets across the country (see Shale Daily, Oct. 10; Aug. 11).

Appalachian operator Rex Energy Corp. also reported it is increasing its full-year guidance. In July, Rex increased its forecast from 140-143 MMcfe/d to 146-150 MMcfe/d (see Shale Daily, July 29). It now has increased 3Q2014 guidance by 3% moved the full-year figure to 150-152 MMcfe/d.

Rex reported third quarter production of nearly 170 MMcfe/d and said fourth quarter volumes should increase to between 179 MMcfe/d and 185 MMcfe/d. For more than a year now, Rex has slowly ramped-up production in southeast Ohio, but even more so in Western Pennsylvania (see Shale Daily, Jan. 16; March 28; Aug. 7). It said last year that it would begin completing certain pads with vertically stacked laterals and has also been testing tighter downspacing on some of those pads (see Shale Daily, Nov. 11, 2013).

Wells Fargo Securities analyst Gordon Douthat said the company is demonstrating a "track record of solid execution," despite the pressure its stock faces as fears persist over weak commodity prices.

Rex produced 107 MMcf/d of natural gas in the third quarter and increased its liquids production during the same time by 61% from 2Q2014 to 10,400 boe/d.

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