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Gastar Wins WV Court Challenge That Threatened Marcellus Ops

Gastar Exploration Inc. said Monday that it has favorably resolved a key legal challenge in West Virginia that threatened to undercut its production in the Marcellus Shale.

A West Virginia judge rejected a second lawsuit from Axiall Corp. affiliate Eagle Natrium LLC, which challenged Gastar's horizontal hydraulic fracturing operations in the state, claiming its salt mining operations were threatened. A request for a temporary injunction had halted work at Gastar's Goudy pad, but a judge dismissed the request and sided with Gastar by precluding Eagle from retrying its claims after a similar lawsuit failed in Pennsylvania earlier this year.

After the judge's decision, the court threw out Eagle's remaining claims against the West Virginia Department of Environmental Protection, which it was pursuing to invalidate permits issued to Gastar.

"In denying Eagle's initial bid for an injunction [the Pennsylvania judge] noted that Gastar had previously drilled and hydraulically fractured 57 Marcellus Shale wells in the vicinity without any impact on Eagle operations," Gastar CEO J. Russell Porter said in a statement. "We are gratified that both courts made decisions based on science rather than fear. Gastar plans to fracture treat the three Goudy wells impacted by the Axiall lawsuits within the next 60 days."

Although it has turned its focus to the Midcontinent in recent years, after a series of acquisitions in north-central Oklahoma in 2013, the Marcellus Shale remains a core area of operation for Gastar (see Shale Daily, Nov. 11, 2014; Sept. 9, 2013; April 2, 2013). The Appalachian Basin still accounts for 71% of the company's proved reserves, according to its latest investor presentation.

Gastar also said Monday that it had completed and turned to sales 10 new horizontal Marcellus wells in Marshall County, WV, that were producing at a combined gross rate of 28.7 MMcf/d of natural gas and 3,300 b/d of condensate. While those wells were said to still be churning out a significant amount of completion fluid, Topeka Capital Markets analyst Gabriele Sorbara said they would likely help the company meet its fourth quarter exit rate.

Gastar provided few details, but it said its latest round of Marcellus wells were completed using an "enhanced completion technique designed to segregate and stimulate differently pressured portions of the horizontal wellbore." Given the technique's success, the company said it would complete Marcellus wells with the method going forward. 

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