National Fuel Gas Co.'s exploration subsidiary is adding 42 Bcfe of proved natural gas reserves to its Marcellus Shale holdings in a deal with joint venture (JV) partner EOG Resources Inc.
Seneca Resources Corp. agreed to pay $23 million to acquire the EOG properties in the Covington Township area of Tioga County, PA. The properties were included in EOG's contribution to the companies' JV, which was formed in 2006 (see Daily GPI, Feb. 8, 2007).
"The acquisition of EOG's position in our Tioga County operations is another step in our Marcellus Shale growth plan," said Seneca President Matthew D. Cabell. "This transaction will have an immediate positive impact on our production and proved reserves, and it provides us with additional upside in an area where we continue to have great success."
Seneca has been the operating partner of the leasehold in the Covington Township area, and it would continue to act as operator for all existing and future wells within that portion of the JV. The Seneca/EOG JV also is to continue, with EOG continuing to operate the JV leasehold west of Tioga County.
EOG, which is focusing more on its oil-weighted shale holdings in North America, last November agreed to sell 50,000 net acres in Pennsylvania to Newfield Exploration Co. for $405 million (see Shale Daily, Nov. 17, 2010). With the sale EOG still was to retain about 170,000 net acres in northwestern Pennsylvania.
With the EOG transaction, Seneca's production forecast for the entire 2011 fiscal year has been increased to between 65 Bcfe and 75 Bcfe, which is 5 Bcfe higher than a previously announced forecast. In addition, Seneca's capital spending in the Exploration and Production segment for fiscal 2011 now is expected to be $485-560 million, up from a previous plan to spend $425-500 million.