Consol Energy Inc. disclosed Tuesday that it has signed a definitive agreement with Blue Racer Midstream LLC to construct, own and operate natural gas gathering pipelines and facilities in Noble County, OH, to support growing production with joint venture (JV) partner Hess Corp.

Consol operates the Hess JV within the Utica Shale.

The Blue Racer agreement would support the partners’ current production using existing infrastructure in the area and with additional construction, support more development plans to deliver future production to market, according to Consol. No other details were provided.

Dominion and Caiman Energy II LLC formed Blue Racer in late 2012 to provide more services over the next two years in the Utica and Marcellus shales; it secured additional funding in August (see Shale Daily, Aug. 26). It includes 500 miles of Dominion East Ohio and the Natrium Natural Gas Processing and Fractionation Plant in Marshall County, WV.

Consol, which has been in the process of considering a split between its onshore natural gas and its traditional coal mining operations to help investors more clearly see the company’s value, also said on Tuesday it produced and sold more production in the third quarter than anticipated, with natural gas output up 17% from a year ago.

The Gas Division produced 46.1 Bcfe in 3Q2013 versus 39.5 Bcfe in the year-ago period, and ahead of the company’s guidance of 43-45 Bcfe. Net production included 491 MMcf/d of natural gas, 397 b/d of oil/condensates and 1,340 b/d of natural gas liquids.

“Our gas production growth is beginning to accelerate as we and our Marcellus Shale partner expand the rig count,” said CEO J. Brett Harvey. Consol partners with Noble Energy Corp. in a JV on some of its Marcellus acreage.

“We now have a record eight rigs drilling in the Marcellus Shale on our JV acreage. For 2014, we and Noble Energy expect to be operating at least this many rigs. Our rebounding rig count and our well results will, we believe, enable us to achieve our 2014 production guidance of 210-225 Bcfe, which represents a 22-30% growth rate over expected 2013 production.”

Between July and September, Consol drilled 12 Marcellus and three Utica shale horizontal wells. The average drilled lateral length for the Marcellus wells was 8,817 feet, with the Utica wells at 9,893 feet. Consol also completed 21 Marcellus and three Utica wells and turned in line 22 Marcellus wells during the quarter.

In its Ohio operations within the Utica, Consol drilled three wells and completed three wells in Noble County within its operated JV with Hess. Consol has completed its 2013 drilling program in the Utica with nine wells drilled and has moved the one rig to support more drilling activity in the Marcellus.

Within its operated dry gas operations in southwestern Pennsylvania, Consol drilled seven wells on the NV 55 pad in Washington County. Fourteen wells were completed in the county, with 10 using shorter stage completions. The most notable producer was the NV 38C, with initial production of 19 MMcf/d. The NV 39 F, Consol’s first Upper Devonian well, also in Washington County, was drilled in the Burkett formation of the play and turned in line in June at 3 MMcf/d. Two more Burkett wells are planned in 2014 to test the Rhinestreet formation from Marcellus pads.

One horizontal rig now is operating, and Consol plans to drill 27 wells in southwestern Pennsylvania, an increase from 20 in previous guidance. In central Pennsylvania, Consol has one horizontal rig and expects to drill five more wells in Westmoreland County, which would bring it to 10 wells this year, consistent with guidance.

Consol drilled five wells in northern West Virginia in 3Q2013, one in Upshur County four in Barbour County. There’s one horizontal rig operating in Upshur County, with expectations to drill another three wells before the end of the year, in line with guidance to drill 11 wells in 2013.

The Pittsburgh operator is set to release its results on Oct. 31, with pretax income expected to be “modestly” positive, but net income “likely to be a loss.” In the final three months of the year, net gas production is forecast to be 46-48 Bcfe, which at the midpoint would be 12% higher than a year ago when output was 41.8 Bcfe. Consol is aiming for 2013 net production of 170-175 Bcfe. Production guidance for 2014 remains unchanged at 210-225 Bcfe net, representing a 22-30% growth rate over the midpoint of the 2013 forecast. Guidance assumes liquids would be 7-8% of the total.