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Seneca Resources Tests First Upper Devonian Well; Moves Forward With Pad Drilling

Seneca Resources Corp., the exploration and production subsidiary of National Fuel Gas Co., said Monday that it has drilled its first Upper Devonian Shale well in north-central Pennsylvania, which is ultimately expected to produce 7 Bcf of natural gas.

The well, located in Lycoming County and drilled into the Geneseo Shale, a thin, shallow formation in the Upper Devonian Shale group, tested at a peak 24-hour rate of 14.1 MMcf/d and averaged a 30-day rate of 8.6 MMcf/d. The company said in an operational update that the well was drilled to a lateral length of 4,920 feet and completed with 33 hydraulic fracturing stages.

In fiscal year 2013, which ended in September, the company’s 745,000 net acres in Pennsylvania's Marcellus Shale drove major reserve and production growth (see Shale Daily, Oct. 23, 2013). National Fuel serves about 732,000 utility customers in western New York and northwest Pennsylvania, and with its latest announcement, Seneca joins a growing group of Appalachian producers that are targeting several formations on multi-well pads to help cut long-term costs and optimize returns (see Shale Daily, Oct. 2, 2013).

In its Greater Clermont Area, located to the west of Lycoming County in Elk and Cameron counties, PA, Seneca said it recently drilled all nine of its planned Marcellus Shale wells on its first multi-well development pad. The company also said Monday that it was nearly finished drilling its sixth and final well at another multi-well pad nearby.

As a result of its 45% year/year production increase in 2013, the company in October increased guidance for FY 2014 from 134-146 Bcfe to 145-165 Bcfe. It reiterated that guidance Monday and said FY 2015 remains on track to reach 180-220 Bcfe. The company expects to spend up to $1.03 billion on capital expenditures this fiscal year and up to $1.27 billion in FY 2015.

Like other companies operating in the Appalachian Basin, Seneca has focused on building out its midstream infrastructure to improve takeaway and the money it earns on its production. Seneca said 75% of its Appalachian volumes are committed to firm sales agreements through September, while 45% of those volumes are already under firm sales agreements for FY 2015.

"We continue to believe our current pace of development is appropriate despite the challenging basis differentials in Appalachia," said National Fuel CEO Ronald Tanski in a statement. "We remain focused on securing long-term firm transportation and sales contracts for Seneca's production and our midstream businesses are developing infrastructure expansion projects not only for Seneca, but for many of the other producers facing similar constraints."

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