Magnum Hunter Resources Corp. confirmed Friday that it has acquired 1,700 net acres in Monroe County, OH, and Ohio and Wetzel counties, WV, from bankrupt aluminum producer Ormet Corp. in a deal that it said would allow it to drill an additional 15 fully operated Marcellus and Utica shale wells.
Earlier this month, documents filed in a Delaware bankruptcy court provided minimal details on the acquisition, and it was unclear at the time what exactly Magnum had planned for its purchase (see Shale Daily, July 10), which the company said actually cost it $22.7 million, rather than the $22.3 million initially listed in court documents.
Magnum already held 875 acres on the Ormet property,where it has drilled three Marcellus wells that have been producing condensate and natural gas since May. The property is located on the Ohio-West Virginia state line near a number of Utica wells that have tested at peak rates exceeding 30 MMcf/d, including Magnum's own Stalder 3UH in Monroe County, which tested at 32.5 MMcf/d in February (see Shale Daily, Feb. 14).
Those results encouraged the company to push into West Virginia to test the Utica there, and Magnum became one of the first companies to publicly highlight the Utica's potential outside of Ohio by announcing plans in March to drill a Utica well on the Steward Winland pad in Tyler County, WV (see Shale Daily, March 14). That well, the Stewart Winland 1300 UH, is 350 feet deeper than the Stalder. In an 8K filed in May the company said early results during drilling showed greater bottomhole pressure and similar porosity and permeability to the Stalder reservoir.
While a test is expected at the Stewart Winland this summer, Magnum highlighted its plans for the Ormet acquisition and said for the first time Friday that it was already drilling the vertical section of another dry gas Utica well on its existing acreage there. That well is on the Ormet 15 pad in Monroe County, Magnum said, and plans call for a lateral length of 4,800 feet with up to 20 or more hydraulic fracturing stages. The company said its current plans for the Ormet 15 pad include four Utica Shale wells that will be drilled, completed and producing by year's end.
Ormet filed for Chapter 11 bankruptcy protection in early 2013 and said this year that it was trying to sell its aluminum smelting plant and associated assets.
Rick Farrell, senior vice president of business development for Magnum subsidiary Triad Hunter LLC, said the company's land department had worked for about one year on the Ormet transaction due to the bankruptcy's complexities. He added that the company will drill five more Marcellus wells with the newly acquired mineral rights, and there are plans for another seven dry gas Utica wells that "appear to be geologically well situated based upon our Stalder pad production results and the recent data obtained from drilling, logging and fracture stimulating the Stewart Winland 1300 UH located immediately across the Ohio River in West Virginia."
Magnum's announcement comes just one day after two of the Appalachian Basin's leading operators said they, too, were preparing to test the Utica's boundaries outside Ohio. EQT Corp. said it would spud its first Utica well in southwest Pennsylvania by year's end (see Shale Daily, July 24), while Cabot Oil & Gas Corp. said it had a rig evaluating the Utica in West Virginia, where it has permitted a well in Wood County (see related story).
Antero Resources Corp., Chesapeake Energy Corp., Stone Energy Corp., Chevron Appalachia LLC and Gastar Exploration Inc. have all either staked, permitted or started drilling Utica wells in West Virginia as well (see Shale Daily, May 16; March 26).