Gulfport Energy Corp. expects to increase the number operated horizontal rig count in the Utica Shale to seven from the current four by the end of June, and it has budgeted $494-504 million to drill 55-60 gross (49-54 net) wells in the play this year, company officials said Wednesday.

The Oklahoma City-based company spud 10 gross (7.7 net) wells in the Utica during the 1Q2013 and, by the end of March, it had one gross well waiting on completion, three gross wells being drilled by horizontal rigs, five gross wells with vertical sections completed and waiting on a horizontal rig, and one gross well being drilled with a top-hole rig. Gulfport is currently operating four horizontal rigs and two top-hole rigs in the Utica.

“Average daily production of 6,395 boe was below our expectations for the first quarter, due largely to delays in the Utica midstream complex,” CEO James Palm said during a conference call with analysts. “The good news is that we hooked up six more wells in April, and the early results show them to be producing in accordance with our expectations, which were high expectations based upon early test results…based on early production results from the six new wells we hooked up, we feel now is the time to accelerate our drilling.”

Gulfport’s plans in the Utica dovetail with those of MarkWest Utica EMG LLC, a joint venture (JV) of MarkWest Energy Partners LP and The Energy and Minerals Group (see Shale Daily, March 4). The JV is developing an integrated system in the Utica to provide low- and high-pressure natural gas gathering systems, natural gas liquids pipelines and processing complexes that would have nearly 800 MMcf/d of capacity and provide 100,000 b/d of C2+ fractionation capacity (see Shale Daily, Jan. 5, 2012).

The company currently has nine wells flowing into sales pipelines at a combined gross rate of more than 10,000 boe/d and expects to have four more wells on line by the end of June, Palm said.

Gulfport in mid-April had been issued a total of 44 permits for horizontal wells targeting oil and natural gas by the Ohio Department of Natural Resources, second only to Chesapeake Energy Corp. (see Shale Daily, April 19).

Last month the Muskingum Watershed Conservancy District (MWCD) approved an agreement with Gulfport to provide water from several managed lakes in eastern Ohio for approximately three months (see Shale Daily, April 23). The agreement calls for the MWCD to provide up to 25 million gallons of water from Clendening Lake in Harrison County through June 12. The company is paying pay $8.00 per 1,000 gallons.

Gulfport also spud a total of nine wells in Southern Louisiana during 1Q2013, completing five of the wells as productive. One well was waiting on completion and three wells were still being drilled at the end of the quarter. At Hackberry, Gulfport drilled six wells and performed nine recompletions at the field.

For 1Q2013, Gulfport reported net income of $44.6 million (61 cents/diluted share), up 66% from $26.9 million (48 cents) in 1Q2012.

Net production in 1Q2013 was 516,954 bbl of oil, 319.7 Bcf of natural gas and 223,126 gallons of natural gas liquids. In October 2012, Gulfport contributed its Permian Basin interests to a Diamondback Energy initial public offering, so no Permian production was included in the company’s 1Q2013 production volumes (see Shale Daily,Nov. 12, 2012). Gulfport’s 1Q2013 results included $61.1 million of mark-to-market income in connection with its 21.4% equity interest in Diamondback.

Gulfport estimates 2013 production of 7.8-8.1 million boe, with capital expenditures for drilling activities estimated at $570-590 million.