Despite production rates that would have been considered impressive under different circumstances, Penn Virginia Corp. (PVA) on Tuesday expressed disappointment in results from its first three horizontal wells on its Marcellus Shale leasehold in Pennsylvania.

The Risser #A-1H, Risser #A-2H and Dunn #A-1H wells, all in the central portion of PVA’s 35,000-acre position in Potter and Tioga counties, had peak 24-hour production rates of approximately 3.1 MMcf/d, 2.8 MMcf/d and 4.0 MMcf/d respectively, the company said. The wells’ average rate over a 72-hour test period was 2.1 MMcf/d, 1.7 MMcf/d and 2.7 MMcf/d, respectively. A fourth well in the western portion of PVA’s acreage is waiting on completion and related pipeline construction is in progress, with sales expected to begin by early August.

“The Marcellus Shale test wells had initial production rates which fell short of our expectations,” said CEO H. Baird Whitehead. “We will monitor longer-term production once these wells are turned into the pipeline and determine if the reserves can support a development program in this immediate area.”

During the second half of the year, PVA plans to focus on testing, initially with vertical wells, the eastern portion of its Marcellus acreage.

The results from the eastern wells might have been more warmly received by the company if natural gas prices were higher, said PVA spokesman James W. Dean.

“Natural gas is not as robust as it was three years ago. We’ve got a situation where you need a higher rate of production up front to create economic wells,” Dean told NGI’s Shale Daily. “In looking at what we were hoping for, we’d rather have something along the lines of 4-5 MMcf/d, versus the range of 2-4 MMcf/d that we reported. They’re short of expectations, but it’s not dramatically short.” Nearby wells operated by other companies have reported similar production rates, he said.

“We’re going to move to the east and we expect the rock to be better there. It doesn’t rule out that we might come back here and it certainly doesn’t condemn the acreage. But it didn’t blow our socks off, obviously.”

PVA has been seeking a joint venture partner or other alternatives in the Marcellus.

“The goal here is to attract a partner because of the capital outlay that we’ll need to undertake in this play, which — given that we might have 200 locations — is pretty enormous for a company our size,” Dean said. “It would be equal to or greater than our size.”

Penn Virginia has sounded more upbeat about its operations in the Eagle Ford Shale in Gonzales County, TX, where one well earlier this year had a peak 24-hour production rate of approximately 1,100 b/d and 1 MMcf/d (see Shale Daily, Feb. 28).

In December PVA said it would concentrate its exploration activities in oily and liquids-rich plays in 2011 and would spend 40% less than it did in 2010 because of a “weak natural gas price environment and outlook” (see Shale Daily, Dec. 20, 2010). The producer plans to spend $290 million in 2011, down from $475 million last year.

PVA recently began commercial operations on the first large-diameter gathering pipeline in the north-central Pennsylvania Marcellus fairway (see Shale Daily, Feb. 18). The first section of the gathering system in Lycoming County, PA, provides more than 850 MMcf/d of capacity on a 30-inch trunkline that connects to Transcontinental Gas Pipe Line Co. LLC’s interstate system.