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Newfield to buy in Marcellus, defer gulf drilling

By OGJ editors
HOUSTON, Nov. 16
-- Newfield Exploration Co. will buy Marcellus shale development assets in Bradford County, Pa., from EOG Resources Inc. for $405 million.

Newfield estimated that the 50,000 net acres contain 1.5 to 2 tcf of gas equivalent net unrisked recovery potential. Newfield plans to spend $100 million in 2011 and will run two operated rigs to hold the acreage by production.

Newfield said it will defer exploratory drilling in the deepwater Gulf of Mexico in 2011, allowing for the reallocation of $70 million to its Appalachian development program. It said net production in 2011 from the acquired Marcellus properties is expected to exceed that associated with the nonstrategic assets planned for divestment next year.

Output on the leases being acquired is 7 MMcfd of gas from five wells. The purchase also includes 11 uncompleted wells and doubles the company’s Marcellus acreage holding.

Closing is likely by the end of 2010, by which time 10 more wells will have been drilled. EOG Resources is in a transition to liquids plays and has been selling natural gas assets (OGJ Online, Nov. 5, 2010).

Current gathering capacity is 25 MMcfd with capability to expand to 95 MMcfd in early 2011. Newfield estimated that more than 400 gross operated well locations exist on the acreage.

Newfield entered the Appalachian basin in 2009 via an operated 50-50 joint venture with Hess Corp. on 70,000 gross acres in Wayne County, Pa. The partnership has drilled three exploratory wells in Wayne County.

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