Magnum Hunter Resources Corp. and Stone Energy Corp. signed joint development and joint operating agreements covering an existing mineral leasehold position owned by both companies in Wetzel County, W.Va.
Magnum Hunter’s Triad Hunter LLC subsidiary and Stone Energy will jointly drill 19 horizontal wells to the Marcellus shale on 1,925 acres in the next 2 years. The two companies completed two horizontal Marcellus wells on the acreage with 50% ownership interest each.
The additional joint effort will drill and complete the first 11 wells in 2012 at an estimated capital cost of $47 million. Total combined capital costs associated with the contract area for the joint agreements is to exceed $100 million.
Stone Energy will be designated as operator in the contract area, and each company will own a 50% working interest. In a separate agreement, Stone Energy agreed to commit its share of production from the contract area to the Eureka Hunter Pipeline System operated by Magnum Hunter’s Eureka Hunter Pipeline LLC subsidiary.
The 1,925-acre contract area is part of an existing 5,288-acre leasehold in which Triad Hunter will retain 100% interest in 2,979 acres. During 2011 and unrelated to the additional contract area, Triad Hunter drilled and completed three horizontal Marcellus wells with a 100% ownership interest. Triad Hunter anticipates drilling an additional nine wells with a 100% ownership interest on the 2,979 acres.
Triad Hunter said the joint venture will benefit greatly due to the takeaway capacity, processing, and multiple market capabilities associated with Eureka Hunter.