Investors await 2012 Utica production numbers

The investment community continues to await the Ohio Department of Natural Resource's (DNR's) release of Utica shale well data from 2012. The entity released its 2011 data on April 1, 2012, which reported only producing wells (see table). "Sometimes it takes states a little while to get ramped up with reporting new drilling activity," said Tim Rezvan, vice president of Equity Research with Sterne Agee. Ohio's oil and gas regime is fairly antiquated, and there is still no sign of data showing how active the Utica shale play has been within the last year. The 2011 data was dominated by Chesapeake, and there are indications this may be the case for 2012.

Carroll County is the focal point for much of Ohio's Utica shale activity, although, several operators are holding major leases both in Carroll and surrounding counties. "We expect the data to be released any day, but there has been no notice from the DNR," Rezvan said. In a prepared statement by Sterne Agee, the firm expects to see a list of 50 to 60 wells that were turned to sales in 2012. The data should include total gas, oil, and brine production in addition to days on production. "DNR only reports on producing wells," Rezvan added. The firm does not foresee any insight into NGL processing that may have occurred as many of the region's processing projects are under way.

No surprises are expected with Gulfport Energy and the data are expected to provide production numbers for the company's two wells—the Wagner 1-28H and the Boy Scout 1-33H—that were brought online in late 2012. The company provided detailed production data about these wells in its fourth-quarter earnings call.

Chesapeake announced in early April that infrastructure build-out remained as the largest near-term growth impediment. The company stated that 2012 production data were unlikely to impress as it would reflect restricted rates. Sterne Agee also cited in its statement the uncertainty of the "days on production" figure provided by the DNR for each well would reflect temporary curtails.

2011 UTICA Shale Production

Chesapeake's drilling and permitting program over the last year suggests that several wells drilled in the northern part of the play are unlikely to produce with similar pressures as those wells drilled in the fairway of the play in Carroll, Harrison, Belmont, and Guernsey counties, Sterne Agee reported.

Antero is operating two drilling rigs in the rich gas/condensate window of the southern core of Ohio's Utica, according to its annual report. The company placed its first well online in December 2012, which is currently producing to sales. The company also reported that it has an additional 25 MMcfed of net production that is shut in and awaiting infrastructure associated with the two remaining wells completed during 2012. Antero has completed three horizontal wells in the play and has drilled an additional four wells, three of which were being completed at the time of the company's report.

As the industry awaits Ohio's well data, Sterne Agee expects the results to vary greatly, given 2012 drilling activity across many fringe areas of the play. Weak results from other operators are likely to validate that Gulfport remains the most exposed operator to the over-pressured liquids fairway in Harrison, Belmont, and Guernsey counties. The firm also notes that results from Chesapeake's Carroll County wells could validate its inclusion in the known fairway of Ohio's Utica play.

The Ohio DNR reported updated statistics in mid-April. From April 7-13, 13 new permits were issued. Nine of these went to Chesapeake for its Carroll County operations. CNX received one permit in Noble County, and Gulfport held three permits all in Harrison County.

The updated statistics classified 12 wells as "drilling," which were working Noble, Belmont, Guernsey, Harrison, Carroll, and Monroe counties. Eighty-nine wells were classified as "producing," with the majority of those—46 wells—also in Carroll County. At the time of this writing, Ohio DNR had not yet released production numbers.

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