Tickers in this Article: SWN, NBL, CNX, RRC
Some exploration and production companies have used third quarter of 2011 earnings to announce an increase in expected production for the current year, as oil and gas operations have turned out to be more productive than originally expected. (For more, see Oil And Gas Industry Primer.)

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Fayetteville Shale
Southwestern Energy
(NYSE:SWN) was initially looking for total 2011 production to range from 483 to 491 Bcfe. The company released an operations report for the third quarter of 2011 and increased the production range to 496 to 500 Bcfe for the year. If the company achieves this range, it would represent growth of approximately 23% over 2010.

Southwestern Energy core area is the Fayetteville Shale in Arkansas, which accounts for approximately 85% of the company's production. The company put 132 wells into production here during the third quarter of 2011.

Southwestern Energy entered into the Marcellus Shale to help diversify the company's operations away from a single basin. The company has participated in 40 wells since entering the play and is most active in Northeast Pennsylvania.

Southwestern Energy reported total production of 7.4 Bcf from the Marcellus Shale during the most recent quarter, a huge increase from the same quarter in 2010 when the company only had 200 million cubic feet of production. The company is growing production from here so quickly that it has to restrict production due to a lack of processing or transportation infrastructure. (To learn more about investing in oil, check out A Guide To Investing In Oil Markets.)

Marcellus Shale
Another company raising production guidance for 2011 was Noble Energy (NYSE:NBL), which now expects 2011 sales volume to range from 220,000 to 222,000 barrels of oil equivalent (BOE) per day. This is an 8,000 BOE per day increase from the company's original guidance, and it is the company's second increase.

Noble Energy attributed part of the increase to anticipated fourth quarter production from the company's joint venture in the Marcellus Shale. Noble Energy signed a deal with CONSOL Energy (NYSE:CNX) in August 2011.

Range Resources (NYSE:RRC) also increased production guidance for 2011, and now expects to grow production by 11% over 2010. The company's previous guidance for production called for a 10% growth rate.

Range Resources reported two gushers in the St. Louis formation, a relatively unknown play in the Texas Panhandle area. These wells had combined production during the first 24 hours of 28.8 million cubic feet of natural gas equivalents per day. The original discovery well reported by Range Resources in the St. Louis play has already produced 4.6 Bcfe since January 2011. (To help you understand natural gas, read Natural Gas Industry: An Investment Guide.)

The Bottom Line
Shale plays in the domestic United States are getting better and better and many exploration and production companies benefited with greater production than anticipated. This trend should continue during the balance of earnings season.

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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

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