Several exploration and production companies used the spotlight of second quarter of 2011 earnings to raise the estimated recovery rate on wells in various resource basins. This has the effect of raising the value of properties as these new recovery rates are extrapolated to the company's entire leasehold position in a particular area.

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Marcellus Shale
Rex Energy is developing the Marcellus Shale on an operated basis in Butler County, Pennsylvania. The company drilled 22 wells here in the first six months of 2011 and put 11 wells onto production and sales.

Rex Energy has increased the estimated ultimate recovery for wells on its Butler County leasehold to a range of 4.4 Bcfe to 5 Bcfe from the previous level of 4 Bcfe. This increase was based on higher initial production rates on wells drilled from the Talarico pad.

Rex Energy is also involved on a non-operating basis with Williams (NYSE:WMB) to develop the Marcellus Shale in Westmoreland County, Pennsylvania, The company also saw higher initial production rates on wells in Westmoreland County, and raised the EUR on wells drilled here from 3 Bcfe to a range of 4 Bcfe to 5 Bcfe.

Range Resources (NYSE:RRC) also hiked the EUR on the company's Marcellus Shale wells, moving the wells in the southeast portion of its acreage to 5.7 Bcfe. The company examined data from all its wells drilled and completed in 2009 and 2010 in this area.

Continental Resources
(NYSE:CLR) is working on the Bakken formation on the company's large leasehold in the Williston Basin. The company raised the EUR on North Dakota Bakken wells to 603,000 barrels of oil equivalent (BOE) from the previous model of 518,000 BOE. Continental Resources looked at twelve months of production data in making the increase.

Continental Resources based the upward revision on its use of additional proppant and more fracturing stages for wells drilled and completed on its leasehold, leading to better initial production rates. During the second quarter of 2011, the company completed 34 gross wells and reported average test production rates over 1,400 BOE per day.

Rosetta Resources (Nasdaq:ROSE) is making a major push into the Eagle Ford Shale and is active in the Gates ranch area in Texas. The company recently raised the EUR on wells here from 7.2 Bcfe to 10 Bcfe, after looking at two years' worth of production data. Rosetta Resources puts a $20 million pretax present value on each of its Gates Ranch wells.

The Bottom Line
One thing for investors to consider is that the well recovery estimates are based on limited data and might change again. Rex Energy adjusted the Butler County EUR's based on between 100 and 200 days of production for these wells. The non-operated Westmoreland County wells have less than 100 days of production in some cases. (This very useful volatility index of the CBOE tells investors about the mood of the stock market. Check out Getting a VIX on Market Direction.)

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