Energy Sector Recap Week Ending September 28, 2012

By Eric Fox | October 01, 2012 AAA

Unconventional resource plays in the onshore United States continued to interest operators in the energy sector, with various companies reporting further activity and acquisitions in these areas last week.

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Marcellus Shale
National Fuel Gas (NYSE:NFG) conducts its exploration and production activities as Seneca Resources Corporation and is involved in several plays in the onshore United States. The company reported the results on four wells recently drilled into the Marcellus Shale in Pennsylvania, with 24-hour production rates ranging from 6.3 million to 14.9 million cubic feet per day of natural gas.

One company not happy with the Marcellus Shale is Marathon Oil (NYSE:MRO), which is attempting to sell its position in this play, according to the Wall Street Journal. The company has 80,000 net acres in West Virginia and Pennsylvania and drilled its first well there in 2009. Marathon Oil estimates it may get up to $1,000 per acre for its Marcellus Shale position.

SEE: A Natural Gas Primer

Utica Shale
Rex Energy (Nasdaq:REXX) announced the results of the company's first well drilled into the Utica Shale in Ohio. The well produced an average of 1,008 barrels of oil equivalent (BOE) as its 5-day sales rate. The production rate assumes full ethane recovery and was composed of a mix of natural gas, condensate and natural gas liquids.

National Fuel Gas also completed two horizontal wells into the Utica Shale in Pennsylvania and has shut them in for two months, with production expected to begin in November 2012.

Mississippian Lime
National Fuel Gas is expanding its exploration and production operations and reported an initial position in Kansas that is prospective for the Mississippian Lime oil play. National Fuel Gas plans to drill three to eight horizontal wells there in fiscal 2013.

Another company active in the Mississippian Lime is Atlas Resource Partners, L.P. (NYSE:ARP), which just bought out its joint venture partner in this play. The company paid $40 million to Equal Energy, Ltd. (NYSE:EQU) for the remaining interest in the 8,500 net undeveloped acres along with related water disposal infrastructure and now has approximately 19,800 net acres exposed to the Mississippian Lime in Oklahoma. Atlas Resource Partners, L.P. plans to add a second operated rig to develop its acreage by the end of 2012.

SEE: How To Profit From Natural Gas

Eagle Ford Shale
Matador Resources Company (NYSE:MTDR) is active in the Eagle Ford Shale in South Texas and has been using smaller choke sizes on recent wells drilled and completed in this area and found that this technique will lead to better long-term performance of these wells. The company is also building its position in the Permian Basin and now has 5,000 net acres prospective for the Bone Spring and Wolfcamp plays. Matador Resources Company plans to start drilling on this acreage in 2013.

Major Oil Companies
The large integrated oil companies were also active last week with Total (NYSE:TOT) holding its annual analyst meeting. The company expects to grow oil and gas production by 3% annually through 2015, with the projected growth based on projects already in development. Total also estimates that oil and gas production may reach 3 million BOE per day by 2017, with 70% of this growth underpinned by projects currently in production or in the development phase. The company also plans to divest from $15 billion to $20 billion in assets by the end of 2014.

Chevron Corporation (NYSE:CVX) has decided to expand its Gorgon Liquefied Natural Gas (LNG) project in Australia to include a fourth train, according to the Oil and Gas Journal. The expansion will increase annual capacity here to 20.8 million tons per year, with an initial start up in 2014.

SEE: Commodities: Natural Gas

The Bottom Line
The energy sector continued to maintain its sharp focus on unconventional resource plays in the onshore United States, with various operators advancing on development programs and acquiring initial positions or additional leasehold in these plays.

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

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