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New Ohio shale gas well results show Utica fairway moving south

Highlights

Magnum Hunter Resources' Friday announcement of a prolific Utica Shale gas well in Monroe County, Ohio, highlights the migration of Utica drilling south out of its original core in Carroll County.

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Houston-based Magnum Hunter said its first dry gas well off the Stalder #3 pad was placed into production this week with a peak rate of 32,500 Mcf/d. The pad could eventually hold 18 wells, Magnum Hunter said.

Analysts at energy investment bank Tudor Pickering Holt on Friday crowed about the "huge" well.

"Well still cleaning up frack water and company believes sales rate will likely increase over the next few days. Stalder #3 drilled to a vertical depth of roughly 10,600 feet with a 5,000 feet lateral fracked with 20 stages," TPH said.


The Stalder well moves the dry gas fairway of the Utica further east towards West Virginia, TPH said, and was good news for firms such as Oklahoma City-based Gulfport and Denver-based Antero, which both own acreage in Monroe County and next door in Noble County.

While not the best Utica well on an equivalent basis to date, Magnum Hunter's Stalder well may be the best dry gas well in the Utica. With no need for processing, the Stalder well was placed into production immediately, bypassing the midstream choke points that have kept other Utica's wells from full production.

According to data from the Ohio Department Natural Resources, at least 25% of drilled Utica wells have yet to be placed on production.

Following the trail of "monster" Utica wells leads out of Carroll County, center of Utica pioneer Chesapeake Energy's efforts, and south into Harrison, Belmont, Monroe and Noble counties.

In November, Chesapeake reported it had drilled 377 Utica wells, almost all in Carroll County, with 169 wells on production and another 208 waiting for completion and a pipeline. Chesapeake said the average peak production for its 63 new wells in the third quarter of last year was 6.6 Mcfe/d.

Antero's Milligan 2H in Noble County, just miles south and west from Magnum Hunter's Stalder well, was reported in January to be producing 40.2 Mcfe/d, with 66% liquids content. The Milligan is one of five Noble County wells Antero reported in January with a combined average output of 32,200 Mcfe/d, with 65% liquids content.

A previous top Utica well, Oklahoma City-based Gulfport's Shugert 1H well is in Belmont County, a few miles directly north of the Magnum Hunter well. The Shugert was reported at a peak rate of 32,200 Mcfe/d, with 20,000 Mcf/d of dry gas.

Results of Magnum Hunter's Stalder #3 go "a long way in delineating the dry gas window in the Utica shale play further south in Ohio," Topeka Capital analyst Gabriele Sorbara told his clients Friday.

"We note that this is a pure dry gas well, requiring no processing. We believe the dry gas window of the Utica shale play is the core part of the play, generating top tier economics, and provides a faster ramp up in production than the liquids area," Sorbara said.

TPH estimated the Stalder #3 will break even at gas prices of $2.50/Mcf.

According to Platt's pricing data, the average daily cash price at Dominion South, a prominent Utica pricing point, was $3.692/MMBtu with a late July low of $2.83/MMBtu and high last week of $7.91/MMBtu.

--Bill Holland, bill.holland@platts.com
--Edited by Derek Sands, derek.sands@platts.com