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Thursday, November 13, 2014

EVEP Planning to Sell Off Additional Utica Shale Acreage

EV Energy Partners (EVEP) president and CEO Mark Houser spoke about the company's Utica shale plans on a recent earnings call.  Here is some of what he had to say:
I want to circle back [to the Utica] for just a moment. Clearly, this is still EVEP’s biggest lever for value creation. There have been almost 1,200 wells drilled in the play and about half are producing with more coming on line every day. Over 500 wells have been drilled by Chesapeake in our AMI area, mostly but not exclusively in Carroll County. Chesapeake is running seven to nine rigs in the play, seven to nine as I said, and expect similar activity levels going forward. Production volumes continue to grow and should approach 800 million equivalent per day or more by year end. 
EnerVest will begin marketing its acreage both operated and non-operated within the AMI area next year. We have a total of 120,000 acres of which 22,000 is net to EVEP. Within many parts of the AMI, we believe the Utica is now a proven play particularly in Carroll County, which is 55,000 of the 120,000 acres. We have identified over 900 proved and probable locations on our acreage in Carroll County alone. 
At the same time, we have also participated in eight wells in very different parts of the Utica play. The play is maturing and expanding with acreage being tested in all directions. With EnerVest large acreage position, we are participating in wells as far northeast as Mercer County, Pennsylvania; as far south as Washington County, Ohio; and as far west as Tuscarawas County, Ohio. This should give us even more insight into the advances of technology and the productivity of many areas of the play. 
The western edge of the play in particular is progressing. We’re encouraged by Chesapeake’s Parker well in Tuscarawas County and anticipate further delineation of the play with continued additional drilling. Chesapeake has indicated they plan to drill three to five more wells in the oil window early next year. We are also aware that Creso, PDC and others are currently drilling in these areas. In fact, we’re participating in some of those wells. 
In partnership with EnerVest and eight other industry partners, we have drilled a volatile oil window well in Tuscarawas County, which we anticipate flowing by the end of this year. We’re in the middle of the completion operations and have completed five of the 20 stages so far. We’re excited but cautious as we are bringing new technology to bear in this process and we’ll keep you posted on the results. Again, keep in mind EVEP has over 70,000 acres in the current oil window. 
Finally, speaking a bit more to our remaining Utica midstream asset, UEO [Utica East Ohio Midstream]. Production and EBITDA continues to ramp up. In November we have been producing on average around 625 million cubic feet a day, which as John mentioned is above nameplate capacity, and these facilities are capable of about 725 million a day. Actually over the past three days, additional throughput is being tied in from the Cardinal system, which will increase the production coming into UEO and open up more areas of the play for unrestricted production as more wells are turned in line. 
We also look forward to the next big step as an additional 200 million a day of capacity is opened in Leesville and an additional 45,000 barrels of fractionation is brought on line at Harrison in December. The UEO management team has also identified a number of other growth opportunities, which are making this asset even more attractive. As John mentioned, despite some commodity pricing headwinds, we are very pleased with all the recent activity and momentum in the Utica and other parts of our business and look forward to 2015.
Click here to read the transcript of the earnings call.  Click here to read an article summarizing Houser's statements about the Utica shale.

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