CONSOL 'super well' gives boost to Utica operators

With CONSOL's announcement of a new, high-performing "super well" in a deep Utica sub-play, operator confidence in Northeast stacked pay is growing. We use our proprietary North America Well Analysis Tool to break down sub-plays, costs and operators in the area and forecast other potential expansions into this space.

Despite the air of caution and capex reductions permeating upstream development in 2016, operator confidence is building in the repeatability of Utica well results in the Northeast as CONSOL announces an impressive deep Utica shale well in southwestern Pennsylvania.

Located in what Wood Mackenzie refers to as the Lean Gas Core — the sub-play responsible for producing some of the highest IP rates in the Northeast — the GH9 well reported the second-highest  24-hour IP in Utica to date, peaking at 61.9 million cubic feet per day.

Drilling and completion (D&C) costs within the Lean Gas Core average US$10.3 million and the wells break even at US$2.94 per thousand cubic feet (mcf) of gas due to operational efficiencies. With CONSOL targeting D&C of US$15 million, it believes these new super-wells can break even as low as $2.11/mcf. 

In our comprehensive Utica key play update, we examine the expansion of the Lean Gas Core sub-play into Pennsylvania, where we estimate 20,000 more locations for dry gas drilling between Ohio, Pennsylvania and West Virginia than in our estimate from a year ago. Using our proprietary North America Well Analysis Tool, we can break down these Utica sub-plays, see who is operating where, and analyse well cost, giving us further insight into how and where development is trending.

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With D&C costs in this sub-play approximately 60% lower than most deep Utica wells, it's an attractive area for development at a time when capex reductions and low confidence in gas market fundamentals dominate the upstream landscape.

CONSOL and EQT continue to defy trends by pursuing a "greater risk, greater reward" philosophy as they commit to further developing deep Utica wells throughout 2016.

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