Ultra Petroleum Marcellus Production in PA Jumps 321%

Ultra Petroleum, an independent energy company headquartered in Houston, TX, reports a major ramp-up in Marcellus Shale gas drilling and production for the second quarter of 2011. Ultra says their Marcellus net production increased 321 percent over the second quarter of 2010. Since Ultra started drilling in the Marcellus Shale in 2009, they have drilled 235 gas wells in Pennsylvania’s Marcellus Shale. All of Ultra’s Marcellus drilling (so far) has been in PA.

Ultra’s PA Marcellus operational update (from their quarterly report):

During the second quarter, Ultra Petroleum and its partners drilled 50 gross (23 net) horizontal wells. This brings the total number of horizontal wells drilled in the first six months of the year to 81 gross (39 net) wells. Currently, there are 10 horizontal drilling rigs active on Ultra-interest lands. As of June 30, 2011, Ultra and its partners have drilled 235 gross (133 net) horizontal wells since the program’s inception in 2009.

Ultra and its partners brought online 20 gross (14 net) new horizontal Marcellus wells during the second quarter of 2011, which represents a 75 percent increase in net new well startups compared to the first quarter of this year. For the second quarter, the company’s net production averaged 106 MMcfe per day, a 16 percent increase over the first quarter of 2011 and over a 320 percent increase from the second quarter of 2010. In July, net production reached 131 MMcfe per day, surpassing the company’s peak production record achieved during the second quarter of 118 MMcfe per day.

At the end of the quarter, there were 125 gross (80 net) horizontal Marcellus wells producing. As of the end of the second quarter, there was an inventory of 110 gross (53 net) wells either waiting on completion or awaiting pipeline connection. The company expects to initiate production from 138 gross (69 net) horizontal Marcellus wells during 2011. Of this amount, 105 gross (47 net) wells, or 68 percent, are expected to come online in the second half of 2011. For the year, Ultra anticipates its total Pennsylvania production will equal approximately 40 Bcf, an estimated 2.5 times the company’s 2010 Pennsylvania annual volumes.

While still evaluating and delineating its broad acreage position, Ultra continues to be encouraged by positive well results. In Lycoming County, the company brought online a four wells during the second quarter with each well averaging 7.5 MMcfe per day initial production rates. Adjacent to this activity area, the company participated in a 500 foot well spacing test in Clinton County. Each of the four wells from this pad was brought online during the second quarter and averaged 6.7 MMcfe per day initial production rates, under restricted flowback conditions. All of these wells are outperforming Ultra’s 5.0 Bcfe type curve by demonstrating flatter declines and higher production rates. Based on consistently strong results, Ultra is raising its type curve for this area to 6.3 Bcfe from 5.0 Bcfe, over a 25 percent increase.

In addition to the Pierson 810-3H test well originally reported in May, Ultra drilled two more extended lateral length wells on the same pad testing 750 foot well spacing in Tioga County. The three wells averaged 6,300 feet in lateral length and were completed with an average of 21 frac stages. Once they were turned to sales, the wells came online with initial per well rates averaging 8.3 MMcfe per day. An additional four wells in Tioga County each producing an average of 5.7 MMcfe per day were added to an existing pad. Ultra is also raising its type curve for this area to 4.25 Bcfe from 3.75 Bcfe.

Subsequent to quarter-end, Ultra brought online two additional 6-well pads in the Marcellus. Wells from the first pad were turned to sales and averaged 7.3 MMcfe per day initial production rates. Of significance, this pad was located in a previously untested portion of Lycoming County and exhibited strong results. The second 6-well pad, located in eastern Tioga County, came online with per well average initial production rates of 7.4 MMcfe per day. These wells continue to affirm the broad prospectivity of Ultra’s Marcellus resource in northern Pennsylvania.*

*Ultra Petroleum Press Release (Aug 10, 2011) – Ultra Petroleum Announces Double-Digit Growth in Production, Cash Flow, and Earnings