EnerVest CEO Contradicts McClendon: Utica Oil Will be Big
At the Developing Unconventional Gas (DUG) East Conference in Pittsburgh yesterday, EnerVest CEO John Walker contradicted the view of Chesapeake CEO Aubrey McClendon. McClendon said the Ohio Utica Shale will not produce much oil—at least for Chesapeake (see this MDN story). Walker said he believes the Utica will produce a lot of oil—that is, once they figure out the “right completion method.”
Gulfport’s CEO Jim Palm also spoke glowingly about the Utica at the conference. Gulfport, you may recall, has the highest producing Utica well so far (see this MDN story). The conference is organized by Hart Energy, who provided information stating lease payments in the Ohio Utica Shale have reached as high as $8,000 per acre.
Here’s a few tidbits from Walker and Palm’s talks:
Gulfport Energy reached a preliminary production level of 20 million cubic feet of natural gas per day from a Belmont County Utica Shale well – and EnerVest Ltd. is extracting natural gas liquids from Ohio.
"I suspect that in Ohio, once we get the right completion method, we will have oil wells flowing," said John B. Walker, president and chief executive officer of Houston, Texas-based EnerVest, as he spoke during the Wednesday Developing Unconventional Gas East Conference and Exhibition in Pittsburgh.
Walker acknowledged his comments seemed to contradict those recently made by Chesapeake Energy Chief Executive Office Aubrey McClendon, who noted drillers may not be able to extract much oil from Ohio. Mentioning the partnership between the two companies for some of the Ohio acreage, Walker said he believes EnerVest’s 1.2 million-acre leasehold in the Buckeye State will pay large dividends
"A year ago, we could not say the (natural gas liquids) window would work. Now, we can," he said of the portion of the Utica Shale that produces ethane, propane, butane and pentane, in addition to the dry methane. "We are still making improvements, but there are some terrific wells."
Much of this NGL window – based on EnerVest’s maps – includes western Belmont, Harrison, Jefferson and Monroe counties. This includes the Belmont County area known as Egypt Valley, home to the productive Gulfport well located on property in the name of Shugert.
"We are really pleasantly surprised by the results," said Jim Palm, chief executive officer of Gulfport. "We do still have a lot to learn. We are doing our best to science it out every day."
Many Belmont County residents who originally signed leases with Wishgard LLC or Tri-Star Energy have seen those contracts turned over to Gulfport, while Gulfport has also signed many county landowners to their own leases. Terms of the leases can range widely depending upon when they were signed and a multitude of other factors. However, some property owners have received at least as much as $5,900 per acre, with as much as 20 percent of the production royalties.*
Not that it makes any difference at all, but MDN found Palm’s turn of phrase interesting. It’s the first time we’ve heard the word “science” used as a verb, as in “to science it out.”
*Wheeling (WV) The Intelligencer/Wheeling News-Register (Nov 15, 2012) – They Dig It: Gas Chiefs Impressed by Utica Shale
For more info on the conference and another perspective, see also:
- Youngstown (OH) Business Journal (Nov 15, 2012) – Energy Industry Gathers to Learn Utica Shale’s Potential