Aqua America is one of the largest U.S.-based, publicly-traded water utilities with almost 3 million residents in Pennsylvania, Ohio, North Carolina, Illinois, Texas, New Jersey, Indiana, Virginia, Florida and Georgia. They also have a joint venture with Penn Virginia Resource Partners called PVR Water Services which provides water to Marcellus drillers in Pennsylvania. So far business is good.
A short section of Aqua America’s annual financial and operations report updates us on PVR Water Services:
Penn Virginia announced today it’s selling off all of its Appalachian drilling operations—except for its Marcellus Shale drilling operations—for $100 million. They are also closing their Canonsburg, PA regional office. Why the sale? They want to get out of debt and plow the proceeds into drilling in the Marcellus and in the oily parts of the Eagle Ford Shale play.
Reading between the lines it sounds like a move away from dry gas and toward wet gas areas.
The CEO of drilling company Penn Virginia has expressed disappointment with the output of the first three Marcellus Shale wells they have drilled in Pennsylvania. From a press release issued Tuesday:
More gleanings from year-end financial statements from drilling companies, this time from Cabot Oil & Gas and Penn Virginia Corporation. Of note, Cabot talks about the “prolific nature” of their 44 Marcellus gas wells, and Penn Virginia will drill their second Marcellus gas well in 2011 as they continue to shift their resources to the Marcellus with plans to drill 14 wells this year.
Penn Virginia Corporation (“PVA”) announced it has acquired approximately 10,000 net Marcellus Shale acres primarily in Potter, Somerset and Tioga Counties, Pennsylvania in two transactions for approximately $19.5 million in cash and overriding royalty interests on a portion of the acquired acreage.
The first acquisition was from a private oil and gas firm who was PVA’s joint venture partner. The acquired leases were located primarily in Potter, Somerset and Tioga Counties, including approximately 7,900 net acres with Marcellus Shale rights and approximately 23,000 net acres with deeper rights. In connection with the acquisition, PVA granted the seller a 1.5 percent overriding royalty interest on the acquired acreage. After taking into account the override, PVA’s net revenue interest in the joint venture acreage is approximately 84 percent.
The second acquisition was from another private oil and gas firm of leases primarily in Potter County covering approximately 2,100 net acres, with rights to the Marcellus Shale and all other formations.
A. James Dearlove, President and Chief Executive Officer, said, “We are pleased to have expanded our Marcellus Shale acreage position from approximately 35,000 net acres to 45,000 net acres, and to have accomplished this expansion at a very attractive cost. We plan to begin testing the acreage in these areas later in 2010. In addition, we continue our leasing efforts and our review of other acquisition opportunities, as we seek to establish a significant presence in this emerging play over the next few years.”
Source: Penn Virginia Corporation Announces Acquisitions in the Marcellus Shale (May 28)
We get the following details on Penn Virginia Corporation’s Marcellus drilling activities from their quarterly operational report:
Marcellus Shale – [PVC spent] approximately $17 million, or six percent, to drill five (3.8 net) horizontal and vertical wells primarily to test our acreage position in Potter and Tioga Counties, Pennsylvania.
During the first quarter of 2010, we drilled one (0.8 net) Marcellus Shale vertical exploratory well which was recently stimulated with approximately one million pounds of sand. The well is currently cleaning up and being evaluated. We continue to add to our acreage position in the Marcellus Shale, increasing our acreage position to approximately 35,000 net acres, and we expect to spend up to $48 million in 2010 to add leasehold acreage in our existing and new prospect areas.*
*Penn Virginia Corporation Press Release – Penn Virginia Corporation Provides Operational Update (PDF file)