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Winfield Township, PA Turns Down Lease Offer from BLX-Redmill; Lessons for Landowners

The decision is in, and Winfield Township (Butler County), PA supervisors have voted to not accept an offer from BLX-Redmill to lease 60 acres of the 69-acre township park located behind the municipal building.

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Township in Western PA Offered $4500 per Acre for Marcellus Drilling Lease

Winfield Township supervisors are mulling over an offer from BLX-Redmill Gas to lease a park in Butler County, PA for Marcellus drilling. But it’s a complicated offer involving re-selling the drilling rights by packaging them with other properties in the area, and also selling the rights to install pipelines to a third party.

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Rex Energy has Already Drilled 4 Wells in Butler County, PA in 2010, On Track to Complete 6 More by Year’s End

The following operational updates about Rex Energy Corporation’s Marcellus drilling activity thus far in 2010, from a company press release:

Butler County, Pennsylvania Marcellus Project Area

Drilling and completion activity in Rex Energy’s Marcellus Shale project area in Butler County, Pennsylvania is continuing to progress on schedule. The two ‘Magill’ horizontal wells completed by the company earlier this year have been flow-testing for approximately 20 days. The combined peak 24 hour rate of the two Magill wells to date has been 5.9 MMcfe per day. The company expects these rates to continue to rise as additional water is returned to the surface. The company’s refrigeration processing plant, and therefore its gas sales in Butler County, Pennsylvania, is currently shut-in for pipeline maintenance. The company expects the plant and sales to resume during May 2010 and to connect the Magill wells to the plant at that time.

[Rex Energy President & CEO Benjamin] Hulburt remarked, “When we compare the initial flow rates of the Magill wells to our P. Knauff #1H well, our first horizontal Marcellus Shale well completed in Butler County, Pennsylvania during 2009, we are very encouraged by the results. The P. Knauff #1H well took approximately 90 days to achieve its peak rate, and thereafter, the rate remained relatively flat for the next 180 days. Although the results of the Magill wells are still preliminary, we are encouraged by what appears to be a similar profile.”

Read More “Rex Energy has Already Drilled 4 Wells in Butler County, PA in 2010, On Track to Complete 6 More by Year’s End”

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Talisman Energy Will Invest $1 Billion in PA Marcellus Shale, Opening Regional Office near Pittsburgh

Talisman Energy (headquartered in Calgary, Canada) says it will invest $1 billion in Pennsylvania’s Marcellus Shale.

Part of that investment is the creating of a regional office in Cranberry Township, in Butler County, PA. The new office will employ 125 people by the end of 2010. And Talisman is looking to hire:

The company is in the process of recruiting and hiring geologists, landsmen, regulatory and legal experts, among others. It will relocate 35 from its New York office and 15 from the Calgary headquarters, and hire the rest.*

Although Talisman’s 214,000 net acres in the Marcellus Shale are in northeastern Pennsylvania, the company decided to locate its regional office near Pittsburgh.

*Pittsburgh Business Times (Mar 12) – Talisman Energy opening office north of Pittsburgh

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Rex Energy Drills 7 Horizontal Gas Wells in the Marcellus in 2009, Expects to Drill Another 19 in 2010, Controls 67,000 Acres

Rex Energy Corporation, an energy company drilling in the Marcellus Shale, today announced its fourth quarter and year-end 2009 results. The portion of the press release dealing with Marcellus drilling activity is reproduced below.

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In the Appalachian Region, Rex Energy has drilled and completed nine horizontal Marcellus Shale wells to date. The company drilled and completed two of these as test wells in a different zone of the shale, which resulted in lower recoveries. Excluding the two test wells, the seven day average test rate after peak production was reached has averaged 3.1 MMcfe per day with an average lateral length of 2,200 feet. The company has experimented with six to twelve stage fracture stimulations. The average gross EUR of these wells was estimated to be 3.2 Bcfe per well at an average cost of $4.6 million.

Currently, Rex Energy is running two horizontal drilling rigs in the play. The company recently completed the drilling of two horizontal wells in Butler County. The wells have an average lateral length of 3,500 feet and were drilled in under 21 days per well. The company expects to simultaneously fracture stimulate these wells during the first quarter of 2010. The company has budgeted $4.0 million per well for its 2010 wells and it expects the wells to have average lateral lengths of 3,000 to 4,000 feet. The company is currently drilling two wells in Butler County and one well in Westmoreland County. During 2010, the company expects to drill and complete 10 gross (10 net) operated horizontal Marcellus Shale wells, and to participate in 9 gross (4.5 net) horizontal Marcellus Shale wells with our partner.

[Rex Energy’s President and CEO Benjamin] Hulburt continued, “The build-out of our Marcellus midstream infrastructure is progressing as scheduled. We expect our two Clearfield County wells to be connected to our initial gathering system in April 2010. In Butler County, we expect our midstream joint venture to put our cryogenic processing facility into operation during the fourth quarter of 2010. We expect the plant will have a processing capacity of 40 MMcf per day. We plan to install compression to permit the plant to process 20 MMcf per day initially, which will be scaled up as additional wells are brought online.”

The company has continued to lease additional acreage in its three Marcellus Shale project areas in southwestern and central Pennsylvania. Rex Energy’s current total acreage under control in the Marcellus Shale fairway is 68,700 acres, an increase of approximately 15% compared with the company’s previous leasing update in January 2010. The net acreage amount excludes approximately 22,000 acres, which can be earned by Williams pursuant to the Participation and Exploration Agreement entered into on June 18, 2009, and includes approximately 8,300 acres covered by oil and gas leases that are pending title verification and final closing.

From: MarketWatch (Mar 2) – Rex Energy Corporation Announces Fourth Quarter and Year-End 2009 Results