Project Profile
Location: Marcellus Shale, Marshall County, West Virginia
Area: 79,700 net acres
Estimated ultimate recovery (EUR): Average 4 Bcf or more per well
Gastar holds a total of approximately 79,700 net acres in northern West Virginia and southwestern Pennsylvania near acreage of some of the most active participants in the play. The company\'s leases are strategically located in areas where it believes the Marcellus Shale is over-pressured and where operational issues such as water sources, water disposal and gas transportation will be easier to manage than in other parts of the play.
Hydrofracing and horizontal drilling technologies have spurred a sharp increase in activity in Appalachia in recent years. Marcellus Shale well data released to date by the largest operators in the play indicate potential estimated ultimate recovery (EUR) for horizontal wells of an average 4 Bcf or more per well. Based on this industry data, GST believes it could have approximately 2 Tcfe of net unrisked potential using horizontal drilling.
In December 2010 Gastar significantly increased its Marcellus position with the acquisition of about 62,000 net acres in West Virginia for approximately $29 million. The acquisition included 17,000 net acres held by production, with five producing wells and 41 miles of gathering lines. Gastar has a 100% operated working interest in these acres. The company derisked this acquisition prior to closing by testing Marcellus potential in two vertical wells, one of which tested at 1.1 MMcf/day, and the second at 0.8 to 1.0 MMcf/day.
In November 2010, Gastar completed a joint venture with Atinum Partners of Korea, a leading private investment firm, giving Gastar $30 million cash at closing and a $40 million carry that will cover 75% of Gastar\'s future drilling, completion and infrastructure costs for wells in the partnership area. Valued at approximately $4,100 an acre, this joint venture gives Gastar $70 million of additional capital over three years to more rapidly develop its Marcellus Shale assets. The agreement covers 36,800 gross acres and calls for a minimum of 12 horizontal wells in 2011 and 24 in each of 2012 and 2013. Gastar will continue to serve as operator of all of the Marcellus Shale interests in the joint venture.
Gastar\'s first Marcellus well, the YOHO #1, was a vertical well that Gastar drilled in late 2009 and tested at a stabilized gross daily rate of 1.5 MMcf and 120 barrels of natural gas liquids. The company commenced drilling its first operated horizontal well in its joint venture with Atinum, the Wengerd #1H in Marshall County, West Virginia, in February 2011. The company plans to drill 21 gross (9.3 net) Marcellus Shale horizontal wells in 2011. Fourteen will be Gastar-operated, and the balance will be through participation with a partner, Rex Energy, in a pooling venture covering a portion of the acreage.
Operators:
Gastar Exploration: Operator
Rex Energy