Total Production for Fiscal Year 2013 Increased 45%
Total Proved Reserves Reached 1,549 Bcfe
WILLIAMSVILLE, N.Y.--(BUSINESS WIRE)--Oct. 21, 2013--
Seneca Resources Corporation (“Seneca”), the wholly owned exploration
and production subsidiary of National Fuel Gas Company (NYSE:NFG)
(“National Fuel” or the “Company”) reports that production volumes for
the fiscal year’s fourth quarter ended September 30, 2013, totaled 33.2
billion cubic feet equivalent (“Bcfe”), a 35% increase over the prior
year’s fourth quarter. Total production for fiscal year 2013 was 120.7
Bcfe, which was a 45% increase over fiscal year 2012. Additionally,
Seneca’s proved natural gas and crude oil reserves as of September 30,
2013, increased 24% to a record high of 1,549 Bcfe.
Production Update
Seneca’s total production of 33.2 Bcfe, or 361 million cubic feet
equivalent (“MMcfe”) per day, was driven by the continued success of
Seneca’s Marcellus Shale development program in Lycoming County, Pa.
Natural gas production increased 42%, to a total of 28.9 Bcf, despite
nearly 3 Bcf of price-related curtailments. Crude oil production totaled
717,000 barrels, which was an increase of 1.6% from the prior year’s
fourth quarter. Growth in crude oil production was limited primarily as
a result of a continued constraint in a third-party pipeline used to
transport associated natural gas production within the Sespe Field. This
is expected to be resolved by the end of January 2014.
Reserves Update (Preliminary)
During fiscal year 2013, Seneca replaced 351% of production to reach a
total of 1,549 Bcfe of proved reserves as of September 30, 2013.
Seneca’s success through the drill bit in the Marcellus Shale led to a
311 Bcf, or 31%, increase in natural gas reserves, which totaled 1,300
Bcf at fiscal year end. Crude oil reserves, which decreased by 3%
largely due to production, totaled 41.6 million barrels at September 30,
2013.
Of the total reserves, 71% were classified as proved developed reserves.
This is an increase from 67% proved developed reserves as of September
30, 2012. Proved undeveloped (“PUD”) reserves totaled 29% of the total
reserves at the end of the fiscal year.
Finding and development costs are expected to be approximately $1.31 per
Mcfe for fiscal 2013. Seneca’s three-year average finding and
development costs are expected to be $1.67 per Mcfe, which is down from
the $1.87 three-year average in fiscal 2012.
Guidance Update
As a result of continued better than projected performance of its
Marcellus Shale assets, the Company is increasing its fiscal 2014
production guidance to a range of 145 to 165 Bcfe, or a 20% to 37%
increase over fiscal 2013. The previous guidance range was 134 to 146
Bcfe. This increase is primarily a result of decreased spud to sales
timing in Lycoming and Tioga counties within Seneca’s Eastern
Development Area (“EDA”), increased EUR assumptions, and a base of
producing properties projected to decline at a slower rate in part due
to the start-up of compression within its DCNR Tract 100 acreage in
Lycoming County, Pa.
Operations Update
Seneca’s delineation efforts in the Western Development Area (“WDA”) are
ongoing. During the fourth quarter of fiscal 2013, Seneca tested two
additional wells in its Owl’s Nest area of Elk County. Both of these
wells utilized a reduced cluster spacing (“RCS”) completion design and
achieved 24-hour peak production rates of 6.1 and 3.4 MMcfe per day. The
second well was completed using linear gel to place larger proppant near
the wellbore. Seneca believes longer laterals and standard RCS
completion design are more representative of expectations for this area.
Both wells are currently shut-in awaiting the completion of production
infrastructure. Below is a summary of the delineation wells completed in
the WDA during fiscal 2013.
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Prospect Area
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County
(Pa.)
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Stages
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Treatable
Lateral
Length
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Reduced
Cluster
Spacing
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24-Hour
Peak
Production
(MMcfe)
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Peak 7-day
Average
(MMcfe)
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Status
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Rich Valley
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Cameron
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42
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6,372’
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Yes
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8.1
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7.8
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Producing
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Clermont (9H)
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Elk
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37
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5,500’
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Yes
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11.4
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10.0
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Producing
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Clermont (10H)
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Elk
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23
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5,565’
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No
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8.1
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7.3
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Producing
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Ridgway
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Elk
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37
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5,537’
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Yes
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7.1
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6.4
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Tested
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Church Run
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Elk
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29
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4,435’
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Yes
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4.8
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4.5
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Tested
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Owl’s Nest (54H)
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Elk
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41
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6,139’
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Yes
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6.1
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5.8
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Tested
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Owl’s Nest (59H)
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Elk
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36
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5,370’
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Yes
(Gel Frac)
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3.4
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3.1
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Tested
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Tionesta
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Forest
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35
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5,100’
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Yes
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Completed
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On DCNR Tract 100 in Lycoming County, Pa., Seneca brought a new
five-well pad on line during the quarter. These wells achieved 24-hour
peak production rates ranging from 14.8 to 22.1 MMcf per day. Over its
first 30 days, this five-well pad produced 2.3 Bcf of natural gas.
In the Utica Shale, Seneca tested a dry gas well at its Mt. Jewett
prospect area in McKean County. This well had a treatable lateral length
of 5,777’ and was completed using 38 RCS stages. The 24-hour peak
production rate was 8.5 MMcf per day and the well averaged 6.8 MMcf per
day over a seven-day period.
Ronald J. Tanski
, President and Chief Executive Officer of National
Fuel, stated, “The fourth quarter capped off an outstanding year for
Seneca. We achieved tremendous growth in both production and proved
reserves, and our delineation program in the Western Development Area of
the Marcellus Shale demonstrates the vast potential of our acreage
position. As we move into fiscal 2014, Seneca and our midstream
businesses will be executing a coordinated plan to develop our resources
and install the infrastructure needed to bring our production to market.”
Additional information on the Company’s operations and financial results
will be discussed during the 4th Quarter Fiscal 2013
Teleconference, which is scheduled for Friday, November 8, 2013, at 11
a.m. ET.
National Fuel is an integrated energy company with $6.3 billion in
assets comprised of the following four operating segments: Exploration
and Production, Pipeline and Storage, Utility, and Energy Marketing.
Additional information about National Fuel is available at www.nationalfuelgas.com.
Certain statements contained herein, including statements identified by
the use of the words “anticipates,” “estimates,” “expects,” “forecasts,”
“intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,”
“may” and similar expressions, and statements which are other than
statements of historical facts, are “forward-looking statements” as
defined by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve risks and uncertainties, which could
cause actual results or outcomes to differ materially from those
expressed in the forward-looking statements. The Company’s expectations,
beliefs and projections contained herein are expressed in good faith and
are believed to have a reasonable basis, but there can be no assurance
that such expectations, beliefs or projections will result or be
achieved or accomplished. In addition to other factors, the following
are important factors that could cause actual results to differ
materially from those discussed in the forward-looking statements:
factors affecting the Company’s ability to successfully identify, drill
for and produce economically viable natural gas and oil reserves,
including among others geology, lease availability, title disputes,
weather conditions, shortages, delays or unavailability of equipment and
services required in drilling operations, insufficient gathering,
processing and transportation capacity, the need to obtain governmental
approvals and permits, and compliance with environmental laws and
regulations; changes in laws, regulations or judicial interpretations to
which the Company is subject, including those involving taxes, safety,
climate change, other environmental matters, real property, and
exploration and production activities such as hydraulic fracturing;
changes in the price of natural gas or oil; impairments under the SEC’s
full cost ceiling test for natural gas and oil reserves; uncertainty of
oil and gas reserve estimates; significant differences between the
Company’s projected and actual production levels for natural gas or oil;
governmental/regulatory actions, initiatives and proceedings; delays or
changes in costs or plans with respect to Company projects or related
projects of other companies, including difficulties or delays in
obtaining necessary governmental approvals, permits or orders or in
obtaining the cooperation of interconnecting facility operators;
financial and economic conditions, including the availability of credit,
and occurrences affecting the Company’s ability to obtain financing on
acceptable terms for working capital, capital expenditures and other
investments, including any downgrades in the Company’s credit ratings
and changes in interest rates and other capital market conditions;
changes in economic conditions, including global, national or regional
recessions, and their effect on the demand for, and customers’ ability
to pay for, the Company’s products and services; the performance of the
Company’s key suppliers counterparties; or economic disruptions or
uninsured losses resulting from major accidents, fires, severe weather,
natural disasters, terrorist activities, acts of war or cyber attacks.
The Company disclaims any obligation to update any forward-looking
statements to reflect events or circumstances after the date thereof.
Source: National Fuel Gas Company
Analyst:
Timothy J. Silverstein, 716-857-6987
or
Media:
Karen
L. Merkel, 716-857-7654