Magnum Hunter provided a horizontal drilling update on its upstream operations in the Marcellus Shale resource play located across approximately 50,000 net mineral acres located in northwestern West Virginia and southeastern Ohio.
Marcellus Shale Drilling Update
The Company's first well drilled in the natural gas liquids rich leg of the Marcellus Shale of northwestern West Virginia is the Weese Hunter #1001, located in Tyler County. Alpha Hunter Drilling, a wholly owned subsidiary of Magnum Hunter, spud the Weese Hunter #1001 in late July 2010 and reached vertical total depth of approximately 6,510 feet in mid August 2010. A third party drilling rig commenced the horizontal leg in mid September 2010 and reached a horizontal length of approximately 4,028 feet. Total measured depth for the Weese Hunter #1001 is approximately 10,388 feet. A twelve stage frac job was successfully completed in December. The Weese Hunter #1001 well recently tested at an initial production rate ("IP") of 7.0 MMcfe per day with flowing tubing pressures of 2350 psi on a 22/64 inch choke. The British Thermal Unit ("BTU") content of the well was measured at approximately 1,225. The Weese Hunter #1001 began producing yesterday into the recently completed Eureka Hunter pipeline system. The currently estimated economic ultimate recovery ("EUR") for the Weese Hunter #1001 is estimated by the Company's in-house reservoir engineers to be approximately 4 Bcfe. Magnum Hunter's wholly-owned subsidiary, Triad Hunter, LLC, is the operator of this well and owns a 100% working interest with a 84.3% net revenue interest.
Marcellus Shale 2010 Capex Update
The Company's total capital expenditure budget allocation for drilling, completion, leasing, and pipeline construction operating activities for the Marcellus Shale in fiscal year 2010 remains at approximately $18 million, representing 32% of Magnum Hunter's total fiscal year 2010 capital budget of an estimated $55 million. Through October 31, 2010, the Company has spent approximately $16.6 million of the $18 million budget allocation for this business segment.
James W. Denny, President of Triad Hunter, LLC., a wholly owned subsidiary of Magnum Hunter Resources Corporation, commented, "We are excited to have our first horizontal Marcellus well on production at rates that are at the high end of our original expectations. The downhole well log characteristics of our next two horizontal wells that have been drilled and are waiting on fracture stimulation, have indicated similar characteristics. We had a competitive edge by having detailed well information from thirty-one previously drilled vertical Marcellus wells by Triad Hunter prior to completing the acquisition of this Company earlier this year. Since none of our new Marcellus Shale horizontal drilling locations on our existing acreage position are currently booked as proved reserves, the anticipated reserve additions from these recent activities should add significant value in the future to our shareholders. We have currently budgeted a minimum of twelve wells for drilling in fiscal year 2011 for this region. Additionally, the high BTU nature of the production from this portion of the Marcellus Shale in our area of operations will allow us to maximize the liquids rich nature of this gas stream because of our midstream commitments in gathering, transmission, and processing."
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