Magnum Hunter Resources provided a drilling, operational, and production update on the activities of its wholly-owned subsidiary, Triad Hunter, in the Appalachian Region. This includes the liquids-rich window of the Marcellus Shale unconventional resource play located across approximately 58,048 net acres predominately in Northwestern West Virginia and Southeastern Ohio. This update also includes the Huron Shale and Weir Oil Sands formations of the Company's Kentucky operations. Significant highlights for the third quarter of 2011 include:
The capital budget for the Appalachian Division for full fiscal year 2011 remains at approximately $70 million (27.5% of the total capex budget) to drill 37 gross wells (22 net wells). This includes approximately $65 million for 17 gross wells (15.5 net) targeting the liquids-rich Marcellus Shale play of Northwestern West Virginia and Southeastern Ohio. Approximately $5 million is scheduled to be spent principally for the drilling 20 gross wells (6.5 net wells) targeting the Huron Shale and Weir Oil Sands located in Kentucky. Magnum Hunter currently estimates the Appalachian Division will achieve a year-end 2011 production exit rate of approximately 6,000 Boe per day and is currently producing in excess of 5,000 Boe per day.
Since completing its first Marcellus Shale well in December 2010, through September 2011, our Company has drilled and completed 11.0 gross wells (9.5 net wells) in the Marcellus Shale. Triad Hunter has an additional 5 gross wells (5.0 net wells) planned to be drilled and completed before year-end 2011. Therefore, the Company anticipates having a total of 16 gross Marcellus Shale wells (14.5 net wells) on line and flowing to sales on or before December 31, 2011.
In addition to the Company's Marcellus drilling program, 7 gross wells (7 net wells) have been drilled in Kentucky principally to maintain our large acreage position of approximately 300,000 mineral acres. These wells are comprised of four Weir Oil wells, two in the Arch Field and two in the Amvest Field, and three Lower Huron Shale wells, two in the Fonde Field, and one in the Amvest Field. The Company anticipates employing two drillings rigs for the remainder of the year to drill and complete a minimum of 17 gross wells in Kentucky.
Mr. Jim Denny, President of Triad Hunter, LLC, commented, "During the third quarter of fiscal year 2011, the Appalachian Division drilled, completed and tested three very successful liquids-rich Marcellus Shale wells on our Northwestern West Virginia lease acreage. As we have experienced in other operating divisions within Magnum Hunter, the more history and experience we gain in our regional development, we are obtaining better production results. A combination of longer laterals, more frac stages, and certain modifications to downhole equipment has led to consistent new well completions ranging from 5.0 - 10.0 MMcfepd per well in the Marcellus Shale. Our existing mineral lease acreage position appears to be some of the best in the entire Marcellus Shale. When one compares internal rates of return on capital deployed, our high Btu equivalent in our natural gas stream provides economics not seen elsewhere. Coupled with our 100% owned Eureka Hunter Pipeline and its recent October 5, 2011 announcement of its processing initiative with MarkWest Liberty Midstream & Resources LLC, we anticipated a pricing uplift of $1.00 - $1.25 per Mcfe sold for Triad Hunter's equity natural gas production. Additionally, we expect to book new reserves related to these liquids at year-end. We have plenty of running room for many years to come with 290 net drilling locations currently identified across our 58,048 net leasehold acreage position. Our Company's in-house reservoir engineers have identified net resource potential of 309 Million Boe over our entire Appalachian acreage position."
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