MarkWest plans to invest up to $175 million by the end of 2007 and totaling up to $350 million over the next four years to build gathering infrastructure of approximately 200-square miles in a four county region. The gathering system will fully support Newfield's drilling efforts over its entire operating position in the Woodford Shale. The new gathering system will be designed to provide low-pressure and highly reliable gathering, compression, dehydration and treating services. The gathering infrastructure will include more than 400 miles of large diameter pipeline and 100,000 horsepower of compression to provide a takeaway capacity in excess of 500 MMcf/d. The initial term of the agreement is 15 years with an option to renew.
"We are very pleased to announce this strategic relationship with Newfield Exploration," said Frank Semple, MarkWest Energy Partners' President and CEO. "Newfield is a world class exploration and production company and their development of the Woodford Shale resource has enormous potential. This comprehensive gathering agreement was the result of MarkWest providing exceptional service in other areas and our job is to continue to exceed Newfield's expectations for their operations. The agreement will contribute significant long-term, fee-based growth opportunities to MarkWest from one of the premier resource plays in the U.S." MarkWest will discuss the project in more detail in its third quarter earnings release conference call.
Newfield continues to have excellent results from its development drilling program in its Woodford Shale Play. To date, the Company has drilled more than 100 vertical wells and 30 horizontal wells to establish the extent of the resource. Newfield continues to add acreage and today owns an interest in more than 350,000 gross lease acres (more than 125,000 net acres). In late 2005, the drilling program shifted to horizontal wells, which has significantly increased initial production rates and estimated ultimate recoveries of reserves in place.
Newfield's most recent five wells had average initial production of 3.7 MMcfe/d. Results to date indicate that Newfield's average Woodford horizontal well will recover approximately 2.9 Bcfe gross.
Newfield continues to increase its activities in the play. The Company expects to increase its operated rig count from six rigs currently to as many as 13 rigs by year-end 2006 and to as many as 20 rigs by year-end 2007. Newfield expects to spud approximately 60 horizontals wells in the Woodford play in 2006 and up to 155 horizontal wells in 2007.
"By the end of 2009, we expect our gross Woodford Shale production to increase from a current rate of about 65 MMcfe/d to more than 350 MMcfe/d," said Lee K. Boothby, President -- Newfield Mid-Continent. "Our growth requires the installation of significant mid-stream infrastructure. Partnering with MarkWest allows us to benefit from their proven expertise in gathering and transportation and allows Newfield to focus its efforts on drilling and production."
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