CNX Gas expects to drill 300 CBM development wells in Virginia, 100 wells in Mountaineer, and 100 wells in Nittany. These same areas saw 294, 62, and 8 wells drilled, respectively, in 2007, for a total of 364. Each area met or exceeded its planned number of wells in 2007. The entire development portion of the 2008 Budget is expected to be funded from internally generated cash. CNX Gas holds a 100% working interest in these areas.
The Budget's $88 million exploration component contains three pieces: a CBM exploration program for $27 million, a shale (and other) exploration program of $46 million, and $15 million for land. Nicholas J. DeIuliis, president and chief executive officer, said, "The 2008 Capital Budget vividly shows how we continue to accelerate the monetization of our tremendous asset base. It also shows the start of a systemic approach for assessing our nearly 800,000 acres having shale potential."
CNX Gas Corporation has set 2008 capital expenditures at $470 million. This represents a nearly 35% increase from the $348.6 million (unaudited) in capital spending for 2007. CNX Gas will have three development plays, requiring $377 million in capital expenditures, and a separate exploration program, requiring $88 million. Corporate and other will encompass the remaining $5 million.
The exploration program includes projected expenditures for testing the Marcellus Shale, the Huron Shale, the Chattanooga Shale, and the New Albany Shale. Additionally, some conventional sand horizons will be tested for the presence of oil.
Non-operated participation for 2008 is expected to include several Bakken Shale wells in North Dakota, drilled and prospective, with Marathon Oil Company, a well targeting the Trenton Black River formation, and two additional Marcellus Shale wells.
Mr. DeIuliis continued, "We've been encouraged by the success others have had in these shales, and the TBR, and we look forward to replicating their results. CNX Gas can monetize assets through partnering with others and through outright sales, in addition to drilling. We will look at all avenues available to maximize shareholder value."
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