CNX Estimates Appalachian Recoverable Reserves of 3.6 Tcf to 7.4 Tcf
CNX Gas Corporation estimates that it has recoverable reserves and net unrisked resource potential of 3.6 trillion cubic feet (Tcf) to 7.4 Tcf, in an updated review of its Appalachian coalbed methane (CBM) reserves and shale resources.
Nicholas J. DeIuliis, president and chief executive officer, said, "This updated assessment of our Appalachian recoverable reserves and resource potential shows the progress we have made. As recently as two-and-a-half years ago, we didn't fully appreciate the significance of our shale opportunities. Today, we estimate that our Appalachian shale resources alone could range from 1.3 to nearly 5.2 Tcf. When coupled with our CBM 3P reserves of nearly 2.3 Tcf, our total estimate for Appalachia now stands at 3.6 Tcf to over 7.4 Tcf. This range could be higher once we begin to analyze the Trenton Black River formation, the tight sands in our Virginia field, and our conventional oil and gas potential with a portion of our $88 million exploration program."
CNX Gas has proved reserves of 1,343 billion cubic feet (Bcf) as of December 31, 2007, or up 6% from the 1,265 Bcf reported at year-end 2006. Reserves are split nearly evenly between the proved developed and proved undeveloped categories. The proved developed category of 671 Bcf includes 619 Bcf of proved developed producing reserves. The proved reserve estimates for both 2006 and 2007 were prepared by Data & Consulting Services Division of Schlumberger Technology Corporation.
Dr. DeAnn Craig, senior vice president-asset assessment, commented on the proved reserves. "We are pleased to report a meaningful increase in our proved reserves, especially when one considers the drilling assistance we provided to CONSOL Energy to ensure the safety of Buchanan Mine. Some of our crews had to postpone well remediation efforts in 2007, which when completed in 2008, should help our year-end 2008 proved reserves. We also drilled 70 40-acre infill wells and 53 30-acre infills in Virginia in 2007, which helped production and returns, but did not add much to reserves."
The net increase in proved reserves of 78 Bcf, means that when coupled with 2007 production of 58 Bcf, the company replaced 234% of its production with a drill bit reserve replacement cost of $1.25 per Mcf. Drilling capital expenditures in 2007 were $170.5 million.
Dr. Craig continued, "As our Virginia CBM Operations continues to mature, I would expect more of our future reserve growth to be generated by our newer CBM plays, Mountaineer and Nittany, as well as from our exploratory plays. At expected drilling rates in Virginia, the probable reserves are expected to migrate into the proved category within five years. Furthermore in Virginia, the current non-mine-related proved undeveloped reserves (381 Bcf) are expected to be drilled within the next five years."
The probable category for Virginia CBM Operations includes estimates for horizontal wells in the eastern section of the Oakwood Field and for downspacing to 30-acre spacing on approximately 60,000 acres. The probable category does not include any estimate for downspacing to 20 acres, the viability of which the company is currently evaluating.
Proved reserves in Mountaineer CBM Operations increased from 33 Bcf in 2006 to 82 in 2007, as the company expanded its 2007 drilling to 62 wells, from only 15 wells in 2006. Nittany CBM Operations had no proved reserves in 2006.
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