Gulfport Energy Still Believes in the Utica Shale
Gulfport Energy won't end the year producing as much oil and gas at it had hoped. Drilling delays and infrastructure problems have forced the company to aim a bit lower. That being said, Gulfport Energy still sees lots of promise from Ohio's Utica Shale.
It's not alone. Chesapeake Energy and Halcon Resources both continue to move forward with programs to develop the Utica Shale. In Chesapeake's case, it actually sees its production accelerating as infrastructure expands. As the following slide details, there are a number of infrastructure projects coming online, including processing plants and a Gulf Coast ethane pipeline that are critical to producers.
Source: Chesapeake Energy
The other critical piece of information that the slide points out is that Chesapeake still has 93 of its 321 drilled wells waiting on pipelines (WOPL) and another 122 in various stages of completion. This is important to see, because it's exactly what has forced Gulfport Energy to reduce its guidance. This isn't a company being plagued by poor well performance; in fact its latest wells have all performed very well.
About a month ago Gulfport updated investors on its last three wells. Two of the wells turned in a very solid average seven day sales rate of just over 1,000 barrels of oil equivalent per day. A third well delivered an even more impressive 2,607 BOE/d. It is results like this that have Gulfport still devoting most of its capital to the play. Overall Gulfport really has enjoyed stellar well performance from its Utica acreage.
That's why the company continues to pick up additional acreage in the play. It added another 9,000 gross acres to bring its total position to about 154,000 gross acres. It's not going to let a few snags disrupt what it sees as a long-term driver of its business.
The Utica's potential is very enticing for companies targeting liquids growth. That's why we're seeing Halcon Resources join Chesapeake and Gulfport in pursuit of the play. It's currently still evaluating the play and optimizing its drilling and completion techniques. However, its two most recent wells produced test rates of 1,652 BOE/d and 2,233 BOE/d respectively, which suggests that Halcon Resources has solid future potential in the Utica. With nearly as many net acres as Gulfport, it has built a scale position that could start fueling impressive future results.
The Utica Shale is still very early in its development. Producers are still discovering what works and what does not. That's why well results are much more important to investors than production rates at this point. Gulfport might have hit a snag, which is hurting its results this year, but the company still really believes in the Utica's potential.
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The article Gulfport Energy Still Believes in the Utica Shale originally appeared on Fool.com.
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