CEO Of Stone Energy Discusses Marcellus and Utica Shale at Barclays Conference

CEO Of Stone Energy Discusses Marcellus and Utica Shale at Barclays Conference

Chairman, President and CEO of Stone Energy, David Welch, addressed the future of the Marcellus and Utica Shale (also called the Appalachia and Devonian shale) during Barclays Capital CEO Energy-Power Conference.

Barclay stated that to date, Stone has drilled 55 Marcellus Shale wells, of which 25 are online and producing an approximate 56 million cubic feet of natural gas daily. Although they will be using only one drilling rig in the Marcellus region because of its efficiency, they possess another 200 drilling location in Marcellus/Utica wet gas areas.

According to Mr. Welch, “We have achieved a nice little amount of momentum in Appalachia, our strategy there is to profitably grow our liquids rich gas to low risk development. You can see the beginning of the year; we just started with our production at the beginning of 2011. This year we are ramping up, right now we are producing about little over 56 million cubic feet a day equivalence. Our liquids rich gas has about 50 to 70 barrels of condensate for million cubic feet and an additional 60 barrels of NGLs per million cubic feet. And we are ramping up right now with Appalachia and it’s going to be a nice contributor for us, we expect it will continue to ramp up production next year for us.”

Mr. Welch also states that “we also have rights to the Utica Shale which is below the Marcellus, we believe most of our acreage is in the dry gas window and since our Marcellus is holding the acreage we are just viewing the Utica more or less as an option on gas price. But we will probably test a well in there to see what kind of capacity it has sometime within the next three years.”

Welch does not seem concerned with low gas prices, stating “the liquids rich Marcellus remains attractive even at low gas prices. You can see our tight curve in the upper left shows production by year, this particular curves indicating in our liquids rich area that we are in the 5.5 or 5 to 6 Bcf equivalents per well. Our condensate yield is hanging in there at least 50 barrels per million and the NGL yield is about 60 barrels per million. That yields a very robust economic case.” “And as I mentioned wells that we are drilling now and forward we expect to be drilling in the 5.3 to $5.5 million range which would have the effect of actually boosting this economic return or the sensitivity up by about $1 million per well.”

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