CNX Resources is lowering drilling costs for deep Utica gas wells as it works to unlock Appalachia’s massive stacked pay potential.
Canonsburg, Pennsylvania-based CNX completed drilling three deep Utica wells in central Pennsylvania with average lateral lengths of 11,100 ft in the second quarter.
CNX has seen a 27% reduction in total Utica drilling days compared to wells drilled last year and a 46% decrease compared to wells drilled in 2023.
Drilling efficiencies have brought Utica development costs down to around $1,750/ft, below the company’s target of $1,800/ft.
“Where we’re at right now on the cost structure, we think that makes [deep Utica] wells competitive with best-in-basin opportunities, even in the southwest [Pennsylvania] Marcellus stuff,” said Alan Shepard, CNX’s president and CFO, during a July 24 earnings call.
CNX turned in-line three deep Utica wells and five Marcellus wells in central Pennsylvania during the second quarter.
Utica repeatability
CNX is focused on reducing Utica well costs and testing co-development in the shallower Marcellus within a limited area of central Pennsylvania before initiating a broader expansion across its acreage.
Data from Pennsylvania’s Department of Environmental Protection show CNX’s recent activity in Westmoreland County has been primarily directed toward the Utica and deeper Point Pleasant formations. Point Pleasant and Utica extend to depths of approximately 14,000 ft.
CNX added scale in Westmoreland County with a $505 million acquisition of private E&P Apex Energy II in January.
Apex, backed by private equity firm Carnelian Energy Capital, held 8,600 undeveloped Utica acres and 12,600 undeveloped Marcellus acres at the time of the sale.
According to an Energy Advisors Group (EAG) analysis, new Utica gas wells brought online since 2018 have recorded average 30-day IP rates of 1.8 MMcfe/d per 1,000 lateral ft. That outperforms the Marcellus, where comparable wells have averaged 1.6 MMcfe/d during the same time frame.
The top 10% of new Utica wells had average IP30 rates above 3.1 MMcfe/d, or a whopping 31 MMcfe/d for a standard 10,000-ft lateral.
“Our expectation is that there’s a pretty long runway across our field up there to make these results repeatable,” Shepard said.
CNX produced about 147 Bcf from the Marcellus and Utica shales in the second quarter, or approximately 1.62 Bcf/d. That’s up from 126 Bcf, or 1.4 Bcf/d, in the first quarter.
The company also produced 12.2 Bcfe of NGL during the second quarter.
CNX had one Utica drilling rig active in central Pennsylvania at the end of the quarter.
Shepard said CNX plans to continue developing its core Marcellus position in southwest Pennsylvania over the next few years. But the company wanted to continue getting “reps at the Utica wellhead” to work on lowering costs.
Most ultra-deep horizontal Utica development to date has focused on Ohio. Several producers are targeting Ohio’s Utica oil and liquids window, including EOG Resources, Ascent Resources, Encino Energy and Infinity Natural Resources.
Last month, EOG announced a $5.6 billion acquisition of Encino Energy, expanding its footprint in the Ohio Utica oil window and adding gassy acreage.
Some operators are pushing deep Utica development in West Virginia and southwest Pennsylvania, including Gulfport Energy, Expand Energy and EQT Corp., per Rextag data.
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