Operations - Appalachia Basin

 

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Marcellus Shale Hydraulic Fracturing Information

 

 

Proved Reserves:

  • Proved producing reserves of 17.6 MMBoe as of December 31, 2011:
  • Total proved reserves of 29.9 MMBoe as of December 31, 2011:

Acreage:

  • 369,238 net acres in the Appalachia Basin:
    • 58,048 net acres located in the Marcellus Shale
    • 16,000 net acres located in the Utica shale

Drilling Opportunities:

  • Net Unrisked Possible Reserves of ~265 MMBoe
  • Net Unrisked Contingent Reserves of ~44 MMBoe
  • Over 775 net locations identified in the Appalachia region, over 290 net locations identified in the Marcellus Shale
 

Key Marcellus Shale Trends:

  • Primary focus on liquids rich Marcellus gas in northwest West Virgina
  • The Marcellus is one of the most attractive shale plays in the United States
  • The Marcellus has one of the lowest break-even price levels of all the shale plays and will remain attractive throughout the commodity cycle
  • EUR's are improving from longer laterals and new fracing methods
  • The Marcellus is close proximity to U.S. population centers and has access to significant interstate pipelines, thus natural gas pricing typically trades at a premium to Henry Hub
  • Marcellus gas trades at a premium to Henry Hub
  • Deeper potential is emerging in the Utica Shale where MHR operates
 

Marcellus Properties / Operations:

  • 62,200 Net Marcellus / Utica Acres
  • To-date ten wells have been drilled and completed:
    • Four wells in Tyler County, WV
    • Five well in Wetzel County, Ohio
    • One well in Monore County, Ohio
  • Current Drilling / Completing Operations:
    • Currently testing three new wells in Tyler County - WI 100%
    • Currently drilling 3 of 4 pad wells in Tyler County - WI 100%

Utica Shale Overview:

  • MHR has approximately 20,000 gross / 16,000 net acres that are prospective for the Utica Shale
  • MHR has Utica potential in:
    • Monroe County, Ohio
    • Noble County, Ohio
    • Washington County, Ohio
    • Tyler County, WV
    • Pleasants County, WV
  • Utica Shale Characteristics:
    • 200' - 300' in thickness
    • 6% - 10% porosity
    • 6,000 - 9,000 TVD
    • TOC 2% - 6%

Southern Appalachia Overview:

  • NGAS Hunter Properties:
    • Long-lived assets / High Btu gas
    • Approximately 273,000 Net Acres:
      • Multiple low risk opportunities - Eighteen well drilling program planned for 2011 (14.25 net wells to MHR in 2011)
    • Provides tremendous optionality on future gas prices
  • NGAS Hunter Operations:
    • Since the close of the NGAS transaction, seventeen wells have been successfully drilled and completed:
    • Since Completion of the NGAS acquisition MHR has:
      • Restructured existing gas gathering agreement
      • Significantly reduced overhead
      • Sold and continuing to sell non-core assets
      • Achieved annual cost savings of approximately $5.0 milion

 

 
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