CONSOL (CNX) Updates on FY11 Proved Reserves; Reports Drill Bit Finding, Development Cost of 47c/mcf
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CONSOL Energy Inc. (NYSE: CNX) announced net proved reserve adds through extensions and discoveries of 517 Bcf for FY11. The company's estimate of 2011 drilling and completion costs incurred and directly attributable to extensions and discoveries was $237.4 million. This number, when divided by the extensions and discoveries of 517 Bcf, yields a drill bit finding and development cost of $0.47 per mcf. CONSOL Energy attributes this excellent result to superb geology, continued refinement of drilling and completion technology, and its held-by-production (HBP) acreage in the Marcellus Shale. The HBP acreage enables the company to achieve economies of scale by drilling multiple wells from the same pad. During 2011, CONSOL Energy believes it achieved an industry first in the Marcellus Shale, by drilling 10 wells from its Hutchinson pad, in northwestern Westmoreland County, Pa.
CONSOL Energy also replaced 528% of gas production, when considering all increases from extensions and discoveries (517 Bcf), as well as performance (306 Bcf) and price (-10 Bcf) revisions. Production in 2011 was 154 Bcf (net to CONSOL).
Total proved reserves, as of December 31, 2011, were 3.480 Tcf. This represents a 7% decrease versus the 3.732 Tcf at year-end 2010. However, 2011 proved reserves would have been 911 Bcf higher than the 3,732 Bcf, had it not been for 531 Bcf related to the divestitures of the Antero overriding royalty interest and the joint venture with Noble Energy, and the elimination of 380 Bcf proved undeveloped reserves (PUDs) no longer expected to be developed within the next five years. The company is redirecting its drilling capital away from conventional and coalbed methane (CBM) formations and towards the Marcellus and Utica shales. In the future, if CONSOL decides to drill the conventional and CBM formations at a faster pace, these PUDs could return to the proved reserves.
Performance revisions to proved developed producing (PDPs) increased reserves by 306 Bcf, as wells drilled before 2011 produced above earlier expectations. No reserves were added through purchases, as the company did not complete any proved property acquisitions in 2011. Price revisions decreased proved reserves by 10 Bcf.
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CONSOL Energy also replaced 528% of gas production, when considering all increases from extensions and discoveries (517 Bcf), as well as performance (306 Bcf) and price (-10 Bcf) revisions. Production in 2011 was 154 Bcf (net to CONSOL).
Total proved reserves, as of December 31, 2011, were 3.480 Tcf. This represents a 7% decrease versus the 3.732 Tcf at year-end 2010. However, 2011 proved reserves would have been 911 Bcf higher than the 3,732 Bcf, had it not been for 531 Bcf related to the divestitures of the Antero overriding royalty interest and the joint venture with Noble Energy, and the elimination of 380 Bcf proved undeveloped reserves (PUDs) no longer expected to be developed within the next five years. The company is redirecting its drilling capital away from conventional and coalbed methane (CBM) formations and towards the Marcellus and Utica shales. In the future, if CONSOL decides to drill the conventional and CBM formations at a faster pace, these PUDs could return to the proved reserves.
Performance revisions to proved developed producing (PDPs) increased reserves by 306 Bcf, as wells drilled before 2011 produced above earlier expectations. No reserves were added through purchases, as the company did not complete any proved property acquisitions in 2011. Price revisions decreased proved reserves by 10 Bcf.
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