Who Knows?........The Atlas Knows

Conference Call Highlights

Why Greene is Greener than Green.

Many in the play have been speculating about the rapid run up of leasing costs in SW PA from $2,000 for a 5 year lease to well over $3,000 in just the last few weeks. There is even a rumor of a $4,000 offer floating around. Prices in the area now exceed those in the once pricey NEPA-NY region.

Atlas Energy Resources reported a stellar quarter last evening. In this morning's conference call, there were some important comments about the company's Marcellus shale activities. Most informative were those following the discussion about a four to eight horizontal well program in Washington County: President, Dick Weber noted, "Also, later this year, we will drill two horizontal wells in the deeper, more highly pressured and highly fractured areas of Greene and Fayette counties...."

Of course, the water management impediments plaguing the NE part of the play are well documented and most recently, as noted in today's earlier story "NYC DEP....", are becoming more pronounced. So, it would follow that the E&P companies would, at least for the time being, concentrate their efforts elsewhere. It seems Greene County is coming into focus.

Or, perhaps it's because of Range Resources' success. Range reported on July 14 that its last 10 wells had averaged 4.2 mmcfd. Then, ten days later, on July 24, the company reported having completed its last seven horizontal wells in the area with IP rates averaging 4.9 mmcfd (34.3 mmcfd total). Is it just a coincidence that they had just finished flaring off a well in Greene county? Rumors again, but the word is that the Greene well's initial production was around 8 mmcfd. Now, do a little math. If you have 6 wells with an average IP of 4.2 mmcfd what would the seventh one have to be doing for all seven to average 4.9 mmcfd? You're right, around 9 mmcfd. This is not out of the question as Atlas also just reported verticals with peak rates of 3 mmcfd. Of course, it could be that the last two Range wells averaged only 6.6 mmcfd. Just speculating but it seems so are more than a few other interested parties.

Other Marcellus highlights reported by the company:

-Atlas has completed 78 vertical and 1 horizontal Marcellus wells with 69 turned in and producing 20 mmcfd.
-Marcellus gas in the area is dry and pipeline ready.
-Planning 80 more verticals over the next twelve months and reaching 24 total horizontal completions by '09
-Added 37,000 Marcellus acres, now at 552,000, including an 11% increase (27,000) in the focus area, now at 269,000 acres. Expects acquisitions to slow as leasing costs are on the increase in the company's focus area.
-Received approval from the DEP for a 1 mmgpd water treatment plant now in the public comment period. Two more applications are in process. Each of the three plants will be able to process 5-6 vertical or 2-4 horizontal fracs per week.
-Formed a industry consortium with several other companies to drill the two horizontals in Greene and Fayette in order to spread some of the risk and speed up the learning curve. All of the companies are now sharing well info. Atlas will have a 25% interest in and operate the first well.
-Horizontal applications at the DEP were halted after the NE water issues arose but are now again flowing through the process.



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