Frac Tech joins ranks of those hoping to strike it rich in western Pennsylvania

Texas-based drilling-services company Frac Tech paid $2.1 million for a 26-acre property in North Strabane and plans to begin construction this summer on a 25,000-square-foot complex expected to house more than 100 employees. http://www.bizjournals.com/pittsburgh/stories/2008/05/12/story16.html

$3,000 An Acre Prevalent?

.....In some areas, Lash said, landowners are being offered $25 an acre to have their land drilled, a pittance compared to the $3000 per acre rate he said is prevalent throughout northeastern Pennsylvania. -

Full story http://www.bizjournals.com/buffalo/stories/2008/05/05/daily40.html

Drillbits

Yeah, I'm a Believer

One might consider Aubrey McClendon, President and founder of Chesapeake Energy as someone in the know about the Marcellus play. Since January of this year, he has individually purchased over $80mm in CHK common stock. The notable purchases were:

Jan 22-25th - 500,000 shs; Feb 26-29th - 600,000 shs; March 5-6th 500,000 shs; April 2 - 500,000 shs.

These were not option related buys, rather, they were outright, open market buys. Prices ranged from $35.87-$45.91/share. His current holdings now stand at 31.2 mm shares. CHK's current price is $56.25.

Rex Energy - Q1 CC Highlights -05/09/08 - (StreetInsider.com)

On April 14, 2008, our bank syndicate on our senior line of credit increased our borrowing base from $75 million to $90 million. Additionally, on May 5, 2008, we completed an offering of 5,775,000 shares of common stock, which included shares sold pursuant to an over-allotment option granted to the underwriters of the offering, at a price of $20.75 per share. The offering resulted in net proceeds to us of approximately $112 million after underwriters' discounts.
Concerning our increased line of credit and recent equity offering, Mr. Hulburt commented, "We are very excited to have access to a greater borrowing base and to have completed this additional equity offering, which positions us to continue to execute our business plan while maintaining a conservative balance sheet. Following the offering, we will initially have a debt free balance sheet with the capital we need to continue to aggressively expand our Marcellus Shale position and develop our Lawrence Field ASP project

Commenting on our Marcellus Shale progress, Mr. Hulburt said, "We continue to be very encouraged with the potential for Marcellus Shale exploration on our acreage in Pennsylvania. The initial results from our first vertical test well completed in the Marcellus Shale have been very positive. Our leasing efforts in our Marcellus Shale prospective areas are also continuing to show positive results. We believe that we will achieve our leasing goal of expanding our Marcellus Shale prospective acreage by 30,000 to 50,000 net acres during 2008

EXCO Resources (North Coast) - Q1 CC Highlights - 05/07/08 - (Seeking Alpha)

....We've negotiated and got commitments to lease an additional 33,000 net acres that’s in the fairway, so our total holdings are up over 415,000 acres on a net basis and in the fairway I think we've got over 275,000 net acres.

You saw on a previous announcement that we have allocated an additional $150 million above what our original budget was for the Marcellus. A substantial amount of that is going to be on leasing activity and we are well well down the road in meeting our targets there.

...Our development budget as it now stands totals $800 million, includes $150 million for the Marcellus shale leasing and drilling.

(Analyst).....you have a lot of options in terms of trying to get value reflected for Marcellus or Haynesville, you could accelerate drilling, you could farm out Marcellus strategic stake or you could just wait and let others determine what the right techniques for development are before going ahead on your own. How do you think about and manage what the best way is to get the value you see in the Marcellus and Haynesville reflected?

Well, I think the main one is we have people and staff and we have been hiring some other people. We are trying to evaluate the acreage ourselves. We think that we can drill a vertical wells to make sure that we are right – there are a lot of vertical wells that have been drilled down through the Marcellus over the years. That logs are available over 400 wells. So we have done a study on that to determine the thickness. We have got engineers and geologists have been spending a lot time. So we think with the data that’s out there and the technology available and keep in mind, Schlumberger and Halliburton and [FracTech] have already been up there working for people. And Patterson has four rigs up there, one of which we have right now that had drilled some wells for some other people. So and we have people available that know what they are doing. So we are going to slowly drill four horizontal wells this year. The first one is starting its sidewalk boring today. We are going to drill another six vertical wells in different areas where our concentration of acreage is. We are going to take this slow and easy.

....we are trying to lease space in Pittsburgh to put our Marcellus team in. There is no available space to lease. So there is a mini boom going on in Pittsburgh. There is a commercial real estate boom going on because of all of the oil and gas companies are trying to lease.