"Although this first well has yielded lower-than-expected initial oil production rates while it continues to produce back the completion fluid, we believe this new Mid-Continent oil play looks very prospective," Porter said. "The initial well encountered higher matrix porosity than previously seen in other recent wells, so recovery of completion fluids has taken longer than we originally planned. We are working with the operator to adjust the completion methods to improve potential IP rates as we drill the next wells in our planned program," Porter said.
Oil and Gas Reserve Additions Gastar expects to report a 50% to 60% year-over-year increase in total proved reserve volumes for 2012 based on third-party evaluations of reserves in Appalachia, East Texas and the Mid-Continent. Gastar expects to report its complete reserve volume and valuation results for the year-end 2012 in mid-February 2013.
- Approximately 28% of the 2012 year-end total is expected to be attributable to NGLs, oil and condensate, and 72% to natural gas.
- Gastar expects its reserve replacement ratio for fiscal year 2012 to be approximately 500% of 2012 production.
"This rapid growth, which comes primarily from our successful development activities in the Marcellus Shale play in Marshall County, West Virginia, further demonstrates the quality of this asset," Porter said.
"We are realizing improving internal rates of return in our Marcellus program from increased yields of high-value liquids the further west that we develop the play, combined with lower drilling and completion costs and shorter drilling times. We are also seeing increasing reserves per well and declining total well costs," Porter said.Gastar is increasing its guidance of estimated average daily total net production in the fourth quarter of 2012 from the previous guidance of 38 to 40 MMcfe per day to 42 to 43 MMcfe per day as a result of placing wells on production earlier, shallower decline on existing wells coupled with less third-party pipeline and processing facility downtime.
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