Cotton Valley, Hosston, Travis Peak, Pettet
Our conventional Cotton Valley, Hosston, Travis Peak and Pettet assets were contributed to the partnership with HGI on February 14, 2013. The Vernon Field in Jackson Parish, Louisiana is the most significant producing field in this group of assets as its production averaged approximately 48 Mmcf per day of net natural gas volumes from the lower Cotton Valley and Bossier Sand formations at depths ranging from 12,000 to 15,000 feet for the month of December 2012. With current low commodity prices, the primary focus in the Vernon Field is to minimize our operating expense while maintaining production. We have successfully mitigated the production decline rate in the field over the last two years. We have additional acreage and production in Caddo and DeSoto Parishes, Louisiana, primarily in four fields-Holly, Kingston, Caspiana and Longwood. We also have acreage and production in Harrison, Panola, and Gregg Counties in Texas, primarily across three fields-Carthage, Waskom, and Danville. Production from these areas is primarily from Cotton Valley sands at depths ranging from 10,400 to 11,000 feet and the Travis Peak and Hosston Sands at 7,800 to 10,000 feet. Due to low commodity prices, we are not actively drilling in these formations. Capital spending will be focused on maintaining a strong emphasis on base production performance. We typically run multiple service rigs replacing tubing, changing pumps, cleaning out fill and implementing general repairs to maintain optimum production levels. The partnership with HGI currently has 915 wells flowing to sales with a total gross operated production rate of approximately 124.1 Mmcfe per day (67.0 Mmcfe per day net). During the first quarter 2013, the partnership expects to close on the acquisition from BG Group of their shallow interests in the East Texas/North Louisiana JV area.
Our gross Marcellus shale production as of December 31, 2012, was approximately 157 Mmcf per day (43.2 Mmcf per day net), which represents an increase of more than 73% since the end of 2011. As of December 31, 2012, we had more than 19.7 Mmcf per day (4.0 Mmcf per day net) of production shut in due primarily to offset drilling and completion activities. During 2012, we drilled and completed 38 gross (11.4 net) wells in our Marcellus area. We implemented a development program in Northeast Pennsylvania and an appraisal program in Central Pennsylvania. In West Lycoming and Central Pennsylvania, several of our most recent completions have averaged initial production rates in excess of 7.0 Mmcf per day, representing some of our best well performance to date. Most of our drilling activity during 2013 will be in Lycoming County, Pennsylvania where we are realizing some of our highest returns in the Marcellus shale. We are currently drilling with one operated rig due to low natural gas prices. During 2012, we realized significant cost reductions across operational functions with drilling costs down 46%, completion costs down 11% and operating costs down 39%. When natural gas prices recover, we plan to actively implement development drilling.