Enerplus adding Marcellus production, reserves

Enerplus Corp., Calgary, will spend $190 million in the Marcellus shale region in 2012, about 80% of which it will allocate to nonoperated interests in northeastern Pennsylvania.

With the low natural gas price environment, Enerplus plans to prudently invest with partners to retain valuable acreage.

Well results have continued to surpass expectations in terms of both initial production rates and declines, the company said. Costs average $7-8 million/well. Some $30-40 million will go to drill appraisal wells on operated leases in Pennsylvania where Enerplus is focused on demonstrating potential and retaining lease interests.

The company expects to hike its Marcellus production to nearly 70 MMcfd at the end of 2012 compared with 25 MMcfd at the end of 2011.

Last year, Enerplus sold 45% of its Marcellus nonoperated acreage position for $568 million, realizing a $272 million net gain. The company has essentially recovered its entire investment in the region while retaining ownership of 110,000 net acres, 60% operated.

Enerplus invested $210 million on Marcellus delineation and development drilling in 2011, increasing production and hiking booked proved and probable reserves 64% to 154 bcf. An independent best estimate of contingent resources in the Marcellus is 2.3 tcf. Independent reserve evaluators have increased the estimated average estimated ultimate recovery to 6.6 bcf/well from 5.4 bcf.

Meanwhile, in Canada the company will invest $80 million on liquids-rich gas properties in Alberta and British Columbia, down from $91 million in 2011 due to weak gas prices. Operated drilling will target the stacked Mannville and delineate the Montney and Duvernay acreage positions.