Penn Virginia Briefs on Eagle Ford Wells

- Penn Virginia Briefs on Eagle Ford Wells

Tuesday, June 14, 2011
Penn Virginia Corp.

Penn Virginia provided an update of its activity in the Eagle Ford and Marcellus Shales.

Eagle Ford Shale

We currently have six producing Eagle Ford Shale wells. These six wells, in which we have an approximate 83 percent working interest, are currently producing an aggregate of 4,096 barrels of oil per day (BOPD) and 2,072 thousand cubic feet (Mcf) of natural gas per day on a gross basis. The natural gas associated with these wells is also expected to yield approximately 150 barrels of natural gas liquids (NGLs) per million cubic feet (MMcf).

• Our initial well, the Gardner #1-H, had a peak 24-hour production rate of approximately 1,250 barrels of oil equivalent (BOE) in late February 2011 and is still producing approximately 350 BOPD and 240 Mcf of natural gas per day after 129 days of production, bringing cumulative production to approximately 68,000 barrels of oil and 56 MMcf of natural gas all of which was flared, or approximately 77,000 BOE.
• We recently completed five additional wells, the Hawn Holt #1-H, #2-H, #4-H, #6-H and #9-H, which had peak 24-hour production rates, as reported to the Texas Railroad Commission, of approximately 726, 986, 560, 711 and 1,876 BOE per day, respectively. These same wells had corresponding peak 24-hour oil production rates of 650, 869, 514, 670, and 1,652 BOPD. The Hawn Holt #1-H and #4-H had subsequent increases in peak rates of production to 830 and 582 BOE per day, respectively. These five new wells were tested at restricted rates with flowing pressures that ranged between 1,180 and 2,994 pounds per square inch. The total horizontal lateral lengths ranged between 3,827 and 5,063 feet with between 14 and 18 frac stages per lateral.
• In addition to our six producing wells, we are currently drilling three wells and have three wells waiting on completion.

We extended our agreement with a private service contractor to provide hydraulic fracturing services primarily in the Eagle Ford Shale, as well as other plays in east Texas and Oklahoma. This agreement has a one-year term with an option to extend for additional one-year terms.

Our natural gas midstream service provider in Gonzales County recently connected our wells to its pipeline and processing facilities. As a result, we have begun to recognize sales revenue associated with NGL and residue gas production.

Marcellus Shale

We continue to test our approximately 35,000 net acreage position in Potter and Tioga Counties, Pennsylvania and have drilled four horizontal wells. We have completed and commenced testing of three of these wells, while the fourth well is waiting on completion. The three completed wells are located in the central portion of our acreage, and the fourth well is located in the western portion. We plan to move a drilling rig to test the eastern portion of our acreage during the second half of the year. In addition, pipeline construction is in progress with sales expected to begin by early August. Earlier in 2011, we conducted a formal process to seek a joint venture partner or other alternatives for this capital-intensive play. Although we are no longer conducting a formal process, we will continue to consider alternatives for our Marcellus acreage position.

Management Comments

H. Baird Whitehead, President and Chief Executive Officer, stated, "The strong results from our first six Eagle Ford Shale wells are consistent with our geological and economic models. Extending our fracturing services agreement in light of potential completion crew availability issues for the industry, as well as establishing our initial natural gas midstream takeaway and processing capacity, are important accomplishments as we look to maximize our returns from this play. We are currently running three drilling rigs in the Eagle Ford Shale play and expect to accelerate the growth of our oil and NGL production over the course of 2011 and beyond.

"We also continue to test our Marcellus Shale position, having recently completed our initial wells in the central portion of our acreage and looking to test primarily the eastern area later in the year. Once the pipeline is completed to these initial wells we will monitor the production and longer term results."

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