National Fuel Gas Co., moving to expand its presence in the Marcellus Shale region in Pennsylvania, is paying $23 million to gain complete control of gas wells and additional acreage in Tioga County that are part of its joint venture with EOG Resources.
The acquisition, which involves wells that are already producing as well as undeveloped acreage, is expected to add about 42 billion cubic feet of natural gas to its reserves and increase its anticipated gas production this year by about 5 billion cubic feet, the Amherst-based energy company said Monday.
National Fuel's joint venture with EOG will continue, with EOG still serving as operator of the venture's wells and acreage west of Tioga County.
The acquisition involves oil and gas properties around Covington Township in Tioga County. National Fuel had been the operating partner on the wells and acreage in that part of the joint venture.
"The acquisition of EOG's position in our Tioga County operations is another step in our Marcellus Shale growth plan," said Matthew D. Cabell, president of National Fuel's oil and gas drilling business.
"This transaction will have an immediate positive impact on our production and proved reserves, and it provides us with additional upside in an area where we continue to have great success," Cabell said.
National Fuel has been steadily adding to its acreage in the Marcellus Shale, controlling the drilling rights on more than 740,000 acres within the potentially lucrative region.
Because of the deal, National Fuel now expects its production this year to rise to between 65 billion and 75 billion cubic feet of natural gas, up from its previous forecast of between 60 billion and 70 billion cubic feet. The estimated production this year would be up 30 percent to 50 percent from the company's total production of just under 50 billion cubic feet during the previous fiscal year.
The company also said it is adding to its steadily rising capital spending plans for its oil and gas drilling business. National Fuel said it now expects to spend $485 million to $560 million on oil and gas exploration during the fiscal year that ends in September, up from its previous forecast of between $425 million and $500 million and nearly 50 percent to 70 percent more than last year.
New Business Reporter Matt Glynn contributed to this report.