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National Fuel expands drilling

National Fuel Gas Co. is pushing its oil and natural gas drilling business into Kansas and expanding its oil drilling operations in California.
The Amherst-based energy company said Thursday it has acquired about 9,300 acres in Pratt County, Kan., where it expects to participate in a program to drill between three and eight horizontal oil wells during the fiscal year that begins in October.
National Fuel also said it has reached an agreement in principle with Chevron USA to acquire a portion of its assets in the East Coalinga Field. National Fuel said it would begin operating the field early next year, while Chevron would receive an incremental royalty on new wells and a full royalty interest in existing production.
David F. Smith, National Fuel's chairman and chief executive officer, said the California property will fit nicely with the company's existing drilling operations in the state. He said the investments "will keep us on the path toward our ongoing goal of maintaining a significant contribution to the company from our oil-producing properties."
On the Kansas property, National Fuel will be the operator on roughly half of the net acreage, while holding a nonoperating interest on the rest.
"Our initial footprint in the Mississippian Lime play, although modest in size, provides us a position in an emerging play that we believe has significant potential and additional running room," Smith said.
National Fuel also repeated its forecast that its oil and natural gas production during the upcoming fiscal year will range between the equivalent of 92 billion and 105 billion cubic feet of natural gas. It expects to spend $555 million to $710 million on its drilling program.