* Seneca Resources cuts production forecast to 92-105 bcfe
* Seneca cuts capex to $400-$500 mln
* EOG may no longer have rights for additional acreage
July 25 (Reuters) – Seneca Resources Corp, a unit of
National Fuel Gas Co, cut its production and capital
expenditure outlook for 2013 as its Marcellus shale joint
venture partner EOG Resources Inc will not be able to
complete the minimum drilling target agreed upon for this year.
The company now expects production of 92 billion cubic feet
equivalent (bcfe) to 105 bcfe, down from its previous forecast
of 100-115 bcfe.
Capital expenditure outlook was cut by $50 million to $400
million to $500 million.
Seneca said “should it (EOG) not meet that minimum, EOG
would no longer have the right to earn additional acreage from
Seneca.”
Seneca, which sold off its Gulf of Mexico oil and gas
properties in March last year to focus on Marcellus acreage,
reported a 91.5 percent increase in production from Marcellus
wells in the first quarter. The JV with EOG was formed in 2006.
EOG’s decision comes when falling natural gas prices have
pushed oil and gas companies to roll back production, or sell
acreage, to focus on high-margin-generating oil and natural gas
liquids assets.
Under the JV deal, EOG has the opportunity to earn an
interest in Seneca acreage by drilling a minimum number of wells
per year in a defined area of mutual interest at Marcellus.
Shares of EOG closed at $95.69, while those of National Fuel
closed at $48.25 on Wednesday on the New York Stock Exchange.
