A new joint venture has committed to drill 80 Marcellus wells in the Clermont-Rich Valley area of Pennsylvania on about 10,500 acres. Seneca Resources Corp., a wholly owned subsidiary of National Fuel Gas Co., has entered an asset-level JV with IOG CRV-Marcellus LLC, and affiliate of IOG Capital LP.
Under the terms, IOG will hold an 80% working interest and is obligated to participate in the first 42 wells. The company will have an option to participate in the remaining 38 wells that can be exercised on or before July 1, 2016. IOG’s obligation on the first 42 wells is expected to reduce Seneca’s net capital expenditures by up to $200 million in 2016, with a further $180 million reduction spread across 2017. Seneca retains a 7.5% royalty interest and the remaining 20% working interest in the first 42 wells.