National Fuel Gas Co. (NYSE: NFG) said June 13 it has extended its Marcellus Shale joint development agreement with IOG Capital LP.
As part of the extension, the companies have agreed to develop additional Marcellus natural gas assets located in Elk, McKean and Cameron counties in north-central Pennsylvania.
The agreement, between National Fuel's wholly owned E&P subsidiary, Seneca Resources Corp., and IOG CRV - Marcellus LLC, an affiliate of IOG Capital, includes the development of 75 total Marcellus wells located in the Clermont/Rich Valley area in Pennsylvania.
To date, 39 of the 75 joint development wells have been either completed and turned to sales or drilled and in the process of being completed. An additional 36 wells are currently left to be developed under the revised joint development agreement.
IOG continues to hold an 80% working interest in all of the joint development wells. Seneca holds the remaining 20% working interest and will continue to be the program operator.
In total, IOG is expected to fund about $325 million for its working interest in the 75 joint development wells. This is about $55 million less than what was projected under the initial agreement due to a reduction in the total well count and improved well costs, the release said.
In the modified joint development agreement, Seneca and IOG also agreed to make certain modifications to the royalty structure.
IOG was also granted an option to participate in a seven-well Marcellus pad that will be completed prior to Dec. 31, 2017. Should IOG choose to participate in the pad, the total commitment under the joint development agreement would reach 82 wells.
Production from all joint development wells will be gathered by National Fuel's Gathering segment's Clermont Gathering System.
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