The location of the Marcellus and Utica shales, along with their liquids-rich reserves base, has made these two plays among the most profitable in the U.S. and has attracted the attention of a whole slate of potential investors, including private equity and foreign operators.

A recent panel of operators and analysts speaking at a recent finance workshop held before Hart Energy’s DUG East conference in Pittsburgh said the size and location of the two plays have drawn attention from private capital in the U.S. and elsewhere.

Mike McCown, vice president, Northeast, for Gastar Exploration Ltd., said the firm was drawn to a liquids-rich area in the Marcellus in the West Virginia panhandle for several years.

Gastar currently has 29 wells capable of producing. In 2011, the company drilled 19 wells and completed 13 wells. So far in 2012, Gastar has drilled 20 wells and completed 17 with another eight to drill and nine to complete for the rest of the year. “For a small company, the activity has been pretty brisk,” McCown said.

To fund the development of the region, Gastar formed a joint venture with South Korea’s Atinum Partners to develop acreage in the area in 2010. As part of the joint venture, Atinum provided $70 million to implement a continuous drilling operation. “We’ve had two or three rigs working continuously since the beginning of 2011,” McCown said.

A partner the size of Atinum has allowed Houston-based Gastar the opportunity to develop economies of scale that have held down costs and boosted overall returns.

At the time, McCown said, Gastar was looking for frac equipment for its first well and found that it had trouble finding a service provider that would take it seriously. “No service company was interested in hearing our story,” he said.

Eventually, Gastar came to an agreement with Baker Hughes Inc. to provide an integrated series of services to develop the region. McCown said a single-source service provider is an important component of the company’s cost strategies.

The agreement Gastar has with Baker Hughes is relatively simple, reaching all of two written pages. In essence, Gastar commits to Baker Hughes for all of its oilfield services and Baker Hughes agrees to provide those services in a timely and efficient manner that is at a competitive price. A few details are negotiated in the process, but the agreement has worked for both companies, McCown said.

Gastar has spent $140 million during the last two years and is happy with the relationship. “They view that as a successful endeavor and Gastar certainly does, too,” McCown said.

Another technique for containing costs in the region is pad drilling. Gastar quickly found that multiple wells from a single pad was the most efficient way to develop the region. “We found that drilling as many wells as possible from a single pad, and drilling all those wells at once, rather than drilling a few wells and then coming back is more efficient,” he said.

Gastar’s pads have between three and 10 wells each. “More is generally better,” McCown said.

Sylvia Barnes, managing director and head of oil and gas corporate and investment banking at KeyBanc Capital Markets, said the size of the potential reserves in both Utica and Marcellus have attracted companies like Gastar to the region.

Estimates for the potential of the Utica vary greatly, but start with a minimum of 25 billion cubic feet equivalent (Bcfe) and reach as high as 72 Bcfe. The average estimate for the play is around 45 Bcfe, Barnes said.

The Marcellus is a better understood region that so far has an estimated resource potential between 178 Bcfe and 300 Bcfe. “We’re talking about very meaningful reserves,” she said. The size of the Marcellus is also immense, stretching over 54,000 acres in six states.

“These are big numbers that get the attention of financiers, investors and buyers,” she said.

Operators have also flocked to the region in recent years. In 2008, the Marcellus had 32 well permits and the Utica had three well permits. So far this year, there have been 11,959 well permits granted, 11,788 of which are for the Marcellus.

Neal Dingmann, managing director, equity research at SunTrust Robinson Humphrey, said it is the liquids-rich area of the Marcellus shale that has driven the higher rates of return. Both Marcellus and the Utica are two of the most promising regions in the country.

Returns in the liquids-rich area in the Marcellus, assuming full ethane recovery, can be as high as 60%.

“I would put that up against nearly any play that is out there today,” he said.