Thursday, November 4, 2010

See Ya Later, Penn Virginia

In its operational update yesterday, Penn Virginia Corp. stated that as of the fourth quarter 2010 the company is temporarily halting its drilling operations in the Haynesville Shale and Cotton Valley formations and moving the drilling equipment to its leases in the Eagle Ford Shale.  The reason, of course, is continued low natural gas prices.  PVA says that most of its east Texas land is held by production, so there is no reason to waste time drilling on marginally economic land when it can drill for liquids in the Eagle Ford.

This action comes as the company is seeing good activity from its Haynesville leases.  It drilled four wells in the third quarter and is honing its completion skills.  Production rates from its wells have never been too sexy because most of PVA's acreage is outside the sweet spots.  Results are solid, but clearly not worth the risk in this crappy price environment.

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