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The Utica Shale underlies much of the Appalachian region of the northeastern United States, stretching from New York to Ohio, and encompasses an even larger area than the Marcellus Shale. The Utica is Ordovician in age and underlies the Marcellus in the region.
The target zone within the formation is the organic-rich Point Pleasant, which is the lower part of the Utica formation. Carrizo has chosen to focus its leasing and drilling activities on the southern portion of the Utica Shale, primarily in Guernsey and northern Noble Counties, Ohio, which is believed to be prospective for liquid-rich gas and condensate.
Carrizo began leasing in the Utica Shale in late 2011 with a financial partner, Avista Capital, LP. Based on positive nearby results from peer companies, Carrizo elected to significantly increase its interest in the acreage position during the year, investing approximately $170 million on land acquisitions in the play. In early 2013, the Company exercised its option to raise its interest in the joint venture to 50%, and in late 2013, the Company acquired Avista Capital’s 50% interest in the most de-risked portion of the acreage. As a result, Carrizo currently holds approximately 22,000 net acres in the Utica Shale play.
Carrizo brought its first well in the play, the Rector 1H, online in early January 2014, at a peak rate of 1,680 barrels of condensate per day. The performance of the well has been very encouraging, as production has averaged more than 500 barrels of condensate per day over the first two months of production on a small choke.We are preparing to begin our development drilling program in the Utica Shale.
During 2014, we expect to spend approximately $110 million to drill and complete 9 gross (7 net) operated wells as well as participate in several non-operated wells. We currently have more than 120 net potential drilling locations on our acreage, giving us over a 10-year drilling inventory at a one rig pace.