Seneca Energy Production Company

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In September, 2008 Williamsville, New York-based Seneca Resources Corp. aka Seneca Energy Production Company was reported to have won four leases in competitive bidding for tracts in the State of Pennsylvania's forest lands in Tioga and Lycoming Counties. Eighteen tracts were offered for bid.

A January, 2009 report indicated that Seneca is the third largest holder of Marcellus shale. As of this date, it had not been drilling itself, preferring instead to drill through a joint venture with EOG Resources Inc. However, the company planned to become a driller of record in 2009. An August, 2009 report stated that Seneca and National Fuel combined control roughly 1 million acres of prospective Marcellus rights drilling rights.

By February, 2009, a report stated that the company planned 10 vertical wells in 6 different counties and would immediately begin drilling in Tioga County. These were to be Seneca-only, not involving EOG, and were intended primarily for assessment and evaluation purposes. The company announced in April, 2009 that the preliminary drilling results from the first three of these wells was positive and that the company planned to drill additional wells on the same tracts. Horizontal drilling was expected to begin during the summer months of 2009.

Seneca's leasehold of 725,000 acres is primarily located in northwestern Pennsylvania.

Also in April, 2009, Seneca was reported to have walked away from signing a lease for two Pennsylvania state forest land tracks, totaling 4,400 acres, it had won in competitive bidding. A company official cited as the main reason for declining this acreage was higher than expected pipeline construction costs. Later in April, Seneca announced that it had completed one vertical well on a forest tract in Tioga County, Pennsylvania known as Pennsylvania Department of Conservation and Natural Resources (“DCNR”) Tract Number 595. The company also announced that drilling was to begin immediately on Tract 100 in Lycoming County, PA. All of these tracts, including the ones declined, were acquired through the above mentioned competitive bidding from September, 2008.

In a May, 2009 company update, it was noted that Seneca and EOG were testing a Marcellus well that had an initial 7-day flow rate of 3 Mmcf/d.

Seneca's 2006 joint venture with EOG gave it the opportunity to earn a 50% share of EOG's 120,000 acre leasehold, and the latter can earn a 50% share in Seneca's acreage. However, the above May, 2009 update indicated that in this well Seneca enjoyed a 60 percent net revenue interest. EOG was to operate the well.

The company also mentioned in the May, 2009 update that it planned to drill 10 vertical and two or three horizontal wells during 2009. It also planned to work on 10 other wells with EOG during the year.

A June, 2009 report found Seneca teaming up with Hess Corp to sign three landholder coalitions in Broome County, NY.

July, 2009 found Seneca and EOG having drilled 9 wells in Elk County, PA. Four of these wells were set up for real time monitoring. This allows checking the status of the well while fracturing is underway so that decisions can be made quickly about dealing with issues.

According to a second quarter, 2009 update that appeared in August, 2009, Seneca and EOG had completed and flow-tested four Marcellus shale wells. The initial production from these averaged 2.3 Mmcf/d and ranged from 1.4 to 3.3 Mmcf/d. It was unclear from the report whether these had been the same ones mentioned above in Elk County.

Seneca is also drilling wells outside its joint venture with EOG, yet EOG was still selected as the operator. The second of these horizontal wells had been drilled in Tioga County. This was probably one of the wholly-owned Seneca wells mentioned above in February, 2009. In August, 2009, it was reported that the company had also been laying approximately 30 miles of gas gathering pipeline through Tioga and Lycoming Counties to collect its Marcellus shale production and ship the gas out through larger capacity interstate pipelines to eastern U.S. markets.

According to a September, 2009 report, Seneca Resources had drilled a Marcellus shale well starting on Aug. 5, 2009 just northwest of Hemlock Creek in Tionesta Township in Pennsylvania's Forest County. The company also began two vertical Marcellus wells on August 8 in neighboring Jefferson County.

According to a September, 2009 report Seneca Resources began drilling two vertical Marcellus shale wells on August 8.

Seneca is a 100%-owned subsidiary of National Fuel Gas Co.

• Matthew D. Cabell is President of Seneca Resources.
• Michael (Mike) T. Donovan is Seneca's Land Manager and is in charge of business development in Pennsylvania.
• Nancy Taylor is a spokesperson for the company.
• Doug Kepler is a spokesman for Seneca Resources.