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CNX Gas Reports Horizontal Marcellus Shale Well Producing 6.5 Million Cubic Feet Per Day; Raises 2008 Production Guidance to 75 Bcf

Posted on: Monday, 15 December 2008, 08:19 CST

PITTSBURGH, Dec. 15 /PRNewswire-FirstCall/ -- CNX Gas Corporation (NYSE: CXG), the leading E&P company in the Appalachian Basin, reported that its first horizontal Marcellus Shale well is now producing at a rate of 6.5 million cubic feet (MMcf) per day. This is a record daily production rate for any well in the company's history and is believed to be among the highest reported by any Marcellus Shale producer. The well, located in Greene County, Pa., began flowing into the sales meter on October 2, with an initial production rate of 1.2 MMcf per day and 4,000 pounds of backpressure, as previously reported. The backpressure on the well had been gradually reduced since then, allowing daily production to increase to about 4 MMcf per day until Friday, when the installation of new surface equipment enabled the well to flow at the 6.5 MMcf per day rate, with pressure still being held at 2,640 pounds. Cumulative production from the well prior to last Friday was 106 MMcf.

(Logo: http://www.newscom.com/cgi-bin/prnh/20051213/CNXLOGO )

Nicholas J. DeIuliis, president and chief executive officer, said, "This was a team effort from our engineers, operators, and support personnel, including the directional drillers from Scientific Drilling and the hydraulic fracturing team from BJ Services. I can't speak highly enough of our Marcellus Shale team.

"To achieve this kind of success with our first horizontal Marcellus Shale well," Mr. DeIuliis continued, "speaks volumes about the breadth of our horizontal drilling expertise. Many investors may not be aware, but CNX Gas had drilled 160 horizontal coalbed methane wells before drilling its first horizontal Marcellus Shale well."

The well was drilled to a vertical depth of 8,140 feet in the Huntersville Chert, penetrating 83 vertical feet of Marcellus Shale. The well was logged then plugged back and a horizontal section of 3,395 feet was cut for a total measured depth of 10,738 feet. The well was completed with a five-stage slickwater fracture treatment using 3 million pounds of proppant.

CNX Gas has a 100% working interest in the well and a 100% net revenue interest because CNX Gas does not pay a royalty. Because of the gathering infrastructure already in place from its CBM operations, CNX Gas was able to place the well online immediately after retrieving frac fluids. Also, gas from production in southwestern Pennsylvania, as in other areas of Appalachia, typically receives a premium over NYMEX pricing.

CNX Gas is currently drilling its second vertical Marcellus Shale well and will be shortly hydraulically fracturing its second and third horizontal wells. Updates on these wells will be provided during the company's next earnings conference call, now scheduled for January 28, 2009.

CNX Gas is also raising its 2008 production guidance to 75 billion cubic feet (Bcf) from 74 Bcf. The current guidance represents the third time guidance has been raised from the original guidance of 72 Bcf. If the 75 Bcf is attained, it would represent a nearly 29% increase from the 58.2 Bcf produced in 2007. The company attributes the increased guidance to exploration success in both the Marcellus and Chattanooga shales, as well as continued higher-than-expected coalbed methane production.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Various statements in this release, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934). These statements involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: our business strategy; our financial position; our cash flow and liquidity; declines in the prices we receive for our gas affecting our operating results and cash flow; uncertainties in estimating our gas reserves; replacing our gas reserves; uncertainties in exploring for and producing gas; our inability to obtain additional financing necessary in order to fund our operations, capital expenditures and to meet our other obligations; disruptions, capacity constraints in or other limitations on the pipeline systems which deliver our gas; competition in the gas industry; the availability of personnel and equipment; increased costs; the effects of government regulation and permitting and other legal requirements; legal uncertainties regarding the ownership of the coalbed methane estate; costs associated with perfecting title for gas rights in some of our properties; our need to use unproven technologies to extract coalbed methane in some properties; our relationships and arrangements with CONSOL Energy; factors affecting CONSOL Energy's coal mining operations, such as changes in the coal market, the risk inherent in coal mining, and compliance with laws, and other factors discussed under "Risk Factors" in the 10-K for the year ended December 31, 2007. We are including this cautionary statement in this release to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf, of us.

SOURCE CNX Gas Corporation

Source: PR Newswire

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