2011-01-11-2011-01-10

To buy Marcellus oil and properties in Covington Township area of Tioga County, PA, gaining 13.7 MMcf/d, 42 Bcfe proved.

Seneca Resources Corp., a subsidiary of National Fuel Gas Co., Williamsville, N.Y., (NYSE: NFG) has acquired Marcellus shale oil and gas properties in the Covington Township area of Pennsylvania from EOG Resources Inc., Houston, (NYSE: EOG) for $23 million.

The properties are in Tioga County, produce gas from the Marcellus and are also prospective for additional Marcellus reserves. Production is approximately 13.7 million cubic feet per day. Proved reserves are 42 billion cubic feet of gas equivalent.

EOG contributed this acreage to the Marcellus joint venture between Seneca and EOG that was formed in 2006. Seneca has been the operating partner on this portion of the joint-venture acreage and has acquired EOG's interest in these properties, continuing to act as the operator of all existing and future wells.

Seneca president Matthew Cabell says, "The acquisition of EOG's position in our Tioga County operations is another step in our Marcellus shale growth plan. This transaction will have an immediate positive impact on our production and proved reserves, and it provides us with additional upside in an area where we continue to have great success."

EOG previously attempted to sell a separate Marcellus package to Newfield Exploration Co. (NYSE: NFX) in Bradford County, Pennsylvania, for $405 million. The deal was terminated in December.

The Seneca/EOG joint venture will continue, and EOG remains operator in the acreage west of Tioga County.

Seneca's production forecast for the entire 2011 fiscal year has been increased to a range between 65- and 75 billion cubic feet equivalent, up from the previously announced range between 60- and 70 billion cubic feet equivalent. Also, the company's capital spending in E&P for fiscal 2011 is now expected to be in the range of $485- to $560 million, up from the previously announced range of $425- to $500 million.