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Pennsylvania Marcellus

Warren acquired approximately 6,982 gross (5,289 net) contiguous acres in Wyoming County, Pennsylvania in the northeast portion of the Marcellus Shale from Citrus Energy and other working interest owners in August 2014.

As of July 1, 2014 the Marcellus assets have 30 gross (22.5 net) wells producing from the lower Marcellus formation, with average net production in June 2014 of approximately 82.0 MMcf/d.

Estimated net proved reserves as of June 30, 2014 were 204.8 Bcfe (55% proved developed), nearly all of which are attributable proved Lower Marcellus locations. There is upside potential to proved reserves from the Upper Marcellus formation, where the Company has identified 48 additional potential locations.

The acquired assets include a robust and scalable infrastructure system that will further enable our development of the Marcellus Assets, including a gathering and compression system, takeaway capacity to end markets, a significant local customer, and abundant water supply.

Gathering system facilities, built and operated by Regency (formally PVR), service the entirety of the Marcellus Assets. The gathering system has been completed to tie-in all existing wells and an agreement is in place to hook up gathering lines to all future wells as we continue development. The Regency compression system, in the permitting stage for the second station, includes two separate stations with 24,000 of combined horsepower with a maximum capacity of 210 MMcf/d of production. The system is expected to be completed in the third quarter of 2015. Upon completion, the system will be divided into four operating segments, which will allow the allocation of horsepower to segments that will most benefit from compression and increase well performance.

There is sufficient takeaway capacity for the Marcellus Assets, with 285,000 gross MMBtu/day of capacity on the entire position. We have a supply contract effective through June 10, 2015 with Procter & Gamble, providing that buyer first priority for up to 45,000 MMBtu/day. Excess volumes can be delivered to the north to Tennessee Pipeline’s 300 Line (120,000 MMBtu/day), which provides access to the East Coast markets, or to the south, to the Transco interstate pipeline (120,000 MMBtu/day), through UGI’s Auburn I and Auburn II pipelines. With bi-directional flow ability, we will have the option to flow gas to the pipeline with the lowest basis differential.

The two main sources of water for the Marcellus Assets are an impoundment pond with capacity of 100,000 barrels of fresh water and a permit to extract 23,810 bbls/d from the Susquehanna River through 2017. These sources are sufficient for all water needs with excess water sold to other operators. 100% of the fresh water is transported via fast line reducing the cost of trucking and community impact. We will recycle 100% of flowback water in subsequent completions.

Wilmington Townlot Unit


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