Penn Virginia natural gas well hits big

The Radnor, Pa.-based company's Fogle 5-H, a well drilled 11,378 feet vertically in Harrison County and 3,861 feet horizontally, had an initial production rate of about 8 million cubic feet of natural gas per day, which was greater than expected.

Pipeline capacity constraints currently limit production to about 5 million cubic feet per day. But increased pipeline capacity, expected in July, will enable an initial production rate of 10 million to 15 million cubic feet per day, the Philadelphia-area company said.

Shares of the company--which have traded between $35.68 and $57.76 over the past 12 months--advanced $10.02, or 18.9 percent, to close at $63.02. The stock hit a new all-time high of $63.85 earlier in the session.

Shares of Penn Virginia's partner in the development, GMX Resources Inc., jumped $6.63, or 15.9 percent, to finish at $48.27, after peaking at $49.33 earlier.

"We expect both PVA and GMX Resources, Inc., PVA's (joint venture) partner in East Texas and a pure play in this area, to benefit greatly from this news," Pritchard Capital Partners analyst Stephen Berman wrote in a client note.

RBC Capital Markets analyst Scott Hanold estimated that, based on results of the Fogle 5-H, Penn Virginia holds 1.5 trillion cubic feet equivalent of "net unrisked upside potential from the Haynesville Shale play."