Last checked at 
* April deadline for state to publish energy production data
* Data will reveal output on up to 60 new shale wells
* First major indicator of Utica's progress
By Edward McAllister
NEW YORK, March 25 (Reuters) - Shares of Gulfport Energy were in free fall last spring, dropping 55 percent infour months, until the oil and gas producer announced it haddrilled its first three wells in the Utica shale formation inOhio.
The Oklahoma-based company's value has since more thandoubled, bolstered by a series of company production updates onthose and a handful of other new wells located in what manybelieve to be the next frontier in America's oil and gasrevolution.
The share price gain represents perhaps the clearest exampleof how investors, giddy about an expected boom in Ohio's energyproduction, have been betting on companies based on someoptimistic, but preliminary, production data.
But next month a more comprehensive state report willpublish new data from Ohio's oil and gas wells that will offerthe most insight yet about whether the Utica is the next bigthing or a potentially fizzling bust for companies operatingthere.
Energy producers in the Buckeye State have compared theUtica to the giant Eagle Ford shale play in Texas and declaredit a boon for a state still weathering an economic downturn.However, enthusiasm has cooled somewhat since drilling began in2011, after wells produced more cheap natural gas than the morelucrative oil.
On March 31 this year, data from between 50 and 60 wellsdrilled in 2012 will be given to the state. It will then be madeavailable on the Ohio Department of Natural Resources' websitein April, the department said. It did not give a specific datebut last year the report came on the second of the month.
While around 500 drilling permits have been issued in thestate since 2011, only those wells that have actually producedwill be covered in the report. It will show output over thelifetime of every new well, its location, and its owner,providing some proof of which acreage, and which companies, areperforming best.
"It is a meaningful sample of wells that will go a long waytoward giving investors a sense of whether the Utica is the nextbig thing," said Morningstar analyst Mark Hanson, who coverscompanies operating in the state.
UTICA SILENCE
Ohio publishes well data only once a year, making it one ofthe least transparent states in reporting energy output. Moststates publish every quarter. On April 2 last year, productionwas published from just five wells. That is the only officialstate record on the play two years after drilling began there.
Results from the five wells drilled by Chesapeake Energy in Carroll and Harrison counties showed lower thanexpected oil production, and stronger natural gas output, thestate report said.
Since then, a long list of companies, including Britain's BP, Anadarko Petroleum and Hess Corp, haveacquired acreage in Ohio. Most remain quiet about their progressfor fear that it will push lease prices higher.
"It has to do with the competitive nature of things," saidMark Houser, chief executive officer of EV Energy Partnerswhich, together with its parent company Enervest Ltd, owns morethan 800,000 acres in the Utica. "If you have a good acreageposition, you still may want to buy the acre next door. Youdon't want to have everything public."
BP, Anadarko and Hess did not respond to request for commentfor this story.
Devon Energy is in the process of selling more than 200,000acres in the Utica after drilling a series of what a companyspokesman described as "disappointing" wells in what it expectedto be oil-producing acreage. Chesapeake Energy, which did notimmediately respond to calls for comment, has also sold off aportion of its more than 1 million acres there.
"The little I have seen from the Utica shows it has been abit disappointing given the expectations," said Phil Weiss, ananalyst with Argus Research who covers companies drilling there."Given that the amount of information is relatively sparse,people will be paying attention."
PEAK RATE, SHAKE AND BAKE
Meanwhile, smaller companies such as Gulfport, Rex Energy and Magnum Hunter Resources, with aproportionately bigger stake in the Utica, have more to lose ifthe play turns out to be a dud.
Rex Energy and Magnum Hunter did not immediately respond torequests for comment.
Of the smaller companies, Gulfport's share price has shownthe most remarkable rise since the first half of last year andthe company in many ways encapsulates both the hype about theUtica and the difficulty in deciphering its true potential.(Share price graphic:)
Since June, 2012, when it announced it had drilled its firstthree Utica wells, Gulfport's share price has risen 156 percent,from below $17 to more than $43 on March 18, as the companybegan reporting initial flow rates from the new wells.
But as the April deadline for reporting well productionlooms, experts will be watching closely for whether Gulfport'spreliminary data holds up to further scrutiny.
"Ultimately, the production and estimated ultimate recoveryof our wells and those of our peers will provide definitiveanswers," said Paul Heerwagen, Gulfport's director of investorrelations.
The company, which owns 128,000 net acres in the Utica,published impressive "peak rates" of gas and condensates fromits Utica wells, a measurement of initial flows taken over alimited time period, usually no longer than 24 hours. A peakrate is typically much higher than eventual longer term outputthat declines over time.
"The peak rate is more a bragging type thing," said RandallCollum, a natural gas production analyst at data providerGenscape. "It is nice to know and gives some indication ofpotential production, but I would rather get a longer termoutlook."
During a quarterly conference call with analysts on Feb 27,Gulfport chief executive James Palm revealed longer term ratesfor two wells, which had fallen off significantly from the firstflows.
Natural gas output from the Wagner 1-28H well fell from apeak rate of 17.1 million cubic feet per day reported on August7 to an average of 5.2 million cubic feet per day after 129 daysof production. Output of gas condensates fell from 432 barrelsper day to 94 bpd.
Decline rates are normal, and Gulfport executives said onFeb. 27 that output from the Wagner well has increased slightlysince the end of the year.
Gulfport is not alone in reporting peak rates. Rex Energychief executive Tom Stabley said he was "very excited" aboutoutput from three new Utica wells in a statement on March 18that disclosed 24-hour test rates for the wells.
But the speed of the declines in the Gulfport wells, and thescarcity of longer term data, makes it hard for investors tojudge whether it will be a good long-term investment.
"The first four months show that the peak rate was notover-representative of what could ultimately be recovered fromthe well," said Morningstar's Hanson.
Further muddying the water is a new technique known in theindustry as 'shake and bake' or 'resting', where a well isplugged for a number of days or months after drilling toincrease pressure in the well. Shake and bake, an unprovenmethod that companies hope might improve recovery from a wellover its lifetime, can increase initial flows by raisingpressure, said Gulfport's Heerwagen, though it is not yet clearif it increases flows long term.
So far, more than 500 well permits have been issued in theUtica since 2011, many of which are expected to begin producingas new pipelines and processing plants are built to connectwells to markets as early as this spring.
As more wells are drilled, more information will be madeavailable - but not for a while. The data on wells drilled in2013 will remain largely unknown until April 2014.
