Shares in Penn Virginia Corp. soared $10.02, or 19 percent, after the Radnor energy company yesterday reported a successful well in an east Texas area potentially rich in natural gas.
The shares closed at $63.02 on the New York Stock Exchange, adding $417.52 million in market value. The close was an all-time high for the 126-year-old company.
The stock jumped because strong production from the test well in a newly tapped layer of shale is a sign that Penn Virginia may be able to report a substantial increase in its reserves of natural gas, making the company more valuable to investors.
Penn Virginia said it expected the well, with a depth of 11,378 feet, to produce 10 million to 15 million cubic feet of gas per day starting in July, when more pipeline capacity becomes available.
The company's total current production is 120 million to 130 million cubic feet per day, making the new well a significant addition.
"We are very encouraged by the initial results of the ... test well, which exceeded our expectations," A. James Dearlove, Penn Virginia's president and chief executive officer, said.
The company plans to drill five similar wells in the Bossier shale this year. All six involve horizontal drilling, which allows natural-gas producers to drain larger area from a single vertical shaft by drilling down and then out through a layer of rock. The test well went 3,861 feet horizontally.
In addition to eastern Texas, Penn Virginia has natural-gas operations in Mississippi, Oklahoma, West Virginia, and along the Gulf Coast.
Penn Virginia earned $50.75 million on revenue of $852.95 million last year.