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  • Permit Activity last week.  
    • PA – 33 permits; Chesapeake in Bradford again; XTO in Butler; Cabot in Susquehanna; EQT in Washington.
    • OH –9 permits; American Energy Utica in Harrison; Antero in Monroe.

Expo/Industry events for the next few months:

Midstream PA 2014, November 18TH, Penn State

PA’s first midstream conference.  Speakers from MarkWest, Williams, UGI and more.  You will learn what’s coming in midstream in 2015. Limited sponsorships and seating.

Register now to reserve your seat http://midstreampa2014.com/wordpress/

Governor Corbett Rally, October 26th Beaver PA

Governor Corbett has his hand on the wheel, his foot on the gas and is ready to lead Beaver County and Southwestern Pennsylvania into a new era of prosperity! 

Please Join:
Chuck Betters
Representative Jim Christiana
Chuck Copeland
Rick Granati
Representative Jim Marshall
Commissioner Dennis Nichols
Senator Elder Vogel

As they welcome  Tom Corbett  Governor, Commonwealth of Pennsylvania to Beaver County Sunday, October 26, 2014 1 pm The Gazebo at Irvine Park at the corner of Market & Third Streets | Beaver, PA.
This is not just another election, Beaver County’s future depends on it!

For questions please contact Robert at rjohnson@tomcorbettforgovernor.com

OOGA Oilfield Expo and Technology Conference, Dec 3-4, Cleveland

Look for an exciting program that will provide information for both conventional operators and shale producers.

  • Learn about
  1. Horizontal drilling in conventional reservoirs from Greg Mason of The Energy Cooperative and Mark Lytle of Buckeye Oil Producing.  
  2. Enhanced oilfield recovery by Ohio’s own Batelle.
  • Hear from nationally renowned Wunderlich Securities which will present a Utica Shale Economic Analysis, providing the audience with a unique perspective on the economics of this emerging shale play.   
  • OOGA is excited to host Halliburton who will discuss re-fracing horizontal laterals in shale formations.

http://ooga.org/expo/

http://www.shaledirectories.com/site/oil-and-gas-expo-information.html

Latest facts and a rumor from the Marcellus and Utica Shale

  • Thoughts for the week  

1. Utica Summit II highlights:

  • About 90% of upstream operators in Utica for the next 5 years are there now. New players might emerge, but they will not significantly change the trend of upstream development.
  • For now, midstream companies have caught up producers insofar as processing capacity, if not gathering lines.  However they will need to continue planned construction to keep up.
  • Neither producer or midstream companies are experiencing major supply shortages, including labor (Gulf Coast has major skilled labor shortages)
  • Downstream opportunities will largely depend on building crackers and connector-to-cracker pipelines and the pipelines securing redundancy of ethane access. Midstream companies will play major role in investing into these projects. This decision will be made over the next 1-2 years.
  • Further downstream industries will continue to expand around the greater region with the next 5 years largely due to growth of demand for ethylene and polyethylene and closeness to the consumer market. Until the cracker(s) reach a no-return building phase, thereby triggering low price future contracts for residue; it is unlikely that any major decision on arrival of new full vertically-integrated production of chemicals-compounders-converters will take place.
  • Arrival of foreign companies and small-to-mid-size companies is more probable for chemical and compounding industry. Emergence of foreign-owned converters is less likely due to high export and transportation cost of final products. However repatriation of Asian compounders and extruders/molders may materialize.

2. Evonik Oil & Gas Symposium

I attended Evonik’s Oil & Gas Symposium in Houston this past week.  There were presentations by two companies, Spears Associates and Wood McKenzie, which track oil and gas production in the U.S.  Both presentations commented on the fact that oil would have to go to $70 or below to seriously impact the production in the U.S.  If cutbacks in production were to occur, it would probably be the second half of 2015 before we began to see the impact of the drilling cutbacks.

I have stated in previous newsletter that the reductions in oil drilling could result in the rigs being moved back to PA for more natural gas drilling.  I asked Jeff Spears of Spears Associates if that could occur.  Spears stated that natural gas production is so efficient in the PA that there is no need for any more rigs.  Marcellus production is up 20% over last year so there’s no need for more rigs.

  • Cabot’s 3rd Qtr. Update.  Cabot Oil Gas Corp. said its third-quarter earnings grew 44% on the strength of higher production volume in key segments.

    As a company benefiting from the current energy boom, Cabot had posted stronger earnings over the past few years. Still, the recent results missed Wall Street expectations. Earlier this year, the company said it would spend $210 million to boost acreage in the Eagle Ford Shale, a rock formation in south Texas, increasing its position in the area to about 83,000 net acres from 53,000.

    Overall, the Houston-based company posted a profit of $100.8 million compared with $69.9 million a year earlier. Earnings per share increased to 24 cents a share from 17 cents a share a year earlier.

    Excluding special items such as sale of assets, per-share earnings fell to 20 cents from 18 cents a year earlier. Revenue grew 17.5% to $512 million.

    Production volume rose to 132.4 billion cubic feet equivalent, an increase of 24% over last year's comparable quarter. Production volume for liquids, including crude oil, condensate and natural gas liquids, increased 7% to 961,000 barrels.

    Natural gas price realizations, including the effect of hedges, were $3.06 per thousand cubic feet, down 9% compared to the third quarter of 2013. Oil price realizations, including the effect of hedges, were $94.79 per barrel, also down 9% from a year earlier.

    The company reaffirmed its 2015 production growth guidance range of 20% to 30%. Cabot expects to drill 180-to-190 net wells in 2015, including 95-to-100 net wells in the Marcellus Shale and 80-to-85 net wells in the Eagle Ford Shale.
     
  • Southwestern 3rd Qtr. Update.  Southwestern placed 18 new wells on production in the Marcellus Shale and had net gas production from the Marcellus Shale of 66 Bcf, up approximately 47% from 45 Bcf in the third quarter of 2013. Gross operated production in the Marcellus Shale was approximately 840 MMcf per day at September 30, 2014.

    As of September 30, 2014, Southwestern had 234 operated wells on production and 102 wells in progress. Of the operated wells on production, 233 were horizontal wells of which 109 were located in Susquehanna County, 103 were located in Bradford County and 21 were located in Lycoming County. Of the 102 wells in progress, 36 were either waiting on completion or waiting to be placed to sales, including 19 in Susquehanna County, 16 in Bradford County and 1 in Wyoming County.
     
  • The Koreans are coming to OH.  The investment arm of Korea’s largest in-city natural gas distributor, Samchully Asset Management, said Monday it has completed the acquisition for $612 million of a 34% interest in Cardinal Gas Services, located in Ohio’s piece of the Utica Shale play.

    Total E&P USA and EV Energy Partners were the sellers in the deal, owning 25% and 9% of Cardinal Gas, respectively.

    For purposes of the acquisition, Samchully Asset Management established a special purpose vehicle (SPV) owned by a new fund, with investors comprised of Korean pension funds and E1, a Korean strategic investor.

    “We are pleased to announce the acquisition of Cardinal Gas Services, which is a continuation of our focus on investing in North American energy infrastructure,” said DH Kim, Chief Investment Officer, Samchully Asset.

    “We are very excited to find an opportunity in the Utica Shale, which we view as one of the premier basins in North America, and we are seeking opportunities to add value, including long-term commodity off-take contracts to the Korean and Asian markets and additional midstream infrastructure in the northeast,” according to Kim.

    Cardinal Gas is a wet-gas gathering system in the Utica, established in 2011, and operated by Access Midstream Partners, which will continue to own the remaining 66% of the system, backed by 20-year, cost-of-service contracts.

    The Cardinal deal marks Samchully’s second direct investment in the North American midstream sector. The company purchased a 34% interest in a gas processing plant in February 2013.
     
  • EQT drilling in multiple shales.  EQT Corp., a Downtown-based oil and gas company, reported net income of $98.6 million, or 65 cents per share, for the third quarter. That’s up from $88.3 million, or 58 cents per share, for the same time period last year.

    The company began drilling 42 new wells in the Marcellus Shale, 13 in the Upper Devonian shales and 36 in the Huron shale during the past three months.

    NOTE: EQT is drilling in 3 shale plays. Its rigs drilling in the Devonian and Huron shales are not captured by Baker Hughes rig counts.  There are more rigs in PA than being counted.
     
  • Rex has good 3rd Qtr.  State College, Pa-based producer Rex Energy said Monday its third-quarter production rose by 72% and it bumped-up its full-year production projections, SMG finds.

    Third-quarter production totaled 169.7 million cubic feet-equivalent per day (MMcfe/d), up 72% from the year-ago quarter, and exceeded by 3% the high end of the company’s production guidance of 159-165 MMcfe/d.
     
  • Wooly worm predicting cold winter. The winner of the 37th Annual Woolly Worm Festival Saturday in Banner Elk is predicting a cold and snowy winter for the region.

    Experts examined Kwazimodo's 13 fuzzy brown and black bands to determine the severity of the season. It is believed that the more intense the black is, the harsher the winter will be.

    Here's the prediction:
    • Weeks 1-4 (December 21-January 17) - Snowy with below normal temperatures
    • Week 5 (January 18-24) - Light snow with below normal temperatures
    • Weeks 6-10 (January 25-February 28) - Below average temperatures with little or no snow
    • Week 11 (March 1-7) - Moderate snow and below normal temperatures
    • Weeks 12-13 (March 8-21) - Snowy with below normal temperatures

Kwazimodo's prediction falls in line with what human forecasters are saying.

  • Niobrara increases production despite falling prices.  While some major shale plays throughout the United States have experienced a setback in drilling due to falling oil prices, Colorado has remained immune to it.

    According to Mark Jaffe of the Denver Post, production from the Niobrara Shale is projected to rise in November for both oil and gas.
     
  • Enlink expands assets in the Marcellus and Utica.  EnLink Midstream Partners announced that it has acquired equity interests in E2 Appalachian Compression from EnLink Midstream.  The total consideration for the transaction is approximately $193 million, including a cash payment of $163 million and approximately 1.0 million ENLK units. ENLC expects to use the majority of the cash it received in the transaction to repay indebtedness

    EnLink Midstream’s strategy in the Utica and Marcellus shale plays is primarily focused on stabilizing and transporting condensate via pipeline, rail, barge and trucking operations. The addition of the E2 assets further builds upon the Partnership’s existing platform in the region, where EnLink Midstream expects to have invested approximately $700 million by the end of 2015, including the drop down of E2. The E2 assets are supported by a long-term, fee-based contract, including minimum volume commitments, with Antero Resources (NYSE: AR), one of the most active drillers in the Utica and Marcellus region. Once all the E2 stabilization and compression facilities are complete in the first half of 2015, they are expected to generate approximately $20-25 million per year of adjusted EBITDA.  

    “We continue to make significant progress and enhance our position for substantial growth in the Utica and Marcellus shale plays,” said Barry E. Davis, EnLink Midstream President and Chief Executive Officer. “Our relationship with Antero Resources, a leading oil and gas exploration and production company in the region, is a key component of this growth, and we expect additional opportunities from our expanded platform in the region.

    E2’s assets include five condensate stabilization and natural gas compression stations with combined capacities of 19,000 barrels per day (bpd) of condensate stabilization and 580 million cubic feet per day (MMcf/d) of natural gas compression. Currently, three of the five stations are in service and commercial start-up of the two remaining stations is expected in the first half of 2015. By the end of 2015, EnLink Midstream’s assets in the Ohio River Valley are expected to include approximately 250 miles of crude and stabilized condensate pipelines, 11 condensate stabilization and gas compression stations with a total capacity of approximately 60,000 barrels per day of condensate and approximately 1.2 Bcf per day of natural gas compression, over 110 trucks and rail and barge terminals.
     
  • How do you compare?  Should you decide to make a move for more money receiving a certification from an accredited school can guarantee a salary of around $100,000 per year, but that’s just the beginning of the pay scale. Check out the list from Marcellusshalejobs.com below to see which positions offer the greatest compensation.
     
  • $238,000 per year – Drilling Consultant
     
  • $192,000 per year – Directional Driller
     
  • $180,000 per year – Foreman or Superintendent
     
  • $150,000 per year – Workover or Completion Driller/Engineer
     
  • $145,000 per year – Reservoir Engineer
     
  • $140,000 per year – Rig Manager
     
  • $125,000 per year – Geoscientist or Geologist
     
  • $100,000 per year – Coil Tubing Specialist

Rig Count

  • Baker Hughes Rigs count for the October 17th reporting week.  Again we believe Baker Hughes count is on the light side
     
  • PA
    • Marcellus 50 rigs – down 1
    • Utica 5 rigs – up 1    
  • Ohio
    • Utica 42 – unchanged
  • WV
    • Marcellus 31 up 1
  • TX
    • Eagle Ford – 209 down 2
    • Permian Basin – 469 up 3
  • NM
    • Permian Basin – 92 down 4
  • ND
    • Williston – 181 down 1
  • MT
    • Williston – 11 unchanged
  • CO
    • Niobrara – 57 unchanged
       
  • TOTAL U.S. Rig Count 1918 down 12

PA Permits for October 16, to October 23, 2014

       County               Township               E&P Companies

1.    Allegheny            Foward                    EQT
2.    Bradford               Overton                   Chesapeake
3.    Bradford               Overton                    Chesapeake
4.    Bradford               Overton                    Chesapeake
5.    Bradford               Overton                    Chesapeake
6.    Bradford                Wilmot                    Chesapeake
7.    Bradford                Wilmot                    Chesapeake
8.    Butler                    Connoquenessing     Rex
9.    Butler                    Connoquenessing     Rex
10.    Butler                  Connoquenessing     XTO
11.    Butler                   Donegal                   XTO
12.    Butler                   Donegal                   XTO
13.    Butler                   Clinton                     Range
14.    McKean                Norwich                   Seneca
15.    McKean                Norwich                   Seneca
16.    Susquehanna        Ararat                      Cabot
17.    Susquehanna        Ararat                      Cabot
18.    Susquehanna        Ararat                      Cabot
19.    Susquehanna        Ararat                      Cabot
20.    Susquehanna        Ararat                      Cabot
21.    Susquehanna        Ararat                      Cabot
22.    Susquehanna        Auburn                     Chesapeake
23.    Susquehanna        Auburn                     Chesapeake
24.    Susquehanna        Bridgewater               WPX
25.    Washington         Jefferson                    Range
26.    Washington         Nottingham                EQT
27.    Washington         Nottingham                EQT
28.    Washington         Nottingham                EQT
29.    Washington         Nottingham                EQT
30.    Washington         Nottingham                EQT
31.    Washington         Nottingham                EQT
32.    Wyoming            Braintrim                    Chesapeake
33.    Wyoming            Braintrim                    Chesapeake

OH Permits – week ending October 18th, 2014

       County              Township                E&P Companies

1.    Belmont               Smith                    Rice
2.    Harrison               Franklin                Amer. Ener. Utica
3.    Harrison               Franklin                Amer. Ener. Utica
4.    Harrison               Short Creek          Amer. Ener. Utica
5.    Monroe                Seneca                Antero
6.    Monroe                Seneca                Antero
7.    Monroe                Seneca                Antero
8.    Monroe                Seneca                Antero
9.    Monroe                Seneca                Antero


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Joe Barone jbarone@shaledirectories.com 610.764.1232
Vera Anderson vera@shaledirectories.com 570.337.7149

 

Midstream PA