BusinessCreator, Inc.

NewsLetters

Permit Activity last week.  

  • PA – 7; Range in Washington County
  • OH –1; XTO in Belmont County

Expo/Industry events for the next few months:

OOGA Winter Meeting – March 11-13, 2015, Columbus, OH

OOGA’s featured speaker will be Dr. Philip K. Verleger, Jr. is Owner and President of PKVerleger LLC, an independent consulting firm. Dr. Verleger’s research focuses primarily on the function and structure of energy commodity markets. His studies also encompass the changing relationship between the energy and economic sectors.

http://oogawintermeeting.com/

Utica Upstream 2015 – April 8, 2015, Canton, OH

If you are a business that serves the oil and gas economy in the Utica Shale, you will need the best information going forward in 2015. These experts and more will give you what you need.

https://www.cantonchamber.org/utica-upstream

Upstream PA 2015 – April 16, 2015 Penn State

David Spigelmyer, Marcellus Shale Coalition President, will be the featured speaker.  Spigelmyer along with some E&P Companies providing an overview for upstream activity in 2015.  Additionally, industry experts will comment on oil and gas pricing and government actions impacting the oil and gas industry.  

If you’re doing business in the upstream market in PA, this is a must attend seminar.

http://upstreampa2015.com/

Latest facts and a rumor from the Marcellus and Utica Shale

  • Governor Wolfe’s tax puts Shell cracker plant at risk.  Royal Dutch Shell warned Gov. Tom Wolf that policies which hurt gas production could affect the company's decision on whether to build a multibillion-dollar plant in Beaver County to turn ethane into plastics, the head of a gas industry group said Wednesday.

    “I sat in a meeting with Gov. Wolf in August, where leadership from Shell looked the now-governor directly in the eye and said, ‘If you jeopardize the ethane supply, we likely don't invest here,' Marcellus Shale Coalition President David Spigelmyer told Tribune-Review editors and reporters. “That's a big deal. We need to make sure we have opportunities to invest and grow.”

    The head of the North Fayette-based advocacy group and industry lobbyist said he has no inside knowledge on whether Shell will build the so-called ethane cracker.

    Spigelmyer said Wolf's proposal to collect 5 percent of the money producers get from wells and 4.7 cents for every thousand cubic feet coming from wells threatens investments and could slow production of gas and related liquids, such as ethane.

    Shell said it determined in April it would have enough ethane to operate the plant if it builds, with 10 contracts lasting up to 20 years. The company said the plant could employ 400 people and outside projections put the number of related jobs in the thousands.

    “At no time has Shell linked the potential future of the proposed petrochemical facility with Gov. Wolf's proposed natural gas severance tax,” company spokeswoman Kimberly Windon said in an email. “Shell has always maintained that the ethane supply for the proposed facility would come from the region.”

    Wolf's office confirmed he met while campaigning in Pittsburgh last summer with energy industry officials, but would not specify who attended, or say who initiated the sit-down.

    “The severance tax is not going to drive industry out of the state,” said Wolf spokesman Jeff Sheridan. He said Wolf “wants this industry to succeed. He understands the plant is a game-changer.”

    Wolf's plan to fund public education with up to $1 billion a year from the gas taxes, one of his top campaign platforms in last year's election, would replace a per-well impact fee that collects more than $200 million a year. Spigelmyer repeated industry concerns that the tax is considered at the wrong time for a sector cutting back on drilling plans — and in some cases laying off workers — because of low gas and oil prices.

    Companies working in Pennsylvania, which last year took a record amount of gas from shale, have announced a combined $8 billion in reductions to capital spending this year, Spigelmyer said. Gas prices that hit two-year lows last month, combined with a global crash in oil prices, reduced the number of drilling rigs operating in shale plays to their lowest point in years. Companies that contract with gas producers have announced thousands of layoffs nationwide.

    “This industry today cannot bear an additional burden. We're already underwater in a lot of areas of the commonwealth,” he said.

    Despite the cuts, the industry has shown no sign of slowing production because of more efficient drilling strategies. Fort Worth-based Range Resources Corp., Pennsylvania's third largest shale producer, cut its spending by 46 percent and laid off 8 percent of its workforce in Oklahoma but predicts a 20 percent increase in gas, propane and ethane production.

    “We think there's going to be a lot of gas demand, and gas is going to be a good place to be,” CEO Jeff Ventura told analysts Wednesday, a day after Range reported record profits and revenues last year. Range plans to provide ethane to the cracker if Shell builds it.

    Shell exercised its option to buy a former zinc smelter site along the Ohio River from Horsehead Holding Corp., applied for environmental permits and has spent millions of dollars preparing the site. But Shell officials said it could be years before the company decides whether to build.

    Uncertainty over taxes, combined with lower prices producers are getting in areas with limited pipeline access, threaten such investments, Spigelmyer said. Last week, driller Huntley & Huntley told Harmar officials it was canceling a plan to drill there because of concerns over the tax.

    “We believe that the tax approach that is being embraced by the Wolf administration is an onerous one that would make us uncompetitive with neighboring Ohio,” Spigelmyer said.

    The quick increase in production in Appalachia before pipelines were built to take gas to attractive markets fed a glut that pushes prices lower than the national benchmark, especially in the Northeast corner of the state. Spigelmyer said. Wolf’s proposal results in an 8.4 percent tax in that part of the state and a 7.1 percent rate closer to Pittsburgh.

    Sheridan said Wolf's office puts the effective rate at 5.7 to 5.8 percent.

    “What the governor is proposing to do is investing in education, but also put some money into building a sustainable bridge to the future,” he said.
     
  • Chesapeake’s Utica update.  Chesapeake Energy will curtail drilling in the Utica Shale as it cuts back in response to low natural gas and oil prices.

    The company plans to spend up to $4.5 billion on drilling around the country, officials said in a conference call Wednesday.

    That’s 37 percent less than last year, and will fund approximately 40 rigs, the company’s lowest number since 2004. Last year, the Oklahoma City-based driller used 64 rigs.

    CEO Doug Lawler said Chesapeake is managing its activity based on oil at $55 a barrel and natural gas at $3 per thousand cubic feet.
    UTICA SHALE

    Ten percent of the drilling budget will be spent on Utica wells, where Chesapeake plans to use three to five rigs, down from eight last year, and four fracking crews. Utica well costs averaged $6.6 million last year, and company officials said there is a chance they could drop below $6 million this year. The region had the lowest well costs outside Oklahoma. Utica wells also increased in lateral length and number of frack stages, averaging 6,000 feet and 27 stages.

    Chesapeake has 435 producing wells in the Utica, the most of any driller in Ohio.

    This year it plans to complete three to five wells in the oil window, which has proved difficult to produce. Utica net production averaged 100,000 barrels of oil equivalent per day during the fourth quarter, an increase of 17 percent over the third quarter. Natural gas made up 62 percent of production, followed by natural-gas liquids with 28 percent and oil with 10 percent.

    The 51 Utica wells that began production during the fourth quarter averaged 1,280 barrels of oil equivalent per day, and Chesapeake ended the year with 166 Utica wells in various stages of completion or waiting on pipeline.
     
  • Gulfport’s 2014 Utica results and 2015 forecast.  In the Utica Shale, Gulfport spud 85 gross (67.2 net) wells and turned-to-sales 63 gross (47.4 net) wells during 2014. During the fourth quarter, net production from Gulfport's Utica acreage averaged approximately 353.4 MMcfd, an increase of 450% over the fourth quarter of 2013. "Our Utica Shale production for the fourth quarter of 2014 increased 55% sequentially over the third quarter of 2014, driven by the strong well performance of the 22 gross wells that were turned-to-sales during the quarter. We continue to be pleased with the results of our managed pressure program, and during the fourth quarter of 2014 we turned-to-sales our first four well pad in the dry gas phase window of play under the program. While we continue to monitor the data, the wells are performing in line with expectations," stated Mr. Moore.

    At present, Gulfport has four operating horizontal rigs drilling in the play but plans to release one of these rigs by the end of the first quarter. During 2015, Gulfport has budgeted $400 million to $430 million to drill approximately 46 to 52 gross (28 to 32 net) horizontal wells and turn-to-sales 49 to 53 gross (42 to 46 net) horizontal wells in the Utica. In addition, Gulfport anticipates spending $125 million to $140 million on non-operated activities taking place on its acreage by other operators who plan to drill approximately 11 to 16 gross (4 to 6 net) horizontal wells and turn-to-sales 50 to 64 gross (7 to 9 net) horizontal wells. Mr. Moore commented, "During 2015, we currently expect all Utica Shale drilling activities to take place in the wet gas and dry gas phase windows, the highest rate of return areas of the play. We continue to see improvements on the ground and as a result of operating efficiencies and the service cost reductions we have received to date; we currently expect approximately 15% lower well costs during 2015."

    Today, the Company currently has approximately 188,000 gross (184,000 net) acres under lease in the Utica Shale.
     
  • More sand more productive wells.  As shale gas operators in the Marcellus have been saying for the past year, more sand is going into the ground in Pennsylvania to keep fractures open while gas flows out. And, consequently, more sand is coming out of the ground, along with the gush of flowback water that streams out of wells just after they're fracked.

    That’s evident from the latest waste production data released by the Pennsylvania Department of Environmental Protection.

    In 2011, companies reported disposing of about 14,500 tons of flowback sand, DEP records show. Last year, that number exceeded 43,000 tons.

    That's despite the fact that 1,957 shale wells were started in 2011, while only 1,373 began development in 2014.

    “Our people are using more sand, everybody is using more sand,” said Rodney Waller, senior vice president with Texas-based Range Resources, at an industry conference in October.

    Fracturing sand, extracted from silica mines in states including Wisconsin and Minnesota, is a fine grain that can withstand a certain amount of pressure, as set by industry standards.

    Several Marcellus Shale players have begun to put numbers on their sand use growth.

    Rex Energy Corp., a State College company whose main focus is in Butler County, has more than doubled the amount of sand it uses for each foot of its horizontal wells, while at the same time increasing how long those horizontal sections stretch out by 30 percent in the last five years.

    The operator also reported a significant improvement in how wells produced during their first month on the job and a decrease in how quickly their production tapered off during the first year.

    Improvement did come at a price though, Rex said. While an average, conventional frack job cost the company about $4.7 million in 2010, its “Super-Frac” strategy is running closer to $6 million a pop this year.

    Companies now measure well economics by the foot and, for all the Marcellus operators that talk about it, the cost to complete a new well has decreased — even one with much longer horizontal sections, many more frack stages and a lot more sand.

    Cabot Oil & Gas Corp., for example, boosted its sand use by 71 percent, on a per foot basis, since 2011, while decreasing completion costs by 32 percent, the Texas-based operator reported late last year.

    Over the past year, increased sand usage has predictably spurred logistical issues — not just in getting the fine mesh sand to well sites, which requires more truck and train trips, but also in hauling the resulting flowback sand to disposal facilities.

    The vast majority of the sand recovered from shale wells last year went to landfills, and of that, about 51 percent traveled to out-of-state facilities. About 500 tons, a small fraction, was shipped to landfills in Utah and Michigan, which specialize in handling low-level radioactive waste.
     
  • Cabot will cut rigs to 3 from 5.  Cabot Oil & Gas Corp. will reduce its gas drilling rig count in the Marcellus shale to three from five by the middle of this year as the energy company copes with low oil and gas prices.

    The Houston-based company, which is the second largest shale gas producer in Pennsylvania, said Friday it was cutting its capital budget by about 40 percent to $900 million, following a trend of drillers making less money because of the low commodity prices. It still plans to drill about 70 wells in the Marcellus and increase production by up to 18 percent over last year.
     
  • XTO well in Butler.  The XTO Patton Unit 1H Utica well in Connoquenessing Township (By Lutherlyn on Rt 528) first production report is now available.  For 129 operating days in the second half of 2014 this dry gas Utica well produced 778,970 Mcf.  That is almost double the production rate of the (previously) single best well in Butler County the Thomas s Pajer AL 3H in Buffalo Township (a dry Marcellus well).  (RUMOR)
     
  • Believe it or not! Yes, in Algeria. There are anti-fracking demonstrations in Algeria.  I guess the Sierra Club and Josh Fox are expanding their focus.
     
  • No worrying about Tasmania.  The oil and gas industry does not have to worry about Tasmania turning the oil and gas industry upside down.  The government just voted to ban fracking for five years.  Thank God!
     
  • Chesapeake cuts 2015 CAPEX.  Chesapeake Energy Corp on Wednesday said it would slash its 2015 spending and rig count in response to low crude oil prices that also pushed its fourth-quarter profit below Wall Street expectations.

    Shares of Chesapeake fell more than 11 percent, hurt by the earnings miss and a disappointing production outlook, analysts said.

    Crude prices have slumped more than 50 percent since June as the global oil market remains oversupplied in a time of waning demand. Exploration and production companies have responded by cutting their budgets to conserve cash.

    Chesapeake forecast total capital expenditures of $4 billion to $4.5 billion this year, down from $6.7 billion in 2014.
     
  • Range has strong 4th Qtr. Independent oil and gas company Range Resources Corp. overcame sharply lower commodity prices to report strong fourth quarter 2014 results. Significantly higher production, primarily in the Marcellus shale region, led to the improvement.

    The company's adjusted earnings per share (excluding one-time items and stock-based compensation) came in at 47 cents, which was way ahead of the Zacks Consensus Estimate of 22 cents and the year-ago adjusted profit of 24 cents.

    Fourth quarter total revenue of $872.2 million comfortably beat the Zacks Consensus Estimate of $503 million and grew 104% year over year.
     
  • MarkWest has a strong quarter and year.  “2014 was an exceptional year of growth at MarkWest as we completed 16 major processing and fractionation projects and delivered record operational and financial performance,” stated Frank Semple, Chairman, President and Chief Executive Officer of MarkWest. “Given the recent decline in commodity prices we are working with our producer customers to optimize our midstream operations to support their revised capital plans. The majority of our capital expenditures are in the Marcellus where we are currently processing approximately 90 percent of all rich-gas production. These Northeast Shales continue to provide the best drilling economics in the U.S. and our producer customers continue to deliver strong execution and volume growth. We look forward to another year of operational excellence, best-of-class customer service and solid distribution growth for our unitholders."
     
  • Carrizo reports strong 4th Qtr.  Carrizo Oil & Gas, Inc. CRZO, +1.32% today announced the Company's financial results for the fourth quarter of 2014 and provided an operational update, which included the following highlights:
     
    • Record Oil Production of 22,130 Bbls/d, 70% above the fourth quarter of 2013
    • Record Total Production of 37,696 Boe/d, 52% above the fourth quarter of 2013
    • Oil Revenue of $140.9 million, representing 86% of total revenue, and 28% above the fourth quarter of 2013
    • Total Revenue of $163.3 million, 26% above the fourth quarter of 2013
    • Income From Continuing Operations of $129.5 million, or $2.79 per diluted share, and Adjusted Net Income (as defined below) of $14.8 million, or $0.32 per diluted share
    • Adjusted EBITDA (as defined below) of $128.5 million, 27% above the fourth quarter of 2013
    • Delivered 513% reserve replacement from all sources with a drill-bit F&D cost of $15.73 per Bo
    • Reiterating 2015 crude oil production growth target of 17%
       
  • Statoil considering purchase of EOG.  Statoil is arguably the most shale inspired NOC out there, and Statoil has a track record of signing deals with US independents to gain exposure in US shale plays. In 2008, Statoil entered the Marcellus through a Chesapeake partnership, and in 2011, Statoil became a major player in the Bakken via the acquisition of Brigham Exploration.

    EOG is the leader in US unconventional oil E&P, and would make sense as a target for a large major or NOC interested in taking advantage of the downturn to secure a lasting US liquids foothold. EOG has been talked about as a target before, most notably in early-2013, when both Chevron and Statoil were mentioned as potential suitors for the shale leader.

    EOG's current market cap is $50bn, a sizable figure that limits potential buyers to just a handful of the largest oil and gas companies (of which Statoil would certainly be one).

    The speculation revives memories of the bid for XTO by Exxon in the downturn of 2008/2009. That deal was a big integrated targeting US unconventional gas exposure and this potential deal would be a big NOC buying US unconventional oil exposure - both deals coming in times of industry distress.

    Many industry experts think the drop in oil prices will lead to further consolidation of the industry.  Could this be the first of many?  We’ll keep you updated.
     
  • Rex Energy production up, but loss for the year.  Rex Energy produced 66 percent more natural gas last year than it did in 2013, clocking in at an average 154.4 million cubic feet per day (MMcfe/d), the State College--based driller reported Wednesday.

    During the last three months of the year, the company reported production of 196 MMcfe/d, a 78 percent jump over the same period in 2013, the company said in its quarterly and year-end earnings report.

    Rex Energy reported a net loss for the fourth quarter of $72 million, or $1.35 per share, compared to a net loss of $15 million or 26 cents per share, in the fourth quarter of 2013. For the full year, the company reported a net loss of $50 million, or 94 cents per share, compared to a net loss of $2 million, or 5 cents per share in 2013.

    In the Marcellus Shale formation of Pennsylvania and Utica Shale in Ohio, the company drilled 51 wells and placed 52 wells into sales. In Pennsylvania, the company operates in Butler, Westmoreland, Clearfield and Centre counties.

    Proved reserves, a term referring to what drillers can economically extract from the ground, increased 57 percent year-over-year to 1.3 trillion cubic feet of natural gas equivalent.

Rig Count

  • Baker Hughes Rigs count for the week Feb. 27th.
     
  • PA
    • Marcellus 52 rigs – unchanged
    • Utica 2 unchanged
  • Ohio
    • Utica 36 down 1
  • WV
    • Marcellus 16 down 1
  • TX
    • Eagle Ford – 157 down 3
    • Permian Basin – 290 down 3
  • NM
    • Permian Basin – 65 down 4
  • ND
    • Williston – 108 down 11
  • MT
    • Williston – 3 down 1
  • CO
    • Niobrara – 36 unchanged
       
  • TOTAL U.S. Rig Count 1267 down 43

PA Permits for February 19, to February 26, 2015

       County                 Township             E&P Companies

1.    Washington            Hanover                Range
2.    Washington            Hanover                Range
3.    Washington            Hanover                Range
4.    Washington            Hanover                Range
5.    Washington            Jefferson                Range
6.    Washington            Jefferson                Range
7.    Westmoreland         Derry                    WPX

OH Permits – weeks ending February 21, 2015

       County                Township             E&P Companies

1.    Belmont                Mead                    XTO


Maximize your 2015 marketing budget by being a member in ShaleDirectories.com

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

Northeast Supply Enhancement