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NewsLetters

Permit Activity last week.  

  • PA – 21; Range in Lycoming; Consol in Westmoreland
  • OH –10; American Energy Utica in Guernsey; Triad Hunter in Monroe

Expo/Industry events for the next few months

Utica Midstream
June 10, 2015
Walsh University
North Canton, OH

The midstream business is very active in Ohio. There are 13 pipelines that are being built or in the early start up phases in Ohio. If you want to get the latest information from the major midstream companies, plan on attending Utica Midstream seminar. It will feature speakers from Williams, Marathon Petroleum, EnLink, Spectra Energy and Blue Diamond.

Register now! https://www.cantonchamber.org/utica-midstream

DUG East
June 23-25, 2015
Pittsburgh, PA

The DUG East conference and exhibition is the world’s leading event focused on unconventional resource development in the vast Marcellus and Utica shale plays, as well as emerging plays throughout the Appalachian region. Each year, thousands of oil and gas industry professionals gather for two days of world-class presentations and exclusive networking opportunities. Conference sessions are impactful and informative, covering a wide range of timely topics around exploration, drilling, completions and production.   

Visit us at booth 717

www.DUGEast.com

Latest facts and a rumor from the Marcellus and Utica Shale

  • Magnum sells WV acreage.  Magnum Hunter Resources (NASDAQ: MHR) has announced an agreement to sell non-core, undeveloped Utica shale acreage in West Virginia for $40.8 million. The sale of approximately 5,210 unproven acres is expected to close on May 28.

    According to Magnum Hunter CEO Gary Evans, the sale of the property made financial sense for the company. “The undeveloped properties to be sold pursuant to the agreement announced today are deemed non-core to Magnum Hunter and were not in our long-term drilling plan for this immediate area. Additionally, with lease expirations on the horizon on a large portion of this acreage, it made sense to sell these properties now to an industry competitor that already owns adjacent leases,” Evans explained in a press release.

    The sale of the Tyler County, West Virginia property barely made a dent in Magnum Hunter’s approximately 210,000 acres of Marcellus and Utica shale property in eastern Ohio and West Virginia.

    Although the acreage of the disposed land may be relatively small, Magnum Hunter has had good luck with its previous drilling in Tyler County. In 2014, one of the company’s wells on its Steve Winland pad recorded the highest natural gas production in the entire Utica shale.
     
  • Permian rig analysis.  Over the past 6 months, operators have shuffled their drilling rigs to focus on the best prospects in drilling inventory. This high grading means rig demand in the most economic areas of the Big 3 oil plays will fare better - not many operators are experimenting on the fringes in this commodity tape.

    By analyzing a basin's rig count at the county level at this point in the cycle, we can discern some insight on relative economics within the formation. Counties that are faring the best may be located above formational sweet spots that offer recovery rate advantages or have surface advantages (infrastructure) that reduce per barrel costs.

    Last week, we dug into the Eagle Ford county level trends, and this week, we take a look at the Permian. In the chart below, we've plotted two rig count trends by county: the decline from the peak is shown on the horizontal axis, while the change over the past several weeks is shown vertically. Because most of the major counties have declined fairly similarly in the Permian (-54% on average since peaking in January), looking at the recent change as the rig count has stabilized over the past month helps inform where operators feel the best about prospects as they have become more optimistic.


     
  • Low prices impacting Marcellus production.  Natural gas production in the Marcellus shale, which has grown over the past decade from next to nothing to the source of about a fifth of U.S. output, may decline for the first time if prices in the basin remain low for much longer, according to federal government data.

    Such a reduction may be worrisome since the United States is counting on the Marcellus to continue producing vast amounts of cheap gas needed to meet growing demand from industrial customers and power generators, and to enable the country to transition into a net gas exporter by 2017.

    The U.S. Energy Information Administration says production in the fast-growing field in Pennsylvania and West Virginia is set to remain flat for the next few years before beginning a very slow decline primarily because of depressed gas prices.

    Recent data supports signs of a slowdown. The number of rigs in the area has dwindled in recent months to its lowest since 2011, and drillers including Chesapeake Energy Corp and Cabot Oil & Gas Corp have temporarily shut in some production due to weak regional prices.

    Those low prices are threatening the basin with its first annual decline in output since producers started using hydraulic fracturing and horizontal drilling to develop the formation.

    But many private analysts say output from the Marcellus will continue to grow over the next several years as demand for gas increases and pipeline companies complete more projects to transport the fuel out of the region, boosting local prices that have fallen to their lowest in at least 14 years.
     
  • WPX finalizes Marcellus sale.  WPX Energy, a large natural gas producer in Colorado, Thursday said it has completed a sale announced earlier in May of $200 million in assets in the Marcellus Shale.

    The Tulsa, Oklahoma-based company sold off various assets in the northeastern part of the U.S., such as marketing contracts, transportation capacity and natural gas agreements to an undisclosed buyer.

    “We’re very pleased with the rapid closing of this previously announced agreement,” said Rick Muncrief, president and chief executive officer. “Once again, our team continues to deliver value for our shareholders.”

    The transaction, sold to an undisclosed buyer, marks the third divesture of the year for the company. WPX will also be released from $390 million in future demand payment obligations associated with 135 million Btu per day of firm transportation capacity on Transco’s Northeast Supply Link project.|

    That project will expand certain segments of the existing Transco pipeline in Pennsylvania and New Jersey.

    WPX Energy (NYSE: WPX) said in a statement that it intends to exit the Marcellus Shale and focus its attention on oil and gas properties in the western part of the country. In the past 12 months, the company has reached more than $1.5 billion in transactions.

    Physical operations in Westmoreland County in southwestern Pennsylvania are all that remain of WPX's Marcellus Shale assets, and are also targeted for divesture.

    Earlier this year, WPX also monetized additional Marcellus Shale holdings in Northeast Pennsylvania and completed the exit of its international interests in Argentina and Colombia.
     
  • Aubrey’s deal falls apart.  Aubrey McClendon's newly formed oil and gas company said last year it would buy the Ohio acreage belonging to Houston's Paloma Resources as part of a 130,000-acre, multi-company purchase. But the deal never happened.

    Paloma President Christopher O'Sullivan told Forbes that McClendon did not have the money. A spokesman for McClendon told the magazine that American Energy Partners LP didn't finish the transaction "for a variety of good reasons," but wouldn't elaborate.

    The deal fell apart two weeks before it was scheduled to close this year, O'Sullivan said.
     
  • Aubrey the “Fracking Cowboy.”  An interesting article by Forbes magazine about Aubrey.  http://www.forbes.com/sites/christopherhelman/2015/05/27/aubrey-mcclendon-frackings-cowboy-rides-again/
     
  • Swedish firm to tap in Nat Gas construction opportunities.  The world’s seventh largest construction company announced it has opened an office in Pennsylvania and has energy on its agenda.

    Skanska, a Sweden-based company, shared that its American division is making a new home in Pittsburgh and will be looking into opportunities in power and energy.  Geoff Murken, a vice president of operations for Skanska and also one of many who is helping to open the new office, said the company sees Pittsburgh as a “driven energy center.”  The new office will operate in Pennsylvania, along with all of Ohio and West Virginia.

    As reported by the Pittsburgh Business Times, “Murken said the energy work will fit into the heavy civil and industrial business he is leading.”  A few years ago, Skanska received the contract to build Chevron a new regional office campus in Moon Township, which turned out to be a good start to the company’s energy plans.  Skanska is also looking into opportunities in the Marcellus Shale formation, specifically downstream energy.  Murken also added that the company is eyeing a cracker plant that Royal Dutch Shell has finally decided to construct in Beaver County.

    According to the Pittsburgh Business Times, “Murken expects power and energy to grow into an increasingly important sector for Skanska.”  Along with expanding in the power and energy sector, Skanska is also known for being extremely environmentally-friendly.  In April, the company’s Bullitt Center in Seattle, Washington, was declared as “the world’s greenest commercial office building.”  The building has a life span of 250 years, 14,303 square feet of solar power, geothermal wells reaching 400 feet deep, 362 toxic chemicals on the “red list” and much, much more.
     
  • Storms affecting drilling in TX and OK. (Oilpro Daily) The impact of severe Texas/Oklahoma weather on oilfield activity has been a trending topic on Oilpro.com this week. Heavy rains and flooding are slowing both drilling and production activities.

    Lease roads are impassable in many areas, jobs are being delayed, and financial results are sure to be impacted this quarter as Texas and Oklahoma are home to over half of the rigs drilling in the United States. For example, Halliburton tells us they are experiencing some delays in getting equipment to locations due to soft, muddy conditions in some areas.

    But Wednesday evening, the oilfield weather story ratcheted up a notch in the Texas Panhandle. In northwestern Texas, a twister touched down and took a direct bead on a drilling rig. Here's a shot of the tornado that hit the rig from Twitter.

    The rig, drilling a horizontal well in the Granite Wash basin, took extensive damage, and 3 rig hands were injured (none life threateningly). Pictured below is the tornado just before it hit the rig.


    Photo credit: Shane Bodey, kfor.com

    Details are still fairly limited, but here is what we know right now:
     
    • A rig drilling in Hemphill county - which is located in northwestern Texas in the Granite Wash play - took a direct hit from a tornado that touched down around 5:20 PM on May 27, 2015


       
    • The rig was reportedly drilling for gas. There is only one rig drilling for gas in Hemphill County. 8 other rigs in the county are drilling for oil, all are drilling horizontally suggesting the rig hit is likely a newer, shale-ready rig
       
    • Three injuries were reported - one person was impaled in the abdomen, another had non-life-threatening injuries to the face, and the third suffered minor injuries. All were transported to nearby hospitals and were reported to be in stable condition
       
    • There was extensive damage to the rig
       
    • Access to the rig was initially somewhat limited by flooding and fallen debris, which had highways in the area closed down

Rig Count

Baker Hughes Rigs count for the week May 29, 2015
     

  • PA
    • Marcellus 45 down 3
    • Utica 2 up 1
  • Ohio
    • Utica 23 unchanged
  • WV
    • Marcellus 18 unchanged
  • TX
    • Eagle Ford – 110 up 3
    • Permian Basin  186 down 2
  • NM
    • Permian Basin – 46 up 1
  • ND
    • Williston – 77 down 1
  • MT
    • Williston – 0 unchangedCO
    • Niobrara –28 unchanged
       
  • TOTAL U.S. Rig Count 875 down 10

PA Permits for May 21, to May 28, 2015

      County                       Township                E&P Companies

1.    Bradford                     Standing Stone           Chesapeake
2.    Bradford                     Tuscarora                   Chesapeake
3.    Lycoming                   Cogan House              Range
4.    Lycoming                   Cogan House              Range
5.    Lycoming                   Cogan House              Range
6.    Lycoming                   Cogan House              Range
7.    Lycoming                   Cogan House              Range
8.    Lycoming                   Jackson                      Range
9.    Lycoming                   Lewis                          Range
10.    Lycoming                 McNett                        Chief
11.    McKean                   Sergeant                      Seneca
12.    Sullivan                    Fox                             Chesapeake
13.    Susquehanna           New Milford                  Southwestern
14.    Westmoreland         Allegheny                     Consol
15.    Westmoreland         Allegheny                     Consol
16.    Westmoreland         Allegheny                     Consol
17.    Westmoreland         Allegheny                     Consol
18.    Westmoreland         Allegheny                     Consol
19.    Westmoreland         Allegheny                     Consol
20.    Wyoming                Meshoppen                  Chesapeake
21.    Wyoming                Meshoppen                  Chesapeake


OH Permits – week ending May 16, 2015

       County                 Township             E&P Companies

1.    Belmont                Washington           XTO
2.    Guernsey               Londonderry         Amer. Ener. Utica
3.    Guernsey               Londonderry         Amer. Ener. Utica
4.    Guernsey               Londonderry         Amer. Ener. Utica
5.    Harrison                 Nottingham          Amer. Ener. Utica
6.    Harrison                 Nottingham          Amer. Ener. Utica
7.    Monroe                  Switzerland          Consol
8.    Monroe                  Ohio                    Triad Hunter
9.    Monroe                  Ohio                    Triad Hunter
10.   Monroe                 Ohio                    Triad Hunter


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