Shale Directories Conferences
7th Annual Utica Summit
October 10, 2019
North Canton, OH
Shale Insight Conference
October 22-24, 2019
David Lawrence Convention Center
7th Annual Midstream PA 2019
November 12, 2019
Penn Stater Conference Center
State College, PA
Latest facts and a rumor from the Marcellus, Utica, Permian, Eagle Ford, and Bakken Shale Plays
Big Oil Flashes the Plastic. Chevron and Exxon are beefing up their petrochemicals focus as demand for fossil fuels wanes. Big Oil needs big plastic. Companies like Chevron and Exxon Mobil earned that moniker for a reason, but as the petroleum market gets less lucrative and demand projections wane, their investments have shifted. Not long ago it was in the direction of natural gas, oil’s cleaner-burning hydrocarbon cousin. But so much of the fuel is being produced out of U.S. shale formations that the focus has shifted to adding value to it now. Investing in petrochemicals is as close as one can get to a no-brainer given the surfeit of the feedstock in North America.
FERC Supports Mountain Valley Pipeline. Regulators see minimal environmental impacts from a conduit that is planned to connect to the Mountain Valley Pipeline and deliver natural gas to North Carolina. The Federal Energy Regulatory Commission released its draft impact assessment for the MVP Southgate project July 26 for public comment. In its review, the commission said that the project would result in some adverse environmental impacts, but they would be reduced to “less-than-significant levels” with certain recommended adjustments.
Williams Seeks FERC Approval for Leidy South. Williams is seeking Federal Energy Regulatory Commission approval for its Leidy South pipeline project in Pennsylvania, Kallanish Energy reports.
The plan is to move natural gas from the Marcellus and Utica shales in the Appalachian Basin to markets along the Atlantic Seaboard by the 2021-2022 winter heating season.
The Ferc application was filed Thursday. The $531 million project by Williams’ subsidiary Transco will increase capacity by 582,400 million cubic feet per day (Mmcf/d) from the Leidy Hub and Zick interconnect in northcentral Pennsylvania, to points downstream in Transco’s Zone 5 and Zone 6 market areas.
That’s enough natural gas to serve roughly 2.5 million homes and enable power plants to switch from coal to natural gas, officials said.
Seneca Resources, Cabot Oil & Gas and UGI Utilities have executed binding, 15-year contracts for 100% of the capacity, Oklahoma-based Williams said in the Thursday announcement.
The in-service target date is Dec. 1, 2021.
The project includes 6.3 miles of existing pipeline replacement, 5.9 miles of new pipeline loops along the existing Transco pipeline corridor and enlarging two existing compressor stations. The project will also include two new compressor stations.
The project also includes a capacity lease with National Fuel Gas Supply to enable the project to connect Clermont, Pa., to the Leidy Hub and a lease of Meade Pipeline Co.’s undivided ownership in the Central Penn Line from Zick to River Road.
The project is designed to minimize environmental impacts by maximizing the use of existing Transco pipeline infrastructure and rights of way in Pennsylvania, officials said.
“The Leidy South project will allow Williams to continue to grow our strategic footprint in the gas-rich Marcellus region, creating a unique opportunity to expand Transco by leveraging recent expansions on Williams’ Northeast Gathering & Processing assets in Pennsylvania,” said Michael Dunn, Williams’ chief operating officer, in a statement.
Pennsylvania, the No. 2 gas producer in the U.S., still faces pipeline constraints in getting that gas to markets, he said.
Rice Brothers – EQT Story (Thanks, Rick Stouffer, Kallanish Energy) There’s no denying the Rice Brothers have guts, taking on them that bought them.
With the former company carrying their surname known as an industry innovator, a to-the-minute planner that left nothing to chance – the Brothers Rice were favorites to speak at conferences because of the success they brought to Rice Energy.
That success led to the sale of the independent producer to another Western Pennsylvania independent in 2017, EQT Corp. – for a very unshabby $6.7 billion, Kallanish Energy reports.
But no one in the industry really thought the Rice boys would spend the rest of their lives sitting in a room counting their considerable money from the sale. Former Rice Energy CEO Daniel J. Rice IV even joined the board of the acquirer.
Something wasn’t right
Something just wasn’t right to the Rices. They knew what they had sold to the larger EQT: top notch assets that would make EQT the U.S.’s largest dry gas producer for years to come. The Rices waited a few months, expecting EQT to absorb Rice, and take off.
When the takeoff didn’t materialize, Toby Z. and Derek Rice began formulating a plan to wrest control from the people who bought their company.
Three weeks ago, a situation many industry watchers never expected to happen, occurred: EQT shareholders overwhelmingly backed the eight new shareholders the Rice “Group” had put up, along with the four EQT-backed directors the Rices said they could work with.
A week ago, Toby, named EQT president and CEO the afternoon of the shareholders’ meeting by the newly reconstituted board, chaired his first quarterly analysts’ call to talk about EQT’s results. While not bad, EQT didn’t lose money during the second quarter, you could tell on the call, Toby was – is – chomping at the proverbial bit, to do at EQT what was accomplished at Rice Energy – on a much larger scale.
The diagnosis was correct
“Throughout the proxy contest, we communicated to our fellow shareholders that we believe EQT’s legacy performance was the result of poor project planning due to underutilized technology and a disconnected organization,” Toby said during the call.
“In our first 72 hours on the job, we were able to confirm our diagnosis was accurate.”
One of the main keys to how the Rices intend to get to the drilling cost touted from Day One of putting together a plan to take over EQT of $735 per foot is combo development, or drilling multiple wells from multiple pads simultaneously.
In the PowerPoint presentation that accompanied the second-quarter results, one slide compared a first-half 2019 development under the old EQT regime vs. what a meticulously planned Rice Energy development looked like pre-EQT takeover.
Spaghetti vs. straight edge-drawn lines
The graphic was almost shocking (see below) – like comparing spaghetti thrown at a wall vs. new and producing wells represented as lines drawn with straight edge and a sharpened pencil. Toby Rice said while the sharp looking graphic was from two years ago, the project currently is being drilled by EQT today – by the same crew that threw spaghetti earlier this year.
“Through the first six wells, EQT has drilled at a rate of 1,500 feet per day, a 50% improvement vs. the previous pad,” Toby said. “Drilling costs are trending to around $200 per foot, a 40% reduction in costs vs. our prior example.”
Toby said when EQT’s drilling teams are given “properly designed” development projects; they are nearly at targeted well cost goals, which for drilling are $190/foot.
Cost goals within reach
“With some additional leadership, improved engineering practices and the right pad layout, these cost goals are well within reach. Rounding out this development run, because we planned these wells so far in advance, curtailment issues are minimized and we expect all 12 wells to perform at or above type curve once turned online,” Toby added.
The idea is to take complex tasks and simplify them so employees totally understand the process and can implement same.
One way to make that work was the creation of the so-called Evolution Committee, chaired by Toby Rice and including Daniel Rice IV, Derek Rice, now executive vice president, exploration, Kyle Derham, EQT’s investor relations head, and Will Jordan, the company’s general counsel.
The ‘evolution’ of EQT
The Evolution Committee is dedicated to executing a smooth but expeditious transition to reconstruct the Company’s organization, technology, and operations.
“Over the last 130 years, EQT’s organizational structure has morphed into more than 50 departments that has led to a lack of accountability. We’ll reorganize the business into 16 departments with roles that better match the life cycle of a well,” according to Toby.
The new EQT president and CEO said a major principle is to make EQT the lowest-cost operator in the Appalachian Basin, to weather “what could be a challenging 2020 and position the business for long-term success when prices normalize.”
No asset fire sale
The new EQT also is targeting forward leverage of less than two times net debt-to-Ebitda, at the lower of strip prices or $2.50 per thousand cubic feet for gas. Asset sales are possible, but don’t look for a fire sale. Company management is open to divesting acreage or production if it fits within EQT’s capital allocation framework of maximizing free cash flow per share and net asset value.
The new Rice management team spent its first two weeks working on stabilizing what it considered a rather shaky business, lacking direction, and personnel not knowing what to expect with a new team coming in.
But a couple changes have been implemented. “One thing on the completion design front, when we walked in the door, there were 30 different (well) completion designs,” Derek Rice said during last week’s second-quarter teleconference. “We looked at all the data with the teams and we came to a conclusion that reducing that to one design, one proven design was efficient.
“What that allows us to do is not only predict the performance of our wells going forward, but it also gives our completions team the ability to procure the appropriate amount of materials on a go-forward basis.”
As the new EQT move forward, early results indicate the outside-the-company thought is so far, so good.
“I haven’t analyzed all their proposals and changes, but I hear positive commentary from investors,” Gabriele Sorbara, principal and senior equity analyst with The Williams Capital Group, told Kallanish Energy.
“There aren’t many places to go long in the gas sector. EQT continues to come up in discussions as a name to go long ….”
EPIC Midstream to Start Exporting Permian Oil. EPIC Midstream Holdings LP has begun filling a new 400,000 barrel per day (bpd) oil pipeline that stretches from the Permian Basin to the U.S. Gulf Coast and will start exporting from its own South Texas terminal by the end of this year, President Brian Freed said in an interview on Monday. The San Antonio pipeline operator has also begun construction on a second dock at its export terminal in Corpus Christi, Texas, that next year will be capable of loading tankers that carry up to 1 million barrels, known as Suezmax tankers, Freed said.
NatGas Exporting Could U.S. an Edge. According to a new report published by the International Energy Agency, the United States could become the world’s largest exporter of liquefied natural gas as soon as 2024. Growing U.S. liquefied natural gas trade builds the domestic industrial sector and supports our national security interests abroad by providing America’s allies with more energy choice and freedom.
Saltwater Is an Issue in the Permian. Saltwater disposal wells make up nearly one-third of new well permits. Midland Reporter-Telegram. Water management continues to be big issue in the oilfield where one in three of all drilling permits filed in Texas over the past week were to develop new saltwater disposal wells. Of the 286 drilling permits filed for projects in Texas, 95 of them were filed by 50 companies seeking to develop new injection wells to store oilfield wastewater deep underground. The largest number came from the Permian Basin where oil wells produce more water than oil.
PA DEP Intend to Issue Permits for NW PA Pipeline. (Thank you, MDN) In March we told you about National Fuel Gas Company’s (NFG) FM100 Project in northwestern Pennsylvania that will beef up and extend an existing pipeline network to flow an extra 330 million cubic feet per day (MMcf/d) of Marcellus gas to Williams’ mighty Transco Pipeline. The Pennsylvania Dept. of Environmental Protection (DEP) published notices in last weekend’s PA Bulletin of their intent to issue permits for the project.
Atlantic Coast Pipeline Loses Another Legal Battle. The beleaguered Atlantic Coast Pipeline (Acp) has lost another legal round.
The Virginia-based 4th U.S. Circuit Court of Appeals has vacated a required pipeline permit under the federal Endangered Species Act, Kallanish Energy reports.
The three-judge panel ruled the U.S. Fish and Wildlife Service’s review of natural gas pipeline plans was “arbitrary and capricious.”
It ordered the agency’s biological opinion and an incidental take statement looking at four endangered species along 100 miles of the pipeline route in Virginia and West Virginia be thrown out.
The pipeline company was seeking federal approval to kill a limited number of endangered species, if necessary, and where no other options exist, in building the pipeline. That is called incidental take.
The judges, in a 50-page ruling released last Friday, said the federal agency “lost sight of its mandate” in approving the pipeline project instead of protecting threatened wildlife.
Series of legal challenges
The action comes a year after the same court ruled the federal agency did not properly evaluate the harm the pipeline would have on endangered species.
The ruling is one in a series of legal challenges facing the $7.8 billion project.
Dominion Energy, the company behind the pipeline, has asked the U.S. Supreme Court to overturn a federal appeals court decision blocking the company from building the pipeline across the Appalachian Trail in Virginia.
Last December, the same appeals court vacated a permit that had allowed the pipeline to cross the Appalachian Trail on national forest lands.
The 57th line
The court ruled the U.S. Forest Service lacks the authority to approve a pipeline right-of-way across the trail. Dominion has argued 56 other pipelines have crossed the trail, which stretches from Georgia to Maine.
It is expected to be the fourth quarter of 2019 before it’s known if the Supreme Court will hear the appeal.
The appeals court has also vacated pipeline permits for crossing U.S. Forest Service land and the U.S. Army Corps of Engineers’ approval of stream-crossing permits.
Recently, 18 Virginia legislators have asked the Federal Energy Regulatory Commission to halt construction on the delayed Atlantic Coast natural gas line.
Reassess the need for Acp
They have also asked the federal agency to suspend the project’s certificate of need and convenience and urged Ferc to reassess the need for the $7.8 billion pipeline.
The three-page letter was signed by four state senators and 14 state delegates. A letter signed by 22 North Carolina legislators was sent to Ferc in May with similar requests.
The company has said it hopes to be able to resume construction of the pipeline in the third quarter of 2019, and to complete it by early 2021.
Some analysts think Dominion could cancel the pipeline if the Supreme Court does not hear the case because of increasing costs due to legal and regulatory delays.
The 605-mile pipeline would move 1.5 billion cubic feet per day of Utica and Marcellus natural gas from West Virginia into Virginia and North Carolina. The pipeline had originally been slated to begin service in late 2019. Construction started in spring 2018.
Fighting to Keep the Atlantic Coast Pipeline. Morrisey leads brief against ruling on Atlantic Coast Pipeline. West Virginia Attorney General Patrick Morrisey and 15 other state leaders are asking the U.S. Supreme Court to overturn a ruling that stopped construction of the Atlantic Coast Pipeline. The 4th Circuit Court of Appeals ruled in February the pipeline cannot continue on its current path, which would result in crossing the Appalachian Trail in Virginia. The pipeline, if completed, would carry natural gas from West Virginia to North Carolina. “The court’s decision was completely wrong,” Morrisey said. “This decision, if it holds, will stand in the way of economic diversification, education and public safety. Continued delays negatively impact the livelihoods of our working-class families and the services they receive.”
PTTGC Buying Homes. (Thanks, MDN) PTT Global Chemical continues to behave is if it’s going forward with building a $7.5 billion ethane cracker in Dilles Bottom (Belmont County), Ohio. The latest evidence? The company is actively buying up homes close to the proposed site. Over the past two months the company has snapped up six homes and is in discussions right now with others.
Marathon 2nd Qtr. Update. Marathon Petroleum reported second quarter 2019 net income of $1.11 billion, or $1.66 per diluted share, Kallanish Energy reports, which compares to net income of $1.06 billion, or $2.27 per diluted share, in Q2 2018.
The Ohio-based company generated $2.6 billion of operating cash flow and returned $852 million of capital to investors, including $500 million in stock repurchases in the quarter.
“This quarter we executed across our integrated business and progressed many strategic initiatives,” said Gary R. Heminger, chairman and CEO, in a statement.
“Our retail business, comprised of Speedway and our direct dealer network, had an exceptional quarter and demonstrated its ability to capture value.
‘Simplified midstream structure’
“We simplified our midstream structure into one public company to high-grade commercial opportunities and progressed on an impressive slate of high-return projects that are expected to enhance integration across our system.
“Lastly, today we also highlighted our continued focus on portfolio optimization, which could include asset divestitures to strategically streamline our integrated asset base,” he said.
The company also reported it realized $270 million of synergies in the second quarter.
“Our team’s impressive execution this quarter led to strong realized synergies,” said Heminger. “Combined with our first quarter results, we have realized $403 million of synergies year-to-date. Our progress gives us great confidence in achieving our target of up to $600 million of annual gross run-rate synergies by year-end 2019, and $1.4 billion by the end of 2021.”
Total revenue for the quarter was $33.69 billion, compared to $22.45 billion a year ago.
The company reported that total income from operations in Q2 2019 was $2 billion, up from $1.7 billion one year ago.
Adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) was $3.2 billion, compared to $2.3 billion. Retail segment income from operations was $493 million in the latest quarter, compared to $159 million in Q2 2018.
Higher fuel, merchandise margin contributions
The increase in earnings was due to the addition of the legacy Andeavor retail operations and higher fuel and merchandise margin contributions across the Speedway system.
At June 30, the company has completed converting 237 Andeavor stores to the Speedway brand. It expects to switch 700 stores this year.
Midstream income jumps
Marathon’s midstream segment income was $878 million in the quarter, compared with $617 million in the year-earlier quarter. The increase was driven by a $223 million contribution from Andeavor Logistics and growth across Mplx LP’s businesses.
Income from refining and marketing was $906 million in the quarter, down slightly from $1.0 billion. The drop was driven by narrower crude differentials and lower product realizations, the company said.
Refinery capacity utilization was 97%, resulting in total throughput of 3.1 million barrels per day (Mmbpd) for the quarter. That was 1.1 Mmbpd higher.
Williams 2nd Qtr. Update. Williams reported second quarter 2019 net income of $310 million, or 26 cents per share, Kallanish Energy reports, up sharply from $135 million, or 16 cents per share, in Q2 2018.
That is a year-over-year increase of $175 million, or 130%, the Oklahoma-based company said. Net income per share was up 63%.
Williams said its distributable cash flow was $867 million, up $230 million, or 36%, from a year ago. Cash flow from operations was $1.07 billion, up $178 million, or 20%, from Q2 2018. Adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) was $1.24 billion, up $131 million, or 12%, over the year-ago quarter.
Total revenue dipped slightly, from $2.09 billion in Q2 2018, to $2.04 billion.
“Strong demand for natural gas and the resiliency of our well-positioned business are clearly reflected in our second quarter 2019 results,” said president and CEO Alan Armstrong, in a statement.
“Compared to second quarter 2018, our cash flow from operations increased by 20% and adjusted income per share rose by 53%. Low gas prices will continue to incentivize demand growth and demand for low-cost power generation. LNG exports and new industrial loads will grow even faster in the second half of the year. So we expect this predictable cash flow growth to continue,” he said.
In the second quarter, Williams completed formation of joint venture with the Canadian Pension Plan Investment Board. Williams received $1.33 billion from the Canadian board in exchange for a 35% interest in a new Northeast joint venture in the Utica Shale in eastern Ohio.
It also completed the sale of its 50% stake in Jackalope Gas Gathering Services to an affiliate of Crestwood Equity Partners for $485 million.
Williams also reported its Norphlet Deepwater-Gulf project is in service. The first natural gas was delivered on June 22, which is increasing volumes at the Mobile Bay processing facility in Alabama.
The project was acquired and commissioned by Williams. It was built by Shell Offshore and Cnooc Petroleum Offshore USA to serve the Appomattox Floating Production System.
The 16-inch pipeline extends roughly 54 miles into the Gulf of Mexico and serves about 33,000 offshore acres.
Cabot 2nd Qtr. Update. Cabot Oil & Gas reported a 24% increase in production in the second quarter of 2019, Kallanish Energy reports.
Overall production increased from 1.85 billion cubic feet-equivalent per day (Bcfe/d) in Q2 2018, to 2.35 Bcfe/d in Q2 2019. That increase was at the high end of the company’s earlier production guidance.
The company’s natural gas production jumped from 172.4 Bcf in Q2 2018, to 213.8 Bcf in Q2 2019, also a 24% increase.
Drilled 24, completed 28 wells
Cabot, a key producer in the Appalachian Basin, primarily in Susquehanna County, Pennsylvania, drilled 24 gross and net wells in the quarter and completed 28 gross and net wells. A year ago, it had drilled 24 wells and completed 23 wells.
The company reported its second-quarter 2019 natural gas price realizations including the impact of derivatives, were $2.27 per thousand cubic feet.
The company in the second quarter 2019 reported net income of $181.0 million, or 43 cents a share. up sharply from $42.4 million or 9 cents a share, one year ago.
Revenue in the quarter totaled $534.1 million, up from $453.4 million a year earlier. Net cash provided by operating activities was $326.7 million, up from $273.9 million in Q2 2018.
Cabot generated free cash flow of $72.7 million in the quarter, up from $62.0 million a year earlier.
Success despite low gas prices
“Our success for the quarter was achieved despite Nymex natural gas prices retreating to the lowest levels the industry has experienced since the second quarter of 2016, further highlighting Cabot’s ability to deliver strong financial results throughout the natural gas price cycle,” said president and CEO Dan D. Dinges, in a statement.
The company, he added, “successfully executed on its strategic plan of delivering a combination of positive cash flow generation, improved return on capital employed and disciplined growth in per share metrics, while continuing to return capital to shareholders through a combination of dividends and opportunistic share repurchases.”
Change in operating plans
It repurchased 5.1 million shares at a weighted-average share price of $24.63. Since the company started purchasing share in Q2 2017, it has acquired 418.4 million shares. That program is being expanded by 25 million shares.
Capital spending in the latest quarter was $220.4 million, including $213.1 million for drilling and facilities.
The company has adjusted its Q3 production growth guidance to a range of 16% to 18%. That is due to a change in Cabot’s operating plan after the company was able to purchase additional Susquehanna County acreage next to an eight-well pad. That will allow Cabot to drill longer laterals: from 8,950 feet to 12,450 feet.
Production growth in 2020 of 5%
The increase in lateral length will boost efficiencies and economics but the longer cycle times will likely delay the wells going into production until late December or early January, Dinges said. The company did not identify where those wells are located.
It is expecting 2020 production growth of 5%, based on a preliminary capital budget of $700 million to $725 million.
At $2.50/Mcf for natural gas, that plan could produce $375 million to $400 million in free cash flow.
“Based on the current outlook for the natural gas market, we believe a strategy that focuses on maximizing free cash flow generation through a reduction on capital spending and production growth will create the most value for our shareholders,” Dinges said.
Number of wells turned in line drops
Cabot said it turned in line 18 wells in the latest quarter, down from 26 wells in Q1 2019. It plans to turn in line 96 wells in the remainder of 2019, including 88 wells in the Appalachian Basin and six in Louisiana.
The company plans to begin production on 14 wells in the southwest Pennsylvania super-rich window, 41 in the southwest Pennsylvania wet window and 33 in the southwest Pennsylvania dry window.
Cabot reported Gaap revenue in Q2 2019 of $851 million, a 30% increase over a year ago. Gaap net cash provided from operating activities was $185 million, compared to $175 million a year earlier.
Earnings include derivative gain
It said second quarter 2019 earnings include a $195 derivative gain due to decreases in commodity prices, compared to a $103 million derivative loss in 2Q 2018, and a $5.9 million gain related to asset sales.
The company “delivered in key strategic initiatives: generating free cash flow, improving our cost structure and efficiently executing our operational plans safely and within budget,” said CEO and president Jeff Ventura, in a statement.
“At the same time, we have been successful in generating nearly $1 billion in asset sales proceeds over the last year while impacting annual cash flow by less than 4%. The record royalty sales significantly de-risk our capital plans and highlight the substantial value of our assets,” he said.
“Range remains well positioned for the current commodity cycle with low maintenance capital, flexibility on capital allocation and a competitive cost structure. As we continue to make progress on improving the balance sheet, we believe these competitive advantages will begin to be reflected in the market,” he said.
Range 2nd Qtr. Update. Range Resources reported second quarter 2019 net income of $115.2 million, or 46 cents a share, Kallanish Energy reports, which compares to a net loss of $79.8 million, or 32 cents a share, in Q2 2018.
Production in the quarter averaged 2.29 billion cubic feet-equivalent per day (Bcfe/d), primarily from the Marcellus Shale play in Pennsylvania, despite unplanned third-party downtime, the Texas-based company said.
That production includes 1.57 Bcf/d of natural gas, 10,795 barrels per day of oil, and 108,212 Bpd of natural gas liquids.
Appalachian production rises 10%
It said production in the Appalachian Basin in the quarter averaged 2.06 net Bcfe/d, a 10% increase over Q2 2018. It said second quarter production was hurt by unplanned downtime at a MarkWest facility due to an electrical outage.
Range said the southwest area of its Appalachian Division averaged 1.96 net Bcfe/d in Q2 2019, a 12% increase over the year-ago quarter.
The northeast Marcellus properties averaged 104 net million cubic feet per day (MMcf/d) in the second quarter of 2019.
The company said its realized pricing for the second quarter was $2.54 per thousand cubic feet of natural gas after hedges, $51.02 per barrel of oil and $18.58 per barrel of Ngls. Its average realized price for natural gas-equivalent was $2.87.
Baker Hughes 2nd Qtr. Update. Oilfield services firm Baker Hughes, a GE company, this morning reported it shaved millions off its second-quarter net loss compared to a year ago, as operating income jumped, and revenue and booked orders rose by high single digits, Kallanish Energy reports.
For the quarter ended June 30, the company’s net loss was $9 million, or 2 cents per share, “down” from a net loss of $19 million, or 5 cents a share one year ago. Revenue rose 8%, to $5.99 billion, from $5.5 billion one year ago.
“We delivered a solid second quarter 2019 both commercially and operationally. The trends for our longer-cycle businesses remain intact. The Liquefied Natural Gas (LNG) new-build cycle is a strong positive for our company and our international Oilfield Services (OFS) business continues to be very successful,” said Lorenzo Simonelli, Bhge’s chairman and CEO.
Booked orders increased 9%, to $6.55 billion, from $6.04 billion, Bhge reported, led by oilfield services revenue, which jumped 14%, to $3.23 billion, from $2.87 billion.
“In the second quarter, we booked $6.6 billion in orders, driven by year-over-year growth in three of our four segments. In Oilfield Services (Ofs), we executed on our strategy to grow in key international markets, while in North America our production-levered portfolio is driving growth amid uncertain market conditions,” Simonelli said.
“We delivered $6.0 billion in revenue and adjusted operating income in the quarter was $361 million,” Simonelli said.
Operating income in the oilfield services and equipment segments year-over-year rose 13% and 12%, respectively, to $3.26 billion and $693 million, respectively.
CNX 2nd Qtr. Update. Cnx Resources reported second quarter 2019 net income of $162 million, or 84 cents per share, Kallanish Energy reports, roughly four times the year-ago net income of $42 million, or 19 cents per share.
The Pittsburgh-based company reported sales in Q2 2019 of 135 billion cubic feet-equivalent (Bcfe) or an increase of 10% from the 123 Bcfe sold in Q2 2018.
It was a strong cost-and-margin quarter, observers said. Total production cash costs were $1.18 per thousand cubic feet-equivalent (Mcfe) and fully burdened cash costs of $1.70/Mcfe.
“Despite weaker prices, CNX’s operational execution drove strong cash margins and well performance which resulted in modest volume growth in the quarter, when compared to the first quarter of 2019,” said president and CEO Nicholas DeIuliis, in a statement.
The company hit a major milestone in the deep Utica Shale with a six-well Majorsville pad, which cost $12.1 million per well, a price below targeted well costs in southwest Pennsylvania, DeIuliis said. Those six wells averaged 15,744 feet of laterals with estimated D&C capital of about $800 per foot.
The company, he said, also set a Pennsylvania record for the longest Marcellus lateral at 19,609 feet.
In 2Q 2019, the company operated up to five horizontal rigs and drilled 30 wells. It utilized two frack crews to complete nine wells in the quarter, including five Marcellus Shale wells in Greene County, Pennsylvania, and four Utica Shale wells in Marshall County, West Virginia. It turned in line four wells in the quarter, all Marcellus wells in Greene County.
It is currently operating three rigs under contract through the end of 2019. The company expects to operate two rigs and one frack crew in 2020.
Cnx has signed a long-term contract with Evolution for an all-electric frack crew. That crew started work in Q2 2019, and completed seven wells, providing fuel savings of about $180,000 per well, Cnx said.
The independent producer’s Marcellus production grew by 45.3% in the quarter: from 58 billion cubic feet to 84.3 Bcf. Its Utica Shale production dropped 30.4%, from 40.4 Bcf to 28.1 Bcf due to less drilling.
The company has raised its 2019 production guidance by 15 Bcfe to 510-530 Bcfe. The previous guidance was 495 to 515 Bcfe.
That is due to wells coming on sooner and wells producing above type curves, the company said.
The company reaffirmed its 2019 capital spending of $895 million to $945 million for E&P.
In 2020, the company is projecting production between 570 and 595 Bcfe and D&C capital between $450 million and $520 million. That represents a 33% decline in capital spending and a 12% increase in production.
The company is projecting it will generate $135 million in free cash flow in 2020. In 2021, the company is projecting it will generate positive free cash flow and have flat production.
CNX is one of the most hedged producers for 2020, with 86% of its natural gas hedged including Nymex hedges of $2.94 per Mcf, DeIuliis said.
The company bought back an additional 8.8 million shares as of July 15 or 19% of its total outstanding shares.
Antero 2nd Qtr. Update. Antero Resources has reported second quarter net income of $42 million, or 14 cents per diluted share, Kallanish Energy reports, which compares to a net loss of $136 million, or 43 cents per share, in Q2 2018.
The company reported its net daily gas-equivalent production averaged 3.23 billion cubic feet-equivalent per day (Bcfe/d), a 28% increase over Q2 2018. Of that total, 29% was liquids, with liquids representing 39% of total product revenue before hedges, it said.
Oil, Ngl production jumps
Oil production averaged 10,331 barrels per day (Bpd), a 49% increase over the prior year. Natural gas liquids production averaged 105,228 Bpd, also a 49% jump over the prior year.
Antero said 55% of those Ngl volumes went to Marcus Hook, Pennsylvania, for export, which gave the company a 19-cent-per-gallon premium to Mont Belvieu (Texas) pricing.
The other 45% of Ngls was sold domestically. And Antero realized a 14-cent-per-gallon discount to Mont Belvieu pricing at Hopedale in eastern Ohio, it said.
Recovered ethane climbs
Recovered ethane production averaged 40,882 Bpd, an increase of 13% over the year-ago quarter. It said roughly 135,000 Bpd of ethane remained in the gas stream.
Total liquids production was 156,441 barrels per day, a 38% year-over-year increase.
Antero said its average realized natural gas price before hedging was $2.66 per Mcf, a 6% decrease from a year ago.
40 Marcellus wells placed to sales
In the second quarter, Antero placed to sales 40 horizontal wells in the Marcellus Shale and six Utica Shale wells in the Appalachian Basin. The Marcellus wells had an average lateral length of 10,227 feet and an average 60-day rate per well of 18.8 million cubic feet-equivalent per day (Mmcfe/d) on choke, it said.
It also drilled 23 Marcellus wells in the quarter with an average lateral length of 12,500 feet, in an average of 12.6 days.
The Utica wells had an average 60-day rate per well of 22.7 Mmcf/d on choke.
New world record
The company said it drilled an average of 5,470 lateral feet per day in the quarter, its highest quarterly rate in the company’s history. It also reported that it drilled a 9,560-foot lateral in a rolling 24-hour period, which the company claims is a new world record.
It plans to operate four drilling rigs and average three to four completion crews for the rest of 2019 in the Marcellus and Utica shales. For full-year 2019, the company expects to drill 120 to 130 wells and place 115 to 125 wells online.
D&C spending lowest in years
Antero spent $303 million on well drilling and completion in Q2 2019 — the lowest quarterly spend by the company since its IPO in 2013.
“Antero achieved strong production volumes and incurred its lowest quarterly capital expenditures to date as a public company,” said chairman and CEO Paul Rady, in a statement.
In 2020, the company is targeting 110 to 120 completions with an average lateral length of 12,100 feet. That compares to 2019’s 115 to 125 completions with an average lateral length of 10,200 feet. That would be a 14% increase in lateral lengths.
The company is budgeting $1.28 billion to $1.38 billion for capital spending in 2020. The company is also working to reduce costs by 10% to 14% per lateral-foot by 2020, compared to 2019 budgeted costs.
Antero asks vendors to lower charges
During the quarter, Antero approached its vendors and service providers to reduce pricing to reflect what it called the “current deflationary market environment.” Some price reductions resulted, the company added.
It’s looking to further reduce sand and water costs, working with Antero Midstream to support the growing flowback and produced water volumes from the company’s drilling in its water savings initiative.
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PA Permits July 25, to August 1, 2019
County Township E&P Companies
- Elk Jones Seneca
- Elk Jones Seneca
- Elk Jones Seneca
- Elk Jones Seneca
- Elk Jones Seneca
- Elk Jones Seneca
- Lycoming Lycoming Beech Resources
- Lycoming Lycoming Beech Resources
OH Permits for July 27, 2019
County Township E&P Companies
- Guernsey Wills Utica Resources