Shale Directories Seminars
March 21, 2019
North Canton, OH
Upstream PA 2019
April 17, 2019
Penn Stater Conference Center
State College, PA
Latest facts and a rumor from the Marcellus, Utica, Permian, Eagle Ford, and Bakken Shale Plays
PTTGC FID Getting Closer. I heard this week that companies are beginning to contacted about bids for the cracker plant. I was told a couple of weeks ago that the Final Investment Decision (FID) would probably be occurring in the second quarter of this year. We’ll keep you posted. (RUMOR)
Rice Brothers Want Board Meeting in April. The Rice Brothers won’t let EQT Corp’s management or board forget they’re sitting on the independent producer’s doorstep, ready to take over the company that took over their company in late 2017.
Toby Z. Rice and Derek A. Rice, holding roughly 2.8% of EQT’s outstanding, on Wednesday sent another letter to the EQT board, saying, in effect, move the annual meeting back to April – where it had been for decades prior to 2018 – and let’s see whose directors shareholders want to lead EQT.
The Rices sold Rice Energy for $6.7 billion, allowing EQT to overtake ExxonMobil as the largest dry gas producer in the U.S.
Ready to step in
But the Rices beginning last December began firing off missives to EQT’s leadership, telling them how unhappy they were with the direction of EQT, that the brothers were willing and able to bring what made Rice Energy a top producer to EQT. That includes making Toby EQT’s chief executive, with 10-15 other former Rice personnel ready to step into the EQT structure to jumpstart the producer.
“The Rice Team is writing to you today to ask that EQT Corp. hold its 2019 annual meeting in April, as the company has for decades,” Wednesday’s letter states.
“We are making this request for one simple reason: because it is in the best interests of EQT and all its stakeholders for shareholders to timely decide EQT’s path forward.”
Let shareholders decide
The brothers Rice reiterated they want to work with EQT’s board so the company realizes its full potential, Kallanish Energy reports. But if the board turns thumbs down, “we are ready to nominate highly-qualified director candidates and allow shareholders to vote at the meeting.”
EQT remains calm, states it’s willing to work with any shareholder to further the interests of stakeholders and the company. “We are always interested to hear the views of EQT shareholders. We are excited for the future of EQT and continue to successfully execute our 2019 Operating Plan with a focus on reducing costs and generating substantial free cash flow,” said EQT, in a statement.
No date yet set
“The date of the Annual Meeting has not been set, but the Board is committed to an orderly Annual Meeting process that ensures all shareholders’ views will be heard and represented.”
The EQT annual meeting was moved to June in 2018 due to circumstances related to the spinoff of EQT’s midstream business. The spinoff is long completed, move the meeting back to April, the Rices say.
“We know that other shareholders have publicly and privately shared their support for this view, and we sincerely hope that you appreciate our position and decide to hold the meeting in April without further delay,” the letter states.
EQT Loses $2.2 Billion in 2018.EQT Corp. told analysts on Thursday that it has shifted to “stable operations” after a year of upheaval, even as some headwinds facing the company — namely, a brewing proxy fight — intensified this month.
Stable operations mean cutting down on drilling and fracking times, finding more cost savings at the company, and generally putting the operational mishaps of last year behind.
The Downtown-based oil and gas driller posted a loss of $2.2 billion for last year, or $8.60 per share, compared with net income of $1.5 billion, or $8.04 per share during 2017.
The loss came from impairments. The company wrote down more than $2.7 billion from the sale of oil and gas properties in Texas and Kentucky last year.
A Rice Energy Marcellus Shale drilling rig in Lone Pine, Washington County. Rice was acquired by EQT Corp. in 2017.
We’re not small potatoes, the Rice team tells EQT; you’re stale
It also impaired goodwill by $531 million. Goodwill is the difference between what the company paid for assets and the current market value of those assets.
Another $279 million in operating expenses were the result of leases that had lost some value or expired.
A major lawsuit settlement also ate into the bottom line.
On Wednesday, EQT announced that it will pay out $53 million to settle a years-long class-action lawsuit filed by scores of West Virginia landowners who said the company had shorted their royalty payments by deducting costs to process and transport the gas before it was sold.
As part of the settlement, EQT also promised not to deduct such expenses from those leases going forward.
The company did not announce a date for its annual shareholder meeting.
Brothers Toby and Derek Rice, formerly with Rice Energy, have been pressuring the company to commit to an April date for the shareholder meeting, in line with how EQT has done it for many years with the exception of 2018.
An EQT well pad that, upon completion, would have 21 gas wells on Friday, Dec 8, 2017 in Amwell Township
EQT outlines plan to ward off Rice brothers’ campaign for taking over
Mr. McNally told analysts the decision on the timing of the meeting rests with the board of directors, which, along with the management team, is a target of the Rice brothers’ effort at a crew change.
The Rice team — not including Danny Rice, an EQT board member and former CEO of Rice Energy — has challenged EQT on inefficiencies in its operations and said it could deliver more cash flow to shareholders.
But on Thursday, Mr. McNally told analysts that company’s work to cut cost is “exceeding my expectations.”
By reconfiguring some logistics practices and contracts with suppliers, EQT identified another $50 million in savings, he announced.
“Our entire organization is moving forward with a sense of urgency,” he said.
While taking care to highlight his confidence in the current team, Mr. McNally also promised to announce a new COO by the end of the first quarter. That person is supposed to bring a “change in mindset,” he said, but also will not veer far from the current plan established by the company.
The war or words and claims with the Rice brothers continued on Thursday, with Mr. McNally again calling their plan unrealistic and saying it tells an “incomplete and misleading story.”
The Rice brothers’ stated goal is to replace the current management team and board of directors, and to install Toby Rice as CEO and former Rice executives as department heads.
Mr. McNally pushed back on the Rices’ claims that the wells they drilled at Rice Energy were superior to EQT wells.
The Rice wells happened to be in the sweetest spot of the Marcellus Shale play, Mr. McNally said, so they’d be expected to produce more gas. Also, they weren’t hampered by interference from wells drilled into the shallower Upper Devonian formation — a practice that EQT has since stopped.
He reiterated that EQT’s footprint is several times larger than Rice’s was and that while it is using digital and data tools, it must take care to integrate Rice’s technology into EQT’s “ecosystem.”
“The most relevant and compelling technologies are far from dormant at EQT,” he assured, in response to Toby Rice’s complaints earlier this month.
When an analyst asked about using Rice’s land tracking technology to manage leases and reduce land costs, Mr. McNally waved off the premise.
“There is money that will have to be spent to maintain our land position,” he said. That can be done through lease payments or by drilling on certain properties to hold leases.
“There is no magic app that’s going to decrease the land spend by $100 million,” he said.
Strong January Permitting. U.S. producers may be looking to exploit more oil and natural gas targets in Wyoming’s Williston Basin, California and in Texas, according to a tally of January permitting activity by Evercore ISI. All major states and the Bureau of Ocean Energy Management (BOEM) require drilling permits to be filed and approved before operators may drill new wells or bypass/sidetrack existing wells. Onshore permits usually are issued several months before drilling begins, while offshore permits often are secured even further in advance. According to the January data compiled by Evercore’s James West and his team, domestic permitting activity during January was the strongest in five years and significantly better than in December. Permitting increased month/month to 6,570. Wyoming led the way during January, hitting 4,200, up 1,029 from December. The state’s permitting activity, centered around exploration and development in the Williston Basin’s Bakken/Three Forks targets, has risen steadily over the last six months. More permits also were filed in California, at 262, a gain of 190 from December, and in Texas, where 983 permits were requested, up by 124 month/month.
Eagle Ford Pipeline JV. Howard Energy Partners and NextEra Energy Partners said Wednesday they will form a joint venture to develop additional natural gas transportation projects in the Eagle Ford Shale play.
The JV will market capacity on NextEra Energy Partners’ Eagle Ford Midstream system (EFM) and Howard Energy’s (HEP’s) Eagle Ford Gathering system (EFG), Kallanish Energy reports. The new partners intend to “evaluate additional pipeline opportunities” in an area of mutual interest, which includes Texas’ Webb, Duval, Zapata, Dimmit, La Salle, McMullen, Live Oak and Jim Wells counties.
“The synergies between HEP’s and NextEra Energy Partners’ Eagle Ford assets provide for a compelling footprint, and we are excited about the potential for this joint venture,” said Mike Howard, HEP chairman and CEO. “The connection to NextEra Energy Partners’ EFM system provides an efficient option to expand capacity on our EFG system, as well as providing our producers a direct link to Agua Dulce, bringing new supplies to the emerging markets in Mexico and the Texas Gulf Coast.”
HEP’s existing EFG system, located in Webb County, consists of roughly 215 miles of lean natural gas gathering pipeline with approximately 1 billion cubic feet per day (Bcf/d) of throughput capacity.
NextEra Energy Partners’ existing EFM system is a roughly 150-mile, 30-inch and 16-inch lean gas transportation line originating in La Salle County, spanning portions of McMullen, Duval, Jim Wells, and Nueces counties, and terminating at the Agua Dulce hub in Nueces County, Texas.
“While requiring minimal capital investment, this agreement is expected to increase capacity utilization on NEP’s EFM system and improve gross margins by giving NEP access to additional producer volumes in an active Eagle Ford region,” said Armando Pimentel, NextEra Energy Partners president.
Pimentel said since the joint venture is based on future commitments on NEP’s EFM and HEP’s EFG assets, existing contracts and revenue streams will not be impacted.
Antero 4th Qtr. Update. Antero Resources, a key player in the Appalachian Basin, reported a $398 million net loss for full-year 2018, compared to a net gain of $615.1 million for 2017, Kallanish Energy reports.
In the fourth quarter of 2018, the Denver-based company, reported a net loss of $122 million, compared to a net gain or $486.8 million in Q4 2017.
Antero reported its net daily gas-equivalent in Q4 averaged a record 3.2 billion cubic feet-equivalent per day (Bcfe/d) (30% liquids), an increase of 37% over the previous year.
Fourth-quarter liquids production averaged 162,077 barrels per day, a 51% increase over Q4 2017. That included oil production of 12 million barrels per day (Mmbpd), natural gas liquids of 102 Mmbpd, and ethane recovery of 46 Mmbpd.
That ethane represents roughly 27% of potential ethane that could be removed from the gas stream with the remaining 122,000 barrels per day of ethane still in the natural gas, it said.
Its net daily gas-equivalent production for full-year 2018 averaged 2.7 Bcfe/d (28% liquids), a 20% increase over the prior year.
Due to lower commodity prices, Antero has reduced its 2019 drilling and completion capital budget relative to 2018 to a range of $1.1 billion to $1.25 billion on a consolidated basis, and a range of $1.3 billion to $1.45 billion on a stand-alone basis, it said.
That budget is down about 20% from the 2018 budget, company officials said.
“2018 was a great year for the Antero family, as we significantly reduced leverage, grew production above the 3 Bcfe/d mark and announced midstream simplification,” said chairman and CEO Paul Rady, in a statement.
Antero is “excited” the Mariner East 2 pipelines across Pennsylvania have been placed in service and the company will move nearly half of its natural gas liquids to export market via those lines, Rady said.
The company placed 30 horizontal Marcellus Shale wells to sales in Q4, with an average lateral length of 10,600 feet. The company was averaging 11.7 days to complete such wells, a 7% reduction in drilling time from 2017.
In 2019, Antero plans to drill 120 to 130 wells and to place 115 to 120 wells to service. It plans to operate five drilling rigs and to average four completion crews in 2019. That is a reduction of two completion crews.
The company reported its average realized natural gas price before hedging was $3.83 per thousand cubic feet, a 19 cents/Mcf premium to the average NYMEX Henry Hub price per MMBtu during the period. That is a 37% increase from the prior year.
Trump Pushes Cuomo on Fracking in NY. President Trump Tuesday told New York Gov. Andrew Cuomo he should open his state to hydraulic fracturing to improve its economy, various media reported Wednesday.
The two spoke at the White House after Cuomo requested a meeting to discuss a provision in the Republicans’ 2017 tax-cut law that caps state and local tax (Salt) deduction at $10,000.
Cuomo is blaming Salt for a $2.3 billion plunge in New York State tax receipts.
Deputy press secretary Judd Deere said in a statement Trump listened to Cuomo’s concerns about Salt, and “reiterated the negative impact that high taxes in states like New York have on hardworking families and job creators.”
“The President discussed economic growth opportunities for the State of New York, including helping lower energy prices throughout the entire Northeast by allowing low-cost, American energy to thrive with fracking and pipeline systems,” Deere said. “The two also discussed the need to update America’s outdated infrastructure system.”
Cuomo signed a law effectively banning fracking in New York State roughly four years ago, citing health risks. The governor has faced criticism for the stagnating economy in parts of Upstate New York, especially from counties on the Pennsylvania border, where residents can look across the border and see the impact of drilling and fracking in the Marcellus and Utica Shale plays.
Trump earlier this month suggested those in Upstate New York struggling to find prosperity should “go to another state where they can get a great job.”
“It’s ironic that the same Democrats who criticized the Tax Cuts and Jobs Act for supposedly benefiting only the wealthy are now advocating for a change to the law that would primarily benefit the wealthy,” said Michael Zona, a spokesman for Republicans on the Senate Finance Committee, Fox News reported.
Mountaineer Xpress Ready for Full Flow. The pipeline yesterday filed a request asking the US Federal Energy Regulatory Commission (FERC) to allow it to start service on the remaining portions of the project by 25 February. FERC just last month approved the project to begin partial flows at 1.1 Bcf/d.
The expansion on Columbia Gas, which serves US customers from New York to the Gulf of Mexico, is designed to transport Marcellus shale gas from West Virginia, Ohio and Pennsylvania to Columbia Gas’ Appalachia pool and to Columbia Gulf pipeline, which serves the southeast US and Gulf coast. The full project includes 165 miles (266km) of new pipeline from Marshall County to Wayne County, West Virginia, three new compressor stations and modifications to three existing compressor stations. Independent producer Antero Resources is an anchor shipper on the project.
Mountaineer XPress was originally scheduled to begin full service in late 2018 but that in-service date was pushed back amid regulatory delays. The pipeline in August increased its rate for new subscribers by nearly 50pc because of a $1bn hike in construction costs related to the delays.
The remaining facilities that Columbia Gas is ready to start includes about 30 miles of new 36-inch pipeline in West Virginia, two new compressor stations in Calhoun and Jackson counties in that state, and a regulating station in Jackson County, West Virginia.
Williams’ Atlantic Sunrise Volumes Are Up. The 2.7 Bcf/d (76mn m³/d) expansion began full service in October, allowing largely stranded gas from the northeast Pennsylvania portion of the Marcellus shale to meet demand markets in the Gulf coast, as well as meet LNG export demand via the new Cove Point LNG facility in Maryland. The project was a boon for independent producers operating in the area, with Cabot Oil & Gas, Seneca Resources and Range Resources all contracting for capacity on the line.
Williams’ northeast fourth quarter volumes rose by 13pc on the year, with after-tax profits for the segment rising by 28pc as a result of the project’s start, chief executive Alan Armstrong said. Partly as a result of the expansion, Transco delivered a record amount of natural gas on 21 January at 15.7 Bcf/d.
Williams in early January brought its 460mn cf/d Gulf Connector project into service, shipping Marcellus gas to a Freeport and Corpus Christi LNG export project being built in Texas.
“The majority of our project execution risk that is behind our growth drivers for 2019 has been squared away,” Armstrong said.
The company has garnered a few regulatory milestones with the US Federal Energy Regulatory Commission (FERC) for its remaining project backlog in recent months, with its 400mn cf/d Northeast Supply Enhancement expansion and its 286mn cf/d Southeastern Trail project both receiving positive environmental reviews, and its 63mn cf/d Gateway Expansion project receiving full FERC approval.
This year Williams is setting its sights on possible expansions in the Denver-Jules basin, and just executed a new gas gathering and processing agreement for a 5,200-acre area that is fully permitted there.
Williams’ capital spending guidance for 2019 has increased from previous estimates of $2.6bn to a range of $2.7bn-2.9bn primarily on project timing shifts from 2018 to 2019. The company reported a loss of $572mn for the fourth quarter, compared with profits of $1.7bn a year earlier, driven partly by an impairment of gathering assets in the Barnett shale and the sale of Gulf coast pipeline systems.
Continental’s CAPEX Budget for 2019. Continental Resources says it plans to spend $2.6 billion in 2019 on capital spending, down slightly from $2.7 billion spent in 2018, Kallanish Energy reports.
The company said it expects spending to produce $3 billion of cash flow from operations, and between $500 million and $600 million of free cash flow in 2019.
It has budgeted $2.2 billion for drilling and completions, with the money divided equally between the Bakken Shale in North Dakota and Montana and on plays in Oklahoma.
It’s expecting total production to grow 13% to 19% in 2019, and to range between 190,000 and 200,000 barrels per day of oil. Natural gas production is projected to jump from 1% to 4% in 2019.
“In 2019, Continental will deliver enhanced capital efficiency with greater weighted production growth, coupled with a lower capital spend. The high quality of our assets and operations will drive sustainable free cash flow generation, debt reduction and industry-leading returns,” said chairman and CEO Harold Hamm, in a statement.
Continental Resources says it plans to operate 25 rigs in 2019, down from 31 rigs at year-end 2018 and one additional rig than the 2018 average of 24 rigs. It said it expects to complete 307 gross (207 net) operated wells with first production in 2019.
In the Bakken, the company expects to operate an average of six drilling rigs and to complete 166 gross (107 net) wells in 2019.
At year-end 2019, the company said it plans to have 115 gross operated Bakken wells in development, of which 45 are projected to be completed but awaiting final sales. That compares with 137 gross wells in progress a year-end 2018.
In Oklahoma, the company plans to operate an average of 19 rigs, up one rig from 2018 average. Twelve rigs will be focused on the company’s Project Springboard. It expects to complete 141 gross (100 net) wells in Oklahoma. It will average nine completion crews in the two states.
Continental said full-year 2018 production averaged 298,190 Boe/d, up 23% over full-year 2017. Total oil production was 168,177 Boe/d, up 21% over full-year 2017.
Pioneer to Drill 290 Wells. Pioneer Natural Resources reported fourth-quarter net income of $324 million, on revenue of $2.68 billion, Kallanish Energy reports.
It reported full-year 2018 income of $978 million, with revenue reaching $9.41 billion.
Permian production jumped 23%
The Texas-based company delivered 2018 Permian oil production of 181,000 barrels per day (Bpd) of crude oil (23% growth), and 2018 Permian production of 283,00 Bpd (26% growth).
It also averaged fourth-quarter Permian oil production of 194,000 Bpd, toward the top end of company guidance. Fourth-quarter Permian production averaged 302,000 barrels of oil-equivalent per day (Boe/d), at the top end of guidance.
President and CEO Timothy L. Dove said, in a statement: “The company delivered an excellent fourth quarter, serving to cap a strong year, where we sharpened our focus on our peer-leading Permian asset. Pioneer delivered oil production at the top end of guidance, maintained our trajectory of lowering operating costs and continued our momentum of strong operational execution.
“Our unique, low-cost basis Permian acreage, unencumbered by high cost acquisitions, generated a highly competitive return on capital employed of 9%,” he said.
Drilling down, production up
The company is projecting an 11% reduction in 2019 drilling while delivering an increase of 12% to 17% in production compared to 2018, he said.
Pioneer placed 270 horizontal wells on production during 2018, including 71 brought online in the fourth quarter. Well productivity continues to increase annually, with average cumulative production greater in 2018 as compared to the 2017 program, the company said.
Pioneer said it plans to spend between $2.8 billion and $3.1 billion on its 2019 capital spending and to be fully funded within expected operating cash flow, based on current commodity prices.
Operating 21-23 rigs
The company plans to operate an average of 21 to 23 horizontal rigs in the Permian Basin in 2019. This program is expected to place 265 to 290 wells in production, compared to 270 wells placed in production during 2018. The average lateral length planned for 2019 is roughly 9,800 feet, with an average estimated ultimate recovery of about 1.6 million barrels of oil-equivalent (Mmboe) per well.
This activity level is projected to deliver 2019 Permian production of 320 to 335,000 Boe/d, and 203 to 213,000 Bpd of crude, representing roughly 12% to 17% growth over 2018 production levels.
The company expects 2019 forecasted operational cash flow of $3.2 billion based on current commodity prices.
2019 Bullish Year for NatGas Exports. Now poised for the biggest year ever in 2019, 2018 was a record breaking year for the emerging U.S. natural gas export business. Most recent U.S. Department of Energy data indicate that LNG exports hit a record of nearly 110 Bcf in November 2018. This is a 35% jump from November 2017, with so much more to come: “U.S. Liquefied Natural Gas Hits Record Highs Again. This year, we will pass Malaysia to become the world’s third largest LNG exporter (Australia could surpass Qatar to take the top spot). Currently larger than U.S. LNG sales, although holding less potential, piped U.S. gas to Mexico was also up 10-12% year-over-year. Around half of this came from two areas in South Texas, Rio Grande City and Roma. Top ranked for a long time, however, Mexico is now second to South Korea in LNG purchases from the U.S. flagship LNG terminal Sabine Pass in Louisiana (China is third). Gas to Mexico adds $6-8 billion to the U.S. economy each year and is a critical outlet so our prices do not sink to unsustainable levels and put shale producers out of business. Total U.S. LNG exports should surpass piped supplies to Mexico later this year. Outside of the shale revolution itself, burgeoning exports and thereby increased global competition for domestic users are perhaps the single largest transformation in the history of the U.S. natural gas market. Starting only in February 2016, U.S. LNG has already reached 33 nations.
O&G Employment up in 2018. The U.S. oil and gas industry employed 880,681 professionals in 2018, up 5.4 percent from the previous year, according to a report issued Monday by the Texas Independent Producers & Royalty Owners Association (TIPRO). In 2018, the U.S. oil and gas industry paid a national annual wage averaging $112,712 – more than double average private-sector wages, TIPRO also concluded in the fourth edition of its “State of Energy Report.”
Chevron Ramps Up Drilling in the Permian. Oil giant Chevron is preparing for a large round of drilling in the Permian Basin of West Texas. The California oil company filed 12 drilling permit applications with the Railroad Commission for horizontal drilling and hydraulic fracturing projects on its DR State Wise Unit lease in Culberson County. Located off FM 652 between Guadalupe Mountains National Park and the town of Orla, all 12 drilling projects target the Ford West field of the Wolfcamp geological formation down to a depth of 9,000 feet. Chevron closed 2018 with a nearly $14.9 billion profit on $166.3 billion of revenue. The company attributes part of those profits to a production increase in the Permian Basin where it holds more than 2.2 million acres of leases. With a large presence in Houston, Chevron filed for 124 drilling permits in Texas last year. The company’s nearly 2,300 Texas leases produced nearly 28.9 million barrels of crude oil, more than 116.6 billion cubic feet of natural gas and nearly 5.4 million barrels of condensate during the first 11 months of 2018. .
TX Oil Production Breaks Record. Crude oil production in Texas has beaten a previous record set in the 1970s, a new report from the Texas Independent Producers Royalty Owners Association stated. Texas oil wells produced more than 1.54 billion barrels of crude in 2018, beating the previous record of 1.28 billion barrels set in 1973, TIPRO reported in its annual “State of Energy Report” early Monday morning. Natural gas production also grew, reaching 8.8 trillion cubic feet in 2018, the report stated. “As the national leader in oil and natural gas production, Texas is paving the way for America’s energy independence,” Texas Gov. Greg Abbott said in statement in response to the report. “From technological advancements resulting in increased oil and natural gas output to our LNG export facilities, the Lone Star State’s energy economy is firing on all cylinders.
Eclipse Resources and Blue Ridge Mountain Resources Deal Approved. Eclipse Resources and Blue Ridge Mountain Resources said Blue Ridge’s shareholders have approved Eclipse’s all-stock deal for its fellow Utica Shale independent producer.
The deal has now been approved by the boards and stockholders of each company, Kallanish Energy reports. Because Blue Ridge has received enough written consents to adopt the merger, said written consents received by Blue Ridge have become irrevocable.
As previously disclosed, Blue Ridge stockholders will receive 4.4259 shares of Eclipse Resources common stock for each share of Blue Ridge common stock, before adjustment for a 15-to-1 reverse stock split of Eclipse Resources common, which will happen concurrently with the deal closing.
Once the merger is consummated, Eclipse will change its name to Montage Resources Corp., and trade on the New York Stock Exchange under the symbol “MR.”
Seaport Global Securities put the value of the transaction when announced last August at $345 million, giving the combination an implied enterprise value of $1.4 billion and an equity value of $908 million.
Eclipse shareholders will control 57.5% of the combination, but Blue Ridge CEO John Reinhart will lead the merged company.
Before joining Blue Ridge in 2016, Reinhart was chief operating officer of Ascent Resources and served in various roles at Chesapeake Energy for more than eight years and Schlumberger for more than 11 years.
The merger creates a company with estimated Q4 2018 production of 500-560 million cubic feet-equivalent per day (Mmcfe/d) and roughly 227,000 net effective undeveloped core acres.
The merger partners expect the deal to be completed by March 1.
Range Announces Jump in Reserves. Range Resources said Monday the independent producer’s proved reserves at Dec. 31, 2018, reached 18.1 trillion cubic feet-equivalent (Tcfe) – an 18% jump from year-end 2017.
“Range had another solid year of reserve additions, with drill-bit finding costs of only $0.22 per thousand cubic feet-equivalent (Mcfe),” said Jeff Ventura, Range’s CEO. “The quality of reserves was highlighted by another consecutive year of positive performance revisions, which were a result of extending laterals and improvements from optimized targeting and completions.”
Ventura added future development costs for proven undeveloped locations are expected to be roughly $0.40/Mcfe, which he called “outstanding” and underpins an unhedged recycle ratio of over 2.5x at current strip pricing.
Range added a record 3.1 Tcfe to prove reserves from extensions, discoveries and additions, driven by its projects in the Marcellus Shale, Kallanish Energy reports.
The “extensions, discoveries, and additions” amount excludes 154 billion cubic feet-equivalent (Bcfe) of Marcellus reserves associated with undrilled locations that now have increased recovery estimates as a result of longer laterals and improved lateral targeting and completion design.
The average lateral length for proved undeveloped locations was roughly 9,300 feet in 2018, with newly added Marcellus locations incorporating an average lateral length of approximately 10,200 feet.
Field-level performance increased reserves by 945 Bcfe due to continued improvement in the well performance of existing Marcellus producing wells, and 611 Bcfe of reserves associated with proved undeveloped locations which have re-entered the company’s five-year drilling program.
Year-end 2018 proved reserves by volume were 67% natural gas, 30% natural gas liquids and 3% crude oil/condensate. Proved developed reserves represent 54% of the Company’s reserves.
Lower NatGas Prices Projected for 2019. The Energy Information Administration expects Henry Hub natural gas spot prices to average $2.83 per million British Thermal Units (Mmbtu) in 2019, down 32 cents/Mmbtu from the 2018 average, according to EIA’s Steo, the just-released Short-term Energy Outlook.
NYMEX futures and options contract values for May 2019 delivery traded during the five-day period ended Feb. 7, 2019, suggest a range of $2.15/Mmbtu to $3.30/Mmbtu encompasses the market expectation for May 2019 Henry Hub natural gas prices at a 95% confidence level.
Steo/EIA forecasts dry natural gas production will average 90.2 billion cubic feet per day (Bcf/d) in 2019, up 6.9 Bcf/d from 2018, Kallanish Energy reports. EIA expects natural gas production will continue to rise in 2020 to an average of 92.1 Bcf/d.
The Henry Hub natural gas spot price averaged $3.13/Mmbtu in January, down 91 cents/Mmbtu from December.
Despite bitter cold in late January, average temperatures for the month were milder than normal in much of the country, which contributed to lower prices. Steo expects strong growth in U.S. natural gas production to put downward pressure on prices in 2019.
CNX Sees Increase in Reserves. Independent producer CNX Resources said last week its total proved reserves reached 7.9 trillion cubic feet-equivalent (Tcfe) as of Dec. 31, 2018, up 4% from 2017’s total.
The increase came despite selling roughly 825 billion cubic feet-equivalent (Bcfe) in proved reserves last year via divestiture of CNX’s shallow oil and gas and Ohio Utica joint venture assets.
Pro forma for asset divestitures in 2018, reserves grew 15% compared to the previous year, Kallanish Energy reports.
During 2018, Pittsburgh-based CNX added 960 Bcfe of proved reserves through extensions and discoveries, which resulted in the company replacing 189% of its 2018 net production of 507 Bcfe.
In 2018, drilling and completion costs incurred directly attributable to extensions and discoveries were $490 million. When divided by the extensions and discoveries of 960 Bcfe, this yields a drill bit finding and development cost of $0.51 per thousand cubic feet-equivalent (Mcfe).
Future development costs for proved undeveloped reserves (PUDs) are estimated at roughly $1.43 billion, or $0.42/Mcfe.
Proved developed reserves of 4.49 Tcfe in 2018, comprised 57% of total proved reserves, compared to 58% in 2017. PUDs were 3.39 Tcfe at Dec. 31, 2018, or 43% of total proved reserves, compared to 42% at year-end 2017.
During 2018 in the Marcellus Shale, CNX turned-in-line (Til) 46 gross wells with an average completed lateral length of roughly 8,300 feet and expected ultimate recoveries (EURs) ranging between 1.7 and 3.5 Bcfe per 1,000 feet of completed lateral.
As of Dec. 31, the company’s Marcellus Shale proved reserves were 5.60 Tcfe, which included 3.03 Tcfe of proved developed reserves.
Last year in the Utica Shale, CNX Til 17 gross wells with an average completed lateral length of roughly 8,200 feet and EURs averaging over 2.5 Bcfe/1,000 feet of completed lateral.
In 2018, CNX booked 1.07 Tcfe of Utica Shale proved reserves after accounting for the reduction of 342 Bcfe due to the sale of Ohio Utica joint venture reserves-in-place.
The company was able to increase total reserves year-over-year despite the asset divestiture due to continued drilling success in the deep dry Utica Shale in Pennsylvania.
Women’s Energy Network Comes to NE PA. The Women’s Energy Network (WEN) has come to Northcentral Pennsylvania with the formation of its new, Susquehanna Valley Chapter. This chapter will offer leadership and career development programs and provide networking opportunities for its members in 20 counties.
The Women’s Energy Network is a global, nonprofit organization of professionals who work across the energy value chain.
“We’re excited to bring this well-respected, international organization to counties in and around the Susquehanna Valley,” said Sherry Paulhamus, the chapter’s president who works for natural gas operating company Range Resources. “This area is deeply connected to energy, with everything from natural gas, wind and solar to power generation and utilities. We have many people working in the energy industry here who can benefit from participating in all WEN has to offer.”
Those working in energy in Northcentral Pennsylvania are encouraged to join the Susquehanna Valley Chapter. The counties included in the chapter are Bradford, Cameron, Centre, Clearfield, Clinton, Columbia, Elk, Lackawanna, Luzerne, Lycoming, McKean, Montour, Northumberland, Potter, Sullivan, Susquehanna, Snyder, Tioga, Union and Wyoming. While the organization focuses on women in energy, men are also welcomed to join.
In addition to chapter and national networking events and learning opportunities, WEN offers growth opportunities to its members through participation on chapter and national Boards of Directors and through special programs.
The Susquehanna Valley Chapter’s board includes members who work in a variety of energy companies. In addition to Paulhamus, the board includes Vice President Jeannie Bennett from Panda Hummel Station, Treasurer Cherie Craft from Appellation Construction Services, Secretary Daria Fish from Chief Oil & Gas, Communications Director Nicole Schomburg from FTI Consulting, Membership Director Sandy Spencer from Appellation Construction Services, Events Coordinator Janene Jackson from Beech Resources, and Public & Industry relations Director Amy Gilbert from Repsol Oil & Gas USA.
The chapter will hold its launch event on February 27 at the Genetti Hotel and Suites in Williamsport.
For information about becoming a member, contact Sandy Spencer at or visit the chapter’s web page at: https://www.womensenergynetwork.org/susquehannavalley/
PA Permits February 7, to February 14, 2019
County Township E&P Companies
- Bradford Overton Chief
- Susquehanna Forest Lake Cabot
- Susquehanna Forest Lake Cabot
- Washington Morris Range
- Washington Morris Range
- Washington Morris Range
- Washington Morris Range
- Wyoming Meshoppen Chesapeake
OH Permits for weeks of February 9, 2019
County Township E&P Companies
- Columbiana Elk Run Hilcorp
- Columbiana Elk Run Hilcorp
- Harrison Athens Chesapeake
- Harrison Franklin Chesapeake
- Harrison Franklin Chesapeake
- Harrison Franklin Chesapeake
- Monroe Ohio Equinor (Statoil)
- Monroe Ohio Equinor
- Monroe Ohio Equinor
- Monroe Ohio Equinor