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
Trump to Visit Shell Cracker. President Donald Trump has rescheduled a visit to a cracker plant in Beaver County to Tuesday after postponing the trip — originally scheduled for this week — in the wake of two mass shootings in Texas and Ohio.
Mr. Trump will tour Royal Dutch Shell’s petrochemical complex in Potter Township and is expected to tout his efforts to boost employment in the manufacturing and energy sectors.
A White House official confirmed the plans for Mr. Trump’s rescheduled visit.
The cracker plant and its derivative units, when completed, will transform ethane from Marcellus and Utica shale gas into plastic pellets. The conversion process involves heating up ethane to form ethylene, which forms the basis of plastics.
Shell’s ethane cracker plant under construction in 2018 in Beaver County. The U.S. Secret Service sent a note to Beaver County Emergency Services Monday calling off the planned presidential visit slated for Thursday, citing “recent events.”
Trump calls off planned trip to Shell’s cracker plant in Beaver County
The multi-billion dollar project, which broke ground in 2018, has garnered support from state politicians on both sides of the aisle.
In 2012, then-Gov. Tom Corbett, a Republican, helped Shell procure a tax break for every barrel of ethane it buys from Pennsylvania’s oil and gas operators. Because the 340-acre site — which once held the largest zinc smelter in the country — is a Keystone Opportunity Zone, Shell will also receive 15 years of tax cuts and exemptions.
The subsidy package — which could reach $1.65 billion over 25 years — is one of the largest in state history.
Current Gov. Tom Wolf, a Democrat, has supported the plant’s construction as well, saying in 2016 that he believed the tax breaks would pay for themselves. He also expressed hope the plant could attract industry to the region.
The construction project is expected to employ 6,000 workers at “peak construction” later this year, according to a Shell spokesperson. The plant is slated to employ approximately 500 permanent workers once completed.
Opposition to the ongoing project has come from several environmental groups. Between 2015 and 2017, Shell spent roughly $80 million to clean up contamination at the site, and the company reached a deal with environmental groups in August 2017 to monitor pollution from the plant.
Terrie Baumgardner, a field organizer for the Clean Air Council, a party to the 2017 agreement, said Thursday she remains worried about the pollution that will come with the plant and associated fracking wells, especially given that Beaver County has received an F grade for ozone levels in a report from the American Lung Association.
A large crane stands next to a quench tower on the site of the Pennsylvania Shell ethylene cracker plant on Monday, Oct. 8, 2018, in Potter Twp.
As Shell cracker nears ‘peak construction’ point of 6,000 workers, promoter in D.C. pushes ‘petrochemical Appalachian Renaissance’
“This is not going to improve the air quality in Beaver County,” she said. “We have green alternatives if people are willing to pursue them.”
Another cracker plant is planned just 60 miles west in Shadyside, Ohio, also using ethane from the Appalachian basin. Ms. Baumgardner said she worried the new plants will serve as an “anchor” for a larger “petrochemical buildout” in the region, which she argued could have an impact not only on local health but also efforts to fight climate change.
PTTGC Cracker 99% There. The plan to store natural gas liquids in underground salt caverns along the Ohio River, about 12 miles south of a proposed ethane cracker plant in the Dilles Bottom area of Shadyside, may soon become a reality.
David Hooker, president of Mountaineer NGL Storage and the parent company of Denver-based Energy Storage Ventures, told the Monroe County Commissioners Monday that all permits have been approved and construction could begin the first quarter of next year.
“It’s been a long time coming,” he said.
Hooker updated Commissioners Carl Davis, Tim Price and Mick Schumacher on the plans for the project and its value to the potential cracker plant.
“There’s been a lot of discussion about this Appalachian storage hub,” he said. “What we’re trying to do is build a storage facility because we think it’s needed. We think it’s important to everything that’s going on out here in terms of what can be for this valley, meaning more industry back here. Rather than (sending) it to the coast and ship it out of here, let’s keep it. That’s what storage does.”
He said plans have been ongoing since 2013 and storage is the final stage of the production process.
“We think you’re right in the heart of it,” he said.
“Salt is the safest and most used way of storing liquid hydrocarbons in the country. There’s over a billion barrels of it in this country. We’re only talking about 3 million barrels. … It’s not very big, and it’s been going on for 70 years. You choose this stuff because it truly is the safest way to store those kind of hydrocarbons.”
Mountaineer NGL Storage is sponsored by Goldman Sachs.
Hooker added that about $27 million has already been invested in Ohio, including $9 million for right of way and mineral rights for 200 acres of land in Monroe County.
The company has also spent $6 million for technical validation such as ensuring the salt was the correct quality and depth, with methods including geo-mechanical and cavern mechanics, environmental analysis, and drilling bore holes to be certain of the ground’s stability. $12 million was also spent for engineering and permitting for Westlake Construction, administrative costs and other expenses.
“What ODNR has required us to do in the way of that impoundment is unlike anything that’s ever been built in this country,” he said. “They did not want to see anything happen to this thing.”
Hooker said the company intends to invest an additional $180,000.
“We’re going to take this to well over $200 million to get that first phase built out here,” he said.
The first phase would call for 1.5 million barrels stored in three caverns at about a half-million barrels per cavern, 6,700 feet underground.
“We’re talking about three different product lines. We’ve got a 12-inch (and 12-mile) ethane line, hopefully to PTT Global should that plan go forward,” he said, adding that a 10-inch ethane line will also connect to Blue Racer Midstream Natrium, a natural gas processing plant located on the West Virginia side of the river. The line will also connect to an eight-inch propane/butane line. A 10-inch brine line will also extend to Westlake Chemical.
“If we want to continue to build, they’ll continue to take our brine,” he said.
Hooker also spoke about the potential economic impact.
“We think we’re very important in the PTT Global plan, which is why they’re in discussions with us,” he said. “Rather than buy long haul capacity and pipelines or ship to places you might not otherwise build, you’ve got all the reliability and you’re eight miles away. … We think we’re part of the equation for much larger development down there.”
Hooker said there are three companies: the holding company Energy Storage Ventures, the Powhatan Salt Company, which mines salt and sends it across the river, and Mountaineer NGL Storage.
“We think there’s a business to be had afterward. If someone else wanted to build caverns, Powhatan Salt could provide that service for them,” he said.
He added that that the storage project would create 15 to 20 full-time jobs.
Mountaineer has proposed to build a 12-mile pipeline to direct connect storage with the possible ethane cracker plant. The pipeline route, preliminary survey work and a cost estimate have been completed.
“We think we are important to PTT Global and we’ve had a lot of discussions with them on this. I’m fairly confident that if the pipe goes forward that they’ll do something with us,” he said, adding that a survey crew is exploring possible routes. “We’ve just got to figure out what the right route is, who doesn’t want us in their back yard and who’s amenable to allowing us to build up there. Making sure that if PTT does go forward and want to do a deal with us, we have a route to get them the gas.”
In terms of brine disposal, Hooker said a pipeline would run from his facility along the river. They would bore the river, about 60 to 80 feet below the bottom of the river, and come up on the north side of the Westlake facility.
“We’ll actually cross the highway with the product lines and get onto Blue Racer property and bring it in on the east side of Highway 2 for the propane and ethane line,” he said.
Hooker said 7,000 feet of salt water line will be installed on Westlake property.
To produce three million barrels of NGL storage, about 30 million barrels of brine are produced and 90 percent will be delivered to Westlake. The remaining 10 percent will remain in a brine pond to be constructed in stages.
“Getting rid of the brine is a big issue,” Hooker said. “That brine has to go somewhere. What doesn’t work well up in this part of the world is a deep-well injection. Your rock’s way too hard. It can’t take that much brine without giving it back to you, so you need another solution. That’s the first thing we looked for when we got out here: where can we go with the brine?”
In answer to other questions from the commissioners, he said containment areas were out of the flood plain.
Hooker added that an engineer would meet with local fire chiefs and the sheriff to review safety procedures for the coming project.
Why Renewable Energy Will Not Work. (Thanks, WSJ) Democrats dream of powering society entirely with wind and solar farms combined with massive batteries. Realizing this dream would require the biggest expansion in mining the world has seen and would produce huge quantities of waste.
“Renewable energy” is a misnomer. Wind and solar machines and batteries are built from nonrenewable materials. And they wear out. Old equipment must be decommissioned, generating millions of tons of waste. The International Renewable Energy Agency calculates that solar goals for 2050 consistent with the Paris Accords will result in old-panel disposal constituting more than double the tonnage of all today’s global plastic waste. Consider some other sobering numbers:
A single electric-car battery weighs about 1,000 pounds. Fabricating one requires digging up, moving and processing more than 500,000 pounds of raw materials somewhere on the planet. The alternative? Use gasoline and extract one-tenth as much total tonnage to deliver the same number of vehicle-miles over the battery’s seven-year life.
When electricity comes from wind or solar machines, every unit of energy produced, or mile traveled, requires far more materials and land than fossil fuels. That physical reality is literally visible: A wind or solar farm stretching to the horizon can be replaced by a handful of gas-fired turbines, each no bigger than a tractor-trailer.
Building one wind turbine requires 900 tons of steel, 2,500 tons of concrete and 45 tons of nonrecyclable plastic. Solar power requires even more cement, steel and glass—not to mention other metals. Global silver and indium mining will jump 250% and 1,200% respectively over the next couple of decades to provide the materials necessary to build the number of solar panels, the International Energy Agency forecasts. World demand for rare-earth elements—which aren’t rare but are rarely mined in America—will rise 300% to 1,000% by 2050 to meet the Paris green goals. If electric vehicles replace conventional cars, demand for cobalt and lithium, will rise more than 20-fold. That doesn’t count batteries to back up wind and solar grids.
Last year a Dutch government-sponsored study concluded that the Netherlands’ green ambitions alone would consume a major share of global minerals. “Exponential growth in [global] renewable energy production capacity is not possible with present-day technologies and annual metal production,” it concluded.
The demand for minerals likely won’t be met by mines in Europe or the U.S. Instead, much of the mining will take place in nations with oppressive labor practices. The Democratic Republic of the Congo produces 70% of the world’s raw cobalt, and China controls 90% of cobalt refining. The Sydney-based Institute for a Sustainable Future cautions that a global “gold” rush for minerals could take miners into “some remote wilderness areas [that] have maintained high biodiversity because they haven’t yet been disturbed.”
What’s more, mining and fabrication require the consumption of hydrocarbons. Building enough wind turbines to supply half the world’s electricity would require nearly two billion tons of coal to produce the concrete and steel, along with two billion barrels of oil to make the composite blades. More than 90% of the world’s solar panels are built in Asia on coal-heavy electric grids.
Engineers joke about discovering “unobtanium,” a magical energy-producing element that appears out of nowhere, requires no land, weighs nothing, and emits nothing. Absent the realization of that impossible dream, hydrocarbons remain a far better alternative than today’s green dreams.
Mr. Mills is a senior fellow at the Manhattan Institute and a partner in Cottonwood Venture Partners, an energy-tech venture fund, and author of the recent report, “The ‘New Energy Economy’: An Exercise in Magical Thinking.”
Gould Leaves EQT. Gary Gould has more than three decades of oil and gas industry experience, but his last position lasted just 1% of that timeframe.
Gould, who left the employ of oil producer Continental Resources to join EQT Corp., the U.S.’s largest dry gas producer, lasted exactly five months – less than one month in the employ of the company’s new regime led by president and CEO Toby Rice, Kallanish Energy reports.
In a one-sentence U.S. Securities and Exchange Commission filing, EQT stated: “On August 6, 2019, Gary E. Gould, Executive Vice President and Chief Operating Officer of EQT Corporation (the Company), notified the Company of his intent to resign from his position with the Company effective August 7, 2019.
In addition, as Gould was clearing off his desk, EQT announced his position – which was created for him by former EQT president and CEO Rob McNally – was eliminated.
When his hiring was announced, McNally said Gould had a “proven track record of driving operational efficiency and lowering costs to achieve superior results.”
“We are confident that Gary will make invaluable contributions to our success as we transition to manufacturing mode, position EQT as a leading low-cost production company and create both near-and long-term value for our shareholders.”
The problem is every reason Gould was hired are the strong points of the new EQT executive team, led by Toby Rice. His board nominees were overwhelmingly voted into position, and he was named head of EQT to lower cost, drive efficiency and make EQT not only the largest, but one of the industry’s lowest-cost producers.
“Toby was the Coo at Rice, so we’re not surprised to see Gary leave as the new team takes over,” Sameer Panjwani, a director with Tudor, Pickering, Holt & Co., who follows EQT, told Kallanish Energy.
“We agree the timing is a bit surprising, but also seems like his role was a bit redundant as Coo given Toby is now leading the company with a solid operational background.”
NatGas Power Consumption at Record Levels. The U.S. power sector likely set a record for natural gas consumption in July, prompted by sweltering heat and low prices, according to the Energy Information Administration (EIA). The electricity industry consumed 44.5 billion cubic feet of gas on July 19, eclipsing the old daily record of 43.1 billion cubic feet set on July 16, 2018, the EIA said in a blog post yesterday, citing data from S&P Global Platts. The trend is likely to continue, with power companies projected to increase their gas use by 3.8% this year compared with 2018, according to the EIA’s most recent short-term energy outlook. Rising temperatures have also boosted summertime electricity use in the United States. This July appears to have marked the world’s hottest month since modern record-keeping began, edging out July 2016, according to data from the World Meteorological Organization and the Copernicus Climate Change Service.
Record Levels Hit for West Virginia Oil and NatGas Production. West Virginia oil and natural gas production reached record levels in 2018, the 10th straight year of output increases, according to data from the West Virginia Department of Environmental Protection (DEP). Production of natural gas rose last year to 1.8 trillion cubic feet (Tcf) from 1.5 Tcf in 2017, a year-over-year increase of 17 percent. Oil production grew nearly 60 percent, from 7.5 million barrels in 2017 to 12 million barrels in 2018. This is the largest amount of oil produced since 1900, when 16 million barrels were produced by the state.
Permian Fracking Record. The prolific Permian Basin continues to break records. Hydraulic fracturing (fracking) in the Permian broke old records in June, according to energy research firm Rystad Energy, who estimates there were as many as 18 wells fracked per day in June. Previously, fracking operations in the Permian peaked at 520 wells in August 2018. Rystad estimates almost 550 wells were fracked in June. “The Midland platform has undoubtedly been the driver of this upwards trend with consistent month-over-month increases,” said Oleksii Shulzhuk, senior analyst on Rystad’s shale team. “According to our latest estimate, fracked wells totaled 339 in June 2019, constituting a whopping 70 percent growth since the first quarter of 2019, when an average of 200 wells were fracked per month.”
Environmental Partnership Report Details Progress in Curtailing Emissions. In the year since the Environmental Partnership was formed by oil and gas producers, membership has grown from about 20 companies to 65. These companies represent more than 80 percent of the nation’s top natural gas producers. The partnership recently issued its first report highlighting the industry’s progress in reducing methane and volatile organic compounds emissions. In a statement following the release of the report, Todd Staples, president of the Texas Oil and Gas Association, said, “Oil and natural gas continue to make American life better. The tremendous progress outlined in the Environmental Partnership’s report demonstrates the effectiveness industry-led solutions to the challenges we face today. I am extremely proud of the success of The Environmental Partnership in its first year. By using the latest innovations and technologies to enhance environmental performance, leading oil and natural gas companies are reducing the impact of operations while providing the energy that powers modern life. Through collaboration and coordination, the industry will continue to lead the way toward a cleaner, stronger energy future.”
Shale Driller Stumbles, But Big Oil Says It Can Do Better. Exxon Mobil Corp. and Chevron Corp. aren’t fazed by the drilling mistakes and funding hurdles smaller shale producers are running into in the Permian Basin. The North American supermajors said Friday their strategy for the prolific oil field spares them from the slip-ups that sent shares of one of the largest independent Permian producers down over 20% Thursday. Both oil giants reported surging output from the area over the second quarter and stuck to their plans to pour investment into the shale basin. Exxon and Chevron were late to the game in the Permian. While they’ve recently unveiled plans to eventually produce almost 2 million barrels of oil equivalent a day from the West Texas and New Mexico basin, the area was long the home of wildcatters and independent explorers. Those exploration and production companies are now facing mounting pressure from investors to cut spending and deliver returns, which for many means slowing down and selling some assets. Meanwhile, the supermajors have the means to come in with multibillion-dollar investments and ambitious growth plans.
UGI Completes Purchase of Columbia Midstream. Energy products distributor/marketer UGI Corp. last week said its UGI Energy Services unit completed the previously announced $1.28 billion acquisition of the equity interests of Columbia Midstream Group (Cmg) from a subsidiary of TC Energy.
Cmg includes five gathering systems, with capacity of roughly 2.68 million Btus per day (Mmbtu/d), and 240 miles of pipeline, located in the southwestern Appalachian Basin, Kallanish Energy reports.
The deal expands UGI’s midstream portfolio. The Pennsylvania-based acquirer expects the transaction to be earnings per share neutral in fiscal year 2020, and accretive beginning in fiscal year 2021 (beginning Oct. 1, 2020), excluding transaction and integration costs.
“We are very pleased to announce this important transaction as we continue to build a midstream business of scale,” said John L. Walsh, UGI president and CEO. “This transaction … provides an initial investment into both wet gas gathering and processing.”
When the deal was announced July 2, UGI said the acquisition offered financial and strategic benefits for the near- and long-term, including:
- Positions UGI Energy Services as a significant operator of midstream assets across the Marcellus and Utica Shale plays from northeastern Pennsylvania through western Pennsylvania, eastern Ohio, and the panhandle of West Virginia
- Diversifies the business by giving UGI Energy Services access to wet gas gathering and processing
- Expands fee-based revenues.
Credit Suisse is serving as UGI’s financial advisor and Latham & Watkins LLP is serving as legal counsel. TC Energy retained Wells Fargo Securities to serve as its financial advisor in connection with the sale.
Penn East Submitting New Application. PennEast is planning to submit a new application to the New Jersey Department of Environmental Protection for permits to build a 120-mile pipeline that would carry natural gas from northeastern Pennsylvania to another pipeline in Mercer County. The DEP had denied permits for the pipeline in February, weeks after the $1 billion project was approved by the Federal Energy Regulation Commission. The DEP denied the permits because adequate information had not been submitted to complete the application, but it said PennEast could submit a new application.
EOG 2nd Qtr. Financial Update. Eog Resources last week reported second quarter earnings of $848 million, or $1.46 per share, connected to an 16% increase in quarterly production, Kallanish Energy reports.
That compares to net income of $697 million, or $1.20 per share, in Q2 2018. That is an increase of 21.6% and led the company to call the latest quarter’s results “outstanding.”
Q2 revenue jumped 11%, to $4.7 billion in the quarter, compared to the year-ago quarter.
The Houston-based company generated $2.1 billion of discretionary cash flow in the quarter, 1% more than the same period last year — despite a 12% drop in crude oil prices. It generated $352 million in free cash flow.
Net cash provided by operating activities for Q2 was $2.7 billion.
Crude oil production was up 18% in the quarter and exceeded the company’s target with capital expenditures below target. Crude production reached 455,700 barrels per day, a new company record.
Natural gas liquids production grew 16% from a year ago, and natural gas volumes grew by 10%, the company said. Those increases led to total company production growth of 16% in Q2 2019.
Eog reported it reduced unit operating costs by 7% and lowered year-to-date well costs by 4% in the latest three-month period.
“Eog is positioned to generate significant shareholder value even in lower price environments,” said chairman and CEO William R. Thomas, in a statement.
He added, “Every facet of the company is generating improved performance each quarter, from drilling and completions to production and marketing. To put it simply, Eog’s business is stronger than ever.”
Eog is active in the Permian Basin of West Texas and New Mexico and the Eagle Ford Shale of South Texas.
Gulfport 2nd Qtr. Financial Update. Gulfport Energy last week reported second quarter 2019 earnings of $235.0 million or $1.47 per diluted share, on revenue of $459 million, Kallanish Energy reports.
That compares to net income of $111.3 million, or 64 cents a share, on revenue of $272.74 million in Q2 2018.
Gulfport had adjusted net income of $33.3 million, or 21 cents a share, and adjusted Ebitda (earns before interest, taxes, depreciation and amortization) of $194.5 million in the second quarter.
Net production rises
Net production averaged 1.36 billion cubic feet-equivalent per day (Bcfe/d) in Q2 2019, an 8% increase from one year ago.
Gulfport drilled five gross (3.8 net) operated wells in the Utica Shale in Ohio and three gross (2.6 net) operated wells in the Scoop play in Oklahoma in the quarter. It had two additional gross wells in various stages of drilling at the end of June.
The company completed 12 gross (10.1 net) operated wells in the Utica Shale and two gross (1.9 net) operated wells in the Scoop play in Q2 2019. It had three gross wells in various stages of completion at the end of the quarter.
Operated wells turned to sales
Gulfport turned to sales 25 gross and net operated wells in the Utica Shale and six gross (5.9 net) operated wells in the Scoop in second quarter 2019.
The company had earlier released its production numbers. The company’s net daily production mix was roughly 90% natural gas, 7% natural gas liquids and 3% oil.
The company’s realized prices for Q2 were $3.38 per Mcf of natural gas, $75.14 per barrel of oil and 57 cents per gallon of natural gas liquids, resulting in a total equivalent price of $3.71/Mcfe.
Gulfport reaffirmed its 2019 total capital expenditures at between $565 million and $600 million and funded entirely within cash flow.
It also reaffirmed 2019 full-year production will average between 1.36 Bcfe/d to 1.40 Bcfe/d.
Gulfport said it had recently closed on the sale of its Southern Louisiana assets to an unnamed third party for $54.1 million.
“This was a successful quarter for Gulfport as we delivered results in line with expectations, highlighted by another active three months in both our Utica Shale and Scoop asset areas and high single digit production growth over the first quarter of 2019,” said president and CEO David M. Wood, in a statement.
“We remain on track to deliver on our 2019 production guidance, while adhering to our previously provided capital budget and expect to begin significant free cash flow generation during the third quarter of 2019,” he said.
The company is looking to monetize certain water infrastructure assets in the Scoop play in Oklahoma, he said.
Chesapeake 2nd Qtr. Financial Update. Chesapeake Energy reported second-quarter net income of $75 million, or 5 cents per share, which compares to a Q2 2018 net loss of $272 million, or 30 cents a share.
Adjusting for items typically excluded, the Q2 2019 adjusted net loss was $158 million, or 10 cents per share, compared to a loss of $118 million, or 13 cents per share in Q2 2018, Kallanish Energy reports. Revenue rose 4.2%, to $2.39 billion in the most recent quarter.
Hurt by lower product prices
Chesapeake said it was hurt financially by lower production and natural gas prices, as well as higher production costs.
Natural gas prices fell 6.1% in Q2 2019, while production costs per barrel of oil-equivalent increased 28.7%.
Natural gas represents most of Chesapeake’s production, but the company is working to increase its oil production.
Record oil production
The Oklahoma-based E&P Company reported record oil production of 122,000 barrels per day, up 36% from a year ago, or 10% growth adjusted for asset purchases and sales.
Average daily production for Q2 2019 was roughly 496,000 barrels of oil-equivalent (Boe/d), down from 530,000 Boe/d a year ago.
That new production consisted of 122,000 barrels of oil, 2.03 billion cubic feet of natural and 35,000 barrels of natural gas liquids.
Average daily production in Q2 2018 was roughly 90,000 Bbls of crude, 2.31 Bcf of natural gas and 55,000 Bbls of Ngls. Oil production represented about 17% of Q2 2018 production.
Cash margins increase
Despite lower average prices, the company’s cash margins increased significantly in Q2 2019, primarily due to a higher oil production mix and a decrease in gathering, processing and transportation costs, and general/administrative expenses.
It was the highest second quarter operating margin per Boe since 2014.
The company said it reduced its cash operating expenses by $57 million, or 40 cents per barrel of oil-equivalent.
Chesapeake says its oil production is poised to increase significantly in the second half of 2019. It said it plans to place 170 wells to sales, an increase of 50% over the first half of 2019.
More capital to oil growth areas
The company said it’s reducing cash spending on natural gas production and is predicting a double-digit decline in 2020.
“As we formulate our initial 2020 plans, we expect to allocate more capital to oil growth areas with less capital going toward our gas assets,” said president and CEO Doug Lawler, in a statement.
“As a result, with an approximately flat capital program in 2019, we project our 2020 oil volumes will show double-digit percentage growth over 2019, while our gas volumes will show a double-digit decline, yet our projected adjusted Ebitdax remains approximately the same at 2019 levels using today’s lower Nymex strip pricing and current hedge position.” he said.
Three areas of concentration
The company’s three main oil production areas are the Eagle Ford Shale in South Texas, the Brazos Valley in West Texas/eastern New Mexico and the Powder River Basin Wyoming and Montana.
In the Brazos Valley, the company plans to place 45 oil wells to sales in the second half of 2019, compared to 28 wells in the first half of 2019. It has four rigs at work in the play.
The company said it has expanded its Eagle Ford higher-margin black oil window by about 230 sites. Production in the play has grown because of adjusted well spacing and optimized completion designs, the company said.
It expects to place 42 wells on production in Q3 2019, with four rigs at work.
Six rigs working in the Powder River
The company is looking at options to move its Brazos Valley oil to the Houston area via a pipeline that would begin service in Q4 2020.
It has six rigs at work in the Powder River Basin. It placed 16 wells on production in the latest quarter and plans to place 26 wells on production Q3.
In Q2, the company spent $559 million on capital projects, roughly $29 million more than one year earlier. That was due to increased well drilling.
In Q2 2018, the company spud 56 net and 79 gross wells, completed 56 net and 85 gross wells, and connected 63 net wells and 96 gross wells.
In 2Q 2019, it spud 67 net and 92 gross wells, completed 70 net and 92 gross wells, and connected 65 net and 85 gross wells.
Marcellus a cash cow
In the Marcellus Shale in the Appalachian Basin, Chesapeake placed 14 wells on production in Q2 2019, and expects to place 12 wells on production in Q3 2019.
It calls the Marcellus Shale “a strong free cash flow generator” for the company.
At current activity level, the company has about 10 years of drilling inventory in the Marcellus at a break-even price of $1.50/mcf to $1.75/mcf, it said.
The company said it plans to cut its rigs operating in the Haynesville Shale in Louisiana from one to zero in the near future.
SWN 2nd Qtr. Financial Update. Southwestern Energy is reducing its rigs in the Appalachian Basin for the remainder of 2019, Kallanish Energy reports.
The rig count is being reduced from six rigs in the first half of 2019, to two rigs by the end of the third quarter, the Texas-based company said.
The independent producer said total capital investment for full-year 2019 “is not expected to exceed $1.15 billion” due to what it called capital efficiency improvements. It spent $693 million on capital projects in the first half of 2019.
‘Resilience in volatile commodity price environment’
“Swn’s position as a leading Appalachia producer is underpinned by its operational outperformance, continued cost reduction, disciplined capital allocation and prudent commodity risk management. This, combined with a strong balance sheet and no material near-term debt maturities, provides resilience in this volatile commodity price environment,” said president and CEO Bill Way, in a statement.
He said the company intends to return to free cash flow by the end of 2020.
The company reported a second quarter 2019 net income of $138 million, or 26 cents a share, and adjusted net income of $40 million, or 8 cents per share. That compares to net income of $51 million, or 9 cents per share, in Q2 2018.
It reported adjusted Ebitda was $186 million, net cash provided by operating activities was $101 million, and net cash flow was $173 million in Q2 2019.
Total production down
The company recorded total quarterly production of 186 billion cubic feet-equivalent (Bcfe). The total’s down from 234 Bcfe in the year-ago quarter due to the December 2018 divestment of Fayetteville assets. It’s up 11% compared to 2Q 2018 after factoring in the sale.
The company reported 148 billion cubic feet (Bcf) of gas production, along with 937,000 barrels of oil production and 5.50 million barrels of natural gas liquids production in the Appalachian Basin. Production was 79% natural gas, 3% oil and 18% natural gas liquids. Oil production was up 30% and Ngl production was up 13%.
In Q2 2019, the company drilled 41 wells, completed 40 wells and placed 36 wells to sales. It captured a weighted average realized price of $2.61 per thousand cubic feet-equivalent including derivatives and excluding 44 cents/Mcfe of transportation costs. That is essentially flat, compared to Q2 2018, Southwestern said.
Super-rich liquids window
Its Q2 2019, production in southwest Pennsylvania averaged 802 million cubic feet-equivalent per day (Mmcfe/d), including 10,200 Bbls of oil and 60,400 Bbls of Ngls.
The company drilled 23 wells, completed 26 wells and placed 23 wells to sales in southwest Pennsylvania with an average lateral length of 10,211 feet. The 23 wells were all in the Marcellus Shale’s super-rich liquids window.
In northeast Pennsylvania, total production was 1.2 Bcf/d, basically flat compared to Q2 2018.
It drilled 18 wells, completed 14 wells and placed 13 wells to sales with an average lateral length of 9,981 feet. Wells to sales had an average initial production rate of 25 million cubic feet per day, 25% higher than 2Q 2018, it said.
The company reported successfully drilling and completing three Upper Marcellus Shale wells and completing its first Upper Devonian well in its super rich acreage. It is on track to deliver a 25% annual average well cost reduction on wells to sales.
Montage Resources 2nd Qtr. Financial Update. Montage Resources is the latest E&P Company reducing full-year 2019 capital spending (Capex), Kallanish Energy reports.
The company said it has reduced second half 2019 activity levels from two rigs to one rig, resulting in lowered capital spending of $30 million in the Appalachian Basin.
The reason for the reduction is low commodity prices, it said.
The company, with headquarters in Irving, Texas, lowered capital spending guidance for the rest of 2019 by 8%, to between $345 million and $370 million. That is near the mid-point of the company’s previously issued guidance range.
It is also raising its full-year 2019 production guidance by 3%, or about 15 million cubic feet-equivalent per day (Mmcfe/d).
In Q2 2019, the company reported average net production of 535.5 Mmcfe/d — a 75.3% increase from production of 305.5 Mmcfe/d one year earlier.
Total production in the quarter was 48.73 billion cubic feet-equivalent (Bcfe), up from 27.80 Bcfe in Q2 2018.
Its average realized natural gas equivalent price in the quarter was $2.94 per Mcfe, excluding derivatives and transportation costs.
The company reported net income in the second quarter was $27.5 million, or 77 cents per share, on revenue of $155.5 million. That revenue is up 50% year-over-year. That compares to a net loss of $19.0 million, or 95 cents a share, in Q2 2018.
President and CEO John Reinhart in a statement said the company successfully renegotiated an advantageous processing contract with an existing midstream provider on its Marcellus Shale acreage in Ohio.
In the quarter, the company began drilling 12 gross (10.2 net) operated wells, commenced completions of 15 gross (13.0 net) operated wells, and turned to sales 16 gross (11.4 net) operated wells.
The company spent $115.3 million in capital spending in the most recent quarter.
Montage Resources was renamed after the merger of Eclipse Resources and Blue Ridge Mountain Resources. That deal closed last February.
Its operations are in the Marcellus and Utica Shale plays in Pennsylvania. West Virginia and Ohio. The company has offices in State College, Pennsylvania, and Irving, Texas.
ETP 2nd Qtr. Financial Update. Energy Transfer LP has reported second quarter 2019 net income of $878 million, or 33 cents per share, Kallanish Energy reports, up $523 million, or 147.3%, compared to Q2 2018.
The increase is due primarily to higher operating income and the impact of the simplification transaction involving Energy Transfer and Energy Transfer Operating in October 2018, the Texas-based company said.
It had Q2 2019 revenue of $13.88 billion, down from $14.12 billion in Q2 2018.
The company also reported record adjusted Ebitda of $2.82 billion, up 25% from a year ago.
The results were supported by significant increases in four of the partnership’s five core segments, with record operating performance in the partnership’s natural gas liquids and refined products segment.
It reported distributable cash flow of $1.60 billion, up 23% from Q2 2018.
Energy Transfer increased its full-year 2019 adjusted Ebitda guidance to $10.8 billion to $11 billion and reduced its full-year capital expenditures to between $4.6 billion and $4.8 billion.
The company said it expects the Permian Express 4 pipeline expansion will be in service by Oct. 1. The project will flow 120,000 barrels per day from the Permian Basin of West Texas/southeast New Mexico to Gulf Coast markets.
It said construction is continuing on the company’s ethane storage tank and chilling facilities in Nederland, Texas, with an expected in-service date in Q4 2020.
ET and its Sunoco unit have closed on the JC Nolan Pipeline joint venture and successfully commissioned the diesel fuel pipeline in West Texas this week.
The company announced its eighth natural gas liquids fractionator at Mont Belvieu, Texas, and is seeking shippers to expand its Bakken pipeline system. That fractionator will add 150,000 Bpd of capacity and will be in service in Q2 2021, and will give the company 1 million barrels per day of fractionation capacity at Mont Belvieu.
It also opened an office in Beijing, China, last April, in an effort to boost LNG and Ngl sales.
Texas Sues ExxonMobil Over Refinery Fire. Texas Attorney General Ken Paxton has filed a lawsuit against ExxonMobil (Xom) for the July 31 explosion and fire at its petrochemical facility in Baytown, Texas, Kallanish Energy reports.
The suit was filed by Paxton on behalf of the Texas Commission on Environmental Quality.
It seeks injunctive relief, civil penalties, attorney’s fees and other court costs for violations of the Texas Clean Air Act and the Texas Water Code.
Harris County had filed a separate suit on the day after the explosion and fire at the olefins plant.
A total of 67 persons sought medical treatment and 37 were treated for non-life-threatening injuries, including first-degree burns.
The cause of the fire remains under investigation.
Monitoring during the fire detected no air quality issues to people living near the plant, officials said.
Cactus II Pipeline to Begin Service Next Week. Plains All American to begin commercial service on Texas pipeline next week. U.S. pipeline operator Plains All American Pipeline LP expects to begin partial service on its 670,000-barrel-per-day (bpd) Cactus II pipeline next week, Chief Executive Willie Chiang said on Tuesday. Houston-based Plains has filled about half the crude line, which runs from the Permian Basin in West Texas to the U.S. Gulf Coast. It plans to start full operation by the first quarter of 2020, Chiang told investors on a conference call.
Petrochemical Renaissance. DOE’s Winberg talks about WV’s petrochemical future. West Virginia News. Steven Winberg, the U.S. Department of Energy’s assistant secretary for fossil fuels, says a renaissance is coming to the Appalachian region. While speaking before members of the Independent Oil and Gas Association of West Virginia during the organization’s annual Summer Meeting, Winberg said the tri-state region of Ohio, Pennsylvania and West Virginia is on the verge of what he calls an “Appalachian petrochemical renaissance.”
PA Permits August 1, to August 8, 2019
County Township E&P Companies
- No New Permits
OH Permits August 3, 2019
County Township E&P Companies
- No New Permits