Shale Directories Conferences
FALL 2022 Hydrogen & Carbon Capture Conference IV
November 10, 2022
Hilton Garden Inn, Southpointe
Canonsburg, PA (near Pittsburgh)
Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays
KeyState Gets Funding. (Congratulations, Perry!). OGCI Climate Investments (OGCI CI), a specialist decarbonization investor, has invested in KeyState Natural Gas Synthesis (KeyState), a project company developing the first carbon capture and storage project in Pennsylvania, U.S. The project will integrate natural gas extraction, ammonia and automotive grade urea production, and CCS on a single 7,000-acre site.
The KeyState project could deliver significant near-term emissions reduction by storing CO2, as well as avoiding methane and CO2 emissions thanks to onsite natural gas production and vertical integration, and reduced transportation distance of products. Once operational, the site will enable CO2 cluster development to permanently store over 300,000 tons of industrial CO2 per year.
“KeyState has the potential to enable CCS in Pennsylvania, as well as the vertically integrated model as an example of the circular lower-carbon economy” Betty Pun, Technology Principal, Process Engineering and Carbon Capture at OGCI Climate Investments, said. “Not only does the project deliver emissions reductions directly, but we also see a role for KeyState as a catalyst for CCS hub development in the region.”
The first-of-a-kind project benefits from regional policies and incentives to encourage the responsible use of stranded natural gas, including decarbonization using CCS.
“Once operational, the KeyState project will pull natural gas, methane, up from a mile below the surface, separate the carbon and return the majority of it back deep underground, with the potential to permanently sequester more than 300,000 tons of CO2 per year,” KeyState CEO Perry Babb said. “I believe that the future for America’s natural gas is a lower-carbon future, combining gas production, CO2 extraction and permanent CO2 storage.”
OGCI CI’s investment in the project will be used to deliver pre-front end engineering and design (pre-FEED) activities for the natural gas synthesis plant and characterization of storage resources. These activities are intended to support the project ahead of further investment by additional partners at the FEED stage and beyond.
NatGas Storage Below Expectations. US working natural gas in underground storage rises by 60 Bcf: EIA. US natural gas working stocks rose by 60 Bcf during the week ended July 1, a well-below-expectations build that fueled a recovery in natural gas futures. The net injection brought Lower-48 storage inventories up to 2.311 Tcf for the week ended July 1, the US Energy Information Administration reported July 7. Analysts S&P Global Commodity Insights surveyed July 5 had called for a 73 Bcf build. While responses had ranged from 50 Bcf to 82 Bcf, most analysts surveyed had predicted an above-average build. The weekly net injection aligned perfectly with the five-year average build of 60 Bcf but was more than double the 25 Bcf injection reported during the corresponding week in 2021, according to EIA data. As a result, stocks were 322 Bcf, or 12.2%, less than the five-year average of 2.588 Tcf, and 261 Bcf, or 10.1%, less than the year-ago level of 2.572 Tcf.
Gulfport & Encino, Not Ascent. (Thanks, MDN) Sources whispering to Bloomberg say that Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), is having exploratory talks with Encino Energy about selling itself to/merging with Encino. In March the rumor mill said Gulfport was in talks to sell itself to Ascent Resources (Rumor: Gulfport Energy in Talks to Merge with Ascent Resources). It appears those talks didn’t go anywhere. What about this time?
Ascent Makes Utica Acquisition. Ascent Resources, LLC (together with its subsidiaries, “Ascent” or the “Company”) announced today that it has entered into a Purchase and Sale Agreement with an undisclosed seller to acquire all of its assets in the Utica Shale in Ohio for a total purchase price of $270 million, subject to customary closing purchase price adjustments. Ascent intends to fund the transaction with a combination of cash on hand and borrowings under its revolving credit facility (“Credit Facility”). The Company has also entered into an amended and restated credit agreement with a syndicate of banks to extend the maturity of the Credit Facility to June 2027 while increasing the borrowing base and elected commitment amount to $3.0 billion and $2.0 billion, respectively. The Credit Facility will be governed by the lessor of the borrowing base and the elected commitment amount.
The acquisition expands Ascent’s asset base in the Ohio Utica Shale play by ~26,800 net acres and increases net production by approximately 60 mmcfe/d. The Company already holds working interests in a material portion of the acquired production and, as such, is very familiar with the acquired acreage. In addition, the acquisition comes with a substantial inventory of identified drilling locations in both the Utica and Marcellus which we expect to add high margin cash flow in the future. The acquisition requires no incremental overhead or external financing and is immediately accretive to Adjusted Free Cash Flow and corporate returns. Consistent with past practice, the Company has hedged a significant portion of the expected production from the asset to capture the strong economics and returns offered in the current market.
Jeff Fisher, Ascent’s Chairman and Chief Executive Officer, commented, “We are excited to announce these strategic transactions as they highlight both our operational and financial execution. Through the acquisition we have added high quality acreage and production in the core of the Utica Shale at an attractive valuation, while also picking up prospective locations in the Marcellus. This transaction is immediately accretive to our financial metrics and returns while adding high-quality undeveloped inventory to our portfolio. The extension and increase of our credit facility provides the business with additional access to capital to execute on our long-term returns-based strategy.”
$465 million Permian Deal. New $465 million Permian deal heats up US shale market. For the second time in less than a week, a US independent producer has reached an agreement to purchase assets of a privately held company in the Permian basin. Ring Energy has agreed to acquire 37,000 net acres in Crane County, Texas, from Stronghold Energy II Operating and Stronghold Energy II Royalties for a total sum of $465 million. As part of the deal, Ring will pay $200 million in cash at closing of the transaction and another $15 million six months after. The company will also pay $230 million in common stock and $20 million to acquire Stronghold’s existing hedge liability. The purchase of Stronghold’s assets will change Ring’s balance sheet considerably.
Frac Sand Up 150%. The price of frac sand has spiked 150% for Permian oil producers. World Oil. Frac sand, which gets blasted through shale rocks to unlock oil and natural gas, is averaging $55 a ton, up from $22 at the end of 2021, data from energy-research firm Lium show. Demand is climbing as oil explorers turn the taps back on after Covid-driven cutbacks. But like in so many pockets of the economy, the recovery is sparking a mismatch. Sand suppliers have seen disruptions, labor shortages and trucking bottlenecks. The chief executive officer of US Silica Holdings Inc., the largest publicly traded frac-sand miner, has dubbed the tight market “sandemonium” and said his company is sold out. It’s sand scarcity, even more than price, that’s the big hurdle for oil drillers. Pioneer Natural Resources Co., the Permian’s biggest producer, said it expected oil and natural gas output would take a hit last quarter because of sand issues. Things are so extreme that some oil companies are shipping sand in by train from Wisconsin at almost double the cost.
NatGas Leaving TX; Causing Energy Bill Problems. Texans face skyrocketing home energy bills as the state exports more natural gas than ever. The elevated utility bills have primarily been driven by the price of natural gas, which has shot up more than 200% since late February when Russia, a top gas-producing country, invaded Ukraine and upended the world’s energy market. Since then, Texas, the leading natural gas-producing state in the U.S., has not been able to keep offering its own residents cheap energy. “People are lining up around the world to get our product,” said Todd Staples, president of the Texas Oil and Gas Association. But demand for natural gas has also been growing at home as more people and businesses continue to flock to Texas.
Oil Reserves BIG Drop. Oil reserves see ‘sizable’ drop in another threat to global energy security. Financial Post. Global recoverable reserves have fallen nine per cent from 2021, a “sizable drop” and yet another threat to the world’s precarious energy security, according to a new report by Rystad Energy AS, a consultancy. “Recoverable reserves” refers to oil and gas that would be economically and technically feasible to extract at existing prices. Oslo-based Rystad calculated 1,572 billion barrels of recoverable reserves in its latest tally, down 152 billion barrels from last year. “While the drop in oil availability is positive news for the environment, it may threaten to further destabilize an already precarious energy landscape,” Per Magnus Nysveen, Rystad Energy’s head of analysis, said in a press release. “Energy security is a matter of redundancy; we need more of everything to meet the growing demand for transport and any action to curb supply will quickly backfire on pump prices worldwide.”
Another Permian Deal Canada’s Freehold Royalties pushes July total to $1.1 billion. U For the third time in a week, there has been a major transaction involving assets in the US Permian basin. Canadian-based Freehold Royalties said it has reached an agreement with two private sellers to buy assets in the Permian’s Midland basin, as well as in the Eagle Ford shale, for a combined total of C$155 million (US$119.5 million). Freehold said the majority of the sale price, C$123 million, was spent on the assets in the Midland basin, located in Howard County, Texas.
200 Years of Oil. There is enough oil in Texas and New Mexico to fuel the US for 200 years, but it’s not easily accessible. Energy expert, Ed Hirs, says recovering oil from the Permian Basin would be expensive and would require more workers and materials. The VERIFY team is looking into a meme that has been shared thousands of times on social media. It claims there’s a section of Texas with an oil supply so big, it could supply the entire country for more than a century. Someone wanted to know if that is true. The post shows a map of New Mexico and Texas, with a shaded area in the center. It claims this region, known as the Permian Basin, has enough oil to fuel America for the next 200 years. “It would be really difficult to do. We’re having trouble right now increasing the drilling that we need to do today. Supply chain issues with steel worker issues, we’ve lost over 100,000 workers in the oil patch since 2014,” Hirs said. So, we can verify, while the claim may be true, it wouldn’t be as easy as the post declares.
PA Permit June 27, to July 7, 2022
County Township E&P Companies
1. Bradford Wilmot Chesapeake
2. Bradford Wilmot Chesapeake
3. Butler Parker Laurel Mtn.
4. Butler Parker Laurel Mtn.
5. Tioga Delmar Clean Energy E&P
6. Tioga Delmar Clean Energy E&P
7. Tioga Delmar Clean Energy E&P
8. Tioga Delmar Clean Energy E&P
9. Tioga Delmar Clean Energy E&P
10. Tioga Delmar Clean Energy E&P
11. Tioga Union PA Gen Energy
12. Tioga Union PA Gen Energy
13. Tioga Union PA Gen Energy
14. Westmoreland Rostraver Olympus
15. Westmoreland Salem Apex Energy
16. Westmoreland Salem Apex Energy
17. Westmoreland Upper Burrell Olympus
18. Westmoreland Upper Burrell Olympus
19. Westmoreland Upper Burrell Olympus
20. Westmoreland Upper Burrell Olympus
21. Westmoreland Upper Burrell Olympus
22. Westmoreland Washington Olympus
23. Westmoreland Washington Olympus
24. Westmoreland Washington Olympus
25. Westmoreland Washington Olympus
26. Westmoreland Washington Olympus
27. Westmoreland Washington Olympus
28. Wyoming Meshoppen Chesapeake
OH Permits June 26, to July 2, 2022
County Township E&P Companies
1. Belmont Wheeling Ascent
2. Belmont Wheeling Ascent
3. Jefferson Wells Ascent
4. Monroe Salem Gulfport
WV Permits June 27, to July 1, 2022
1. Marshall Tug Hill
2. Marshall Tug Hill
3. Marshall Tug Hill
4. Marshall Tug Hill
5. Wetzel SWN
6. Wetzel SWN
Joe Barone 610.764.1232
