Facts & Rumors # 528

October 7, 2023

Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays

Exxon’s $60 Billion Deal.  Exxon Mobil closing in on megadeal with shale driller Pioneer. WSJ. Exxon Mobil is closing in on a deal to buy Pioneer Natural Resources, a blockbuster takeover that could be worth roughly $60 billion and reshape the U.S. oil industry. A deal could be sealed as soon as in the coming days, though it is still possible there won’t be one, people familiar with the matter said. After posting a record profit in 2022, Exxon has been flush with cash and exploring options that would push it deeper into West Texas shale. An acquisition of Pioneer, with a market cap of around $50 billion, would likely be Exxon’s largest deal since its megamerger with Mobil in 1999. Reuters, Yahoo Finance, Financial Times, and The Times also report.

Exxon Has Good 3Q.  Exxon 3Q profits to climb from last quarter on higher prices. Reuters. Exxon Mobil said on Wednesday big increases in oil, gas and fuel prices would deliver a third-quarter operating profit between $8.3 billion and $11.4 billion, below the year ago’s record earnings but up from its second quarter. Exxon’s snapshot of operating profits, delivered in a securities filing after the market close, signals a good quarter for oil companies on high oil prices and strong demand for gasoline and diesel. The largest U.S. oil producer posted total profit in the same quarter a year ago of $19.7 billion and $7.9 billion in its second quarter this year. Analysts currently forecast a $9.22 billion, or $2.37 per share profit, for the latest quarter, according to financial firm LSEG.

New NatGas Production Needed to Meet Global Demand.   Rystad Energy: New natural gas production is needed to meet demand. Oilfield Technology. Global gas demand is projected to rise in the next decade, thus influencing a 12.5% surge in production between 2023 and 2030. However, Rystad Energy forecasts that even in scenarios of 1.9 – 2.5°C warming, with rapid growth in renewable energy sources, the current set of existing gas fields will not meet global demand, requiring rapid growth in unconventional gas supply. Gas-rich geographies such as the Middle East, with basins such as Rub al Khali, will play an essential role in bridging that gap, providing an estimated 20 million tpy of LNG by 2040.

Almost 2.5 Million Barrels Go Offline for Maintenance.  Nearly 2.5 million barrels a day of US refining capacity to shut for fall maintenance. Bloomberg. The fall refinery maintenance season in the United States is shaping up to be the heaviest since before the Covid-19 pandemic forced plants to slash rates and delay all but emergency work. Nearly 2.5 million barrels a day of refining capacity will go offline for maintenance from September through December, according to data from Energy Aspects. That’s 11 percent higher than the same period last year. Looking ahead, the first quarter of 2024 is projected by some to be the heaviest maintenance season ever, loaded with deferred work and regularly scheduled turnarounds on crude units, gasoline-making fluid catalytic crackers, cokers and others. That could kick-start a race to lock down available contractors.

Four Most Productive Oil and NatGas Counties in America.  Four most productive oil, natural gas counties in America are in west Texas. El Paso Inc. The counties that produce the most oil and natural gas in all of America are in the Permian Basin in west Texas and southeastern New Mexico. Four of the top five Texas counties that produced the most crude oil in June were in the Permian Basin: Midland, Martin, Upton, and Howard, according to the latest data from the Texas Railroad Commission, which regulates the oil and natural gas industry. Karnes County, southeast of San Antonio, located in the Eagle Ford Shale, produced the fifth-greatest amount of crude and fourth-greatest amount of natural gas.

Don’t Let that Lizard Stop Drilling in TX. The U.S. shouldn’t let a lizard stand in the way of drilling (Opinion). Houston Chronicle. U.S. Rep. August Pfluger, representing the 11th District of Texas, and Tim Tarpley, president of the Energy Workforce and Technology Council, write: The national security contributions of this secure supply of energy cannot be overstated, and the economic value remains a boon to the Texas and U.S. economy. Unfortunately, this plentiful resource and economic growth engine is being threatened by the Biden administration and its proposal to list the dunes sagebrush lizard — a small reptile found in arid regions of Texas and New Mexico — as an endangered species. Listing the dunes sagebrush lizard as endangered will be detrimental to oil and gas production in the lizard’s habitat, which is also home to some of our nation’s most critical oil and gas developments.

Reluctant to Drill.  U.S. shale is reluctant to drill despite rising oil prices. Oil Price. The U.S. shale industry has changed its primary focus from production growth to capital discipline, influenced by capital efficiency concerns, federal government policies, and shareholder interests. There are contrasting reports about U.S. oil production, with the EIA suggesting a decline in shale oil, while Rystad Energy predicts an all-time high by year-end. Several industry leaders and analysts, including those from Goldman Sachs, anticipate oil prices to soar even further, with potential challenges ahead for U.S. shale production and the Biden administration’s energy strategies.

Permian Boom Is Not Over.  The Permian oil boom isn’t over just yet. Yahoo Finance. The Permian has more oil in place to allow output growth for the next few years, Occidental’s president and CEO Vicki Hollub said this week, commenting on mounting concerns among analysts that well productivity in the top oil-producing U.S. shale basin is dropping off. “Well, we’ve seen continuing improvement in our oil well productivity and so we haven’t seen a drop off,” Hollub said at the ADIPEC energy conference in Abu Dhabi, as carried by Reuters. While there has been a degradation of productivity with some operators, the Permian “still has enough additional oil to develop that will continue to grow over the next few years,” Oxy’s Hollub said.

 Flaring Up in TX Oil Patch.  Flaring ticks up in Texas oil patch, showing limits of ESG pressure. Bloomberg. It has been the US oil industry’s biggest environmental success story in recent years. Gas flares that once lit up the night skies were shut off, curbing a wasteful practice that generated millions of tons of planet-warming emissions. But after years of declines, flaring is on the rise again in the biggest US oilfield. Altogether, producers in the Permian Basin in Texas and New Mexico flared about 97 billion cubic feet of the fuel in the year ended June 30, a Bloomberg News analysis shows. That’s enough to meet the nation’s entire natural gas needs on a typical day.

Leasing Picking Up in Columbiana, County, OH.  Thanks, MDN.  Once upon a time (roughly 12 years ago), Chesapeake Energy and other shale drillers were leasing property in Columbiana County, OH, in deals that often paid $6,000 per acre for a signing bonus and granted 20% royalties for any oil or gas produced. According to an analysis by the Youngstown Business Journal, those days are long gone. However, many of those original leases have expired, and there is a new push to re-lease in the county, says a Youngstown attorney specializing in oil and gas. Just don’t expect big signing bonuses and royalty rates.

From what I’m hearing, a number of these leases could be for oil.

U.S. Record NatGas Exports First Half of 2023. US exports of natural gas set a record high in the first half of 2023. Green Car Congress. The United States exported more natural gas in the first half of 2023 (1H23) than it did in the same period of any previous year, according to the US Energy Information Administration (EIA). Natural gas exports averaged 20.4 billion cubic feet per day (Bcf/d), 4% (0.8 Bcf/d) more than in 1H22, according to EIA’s Natural Gas Monthly. Liquefied natural gas (LNG) exports largely drove the continued growth in total natural gas exports, although natural gas exports by pipeline also increased.

U.S. Exports Down in September.  Thanks, MDN.   U.S. exports of liquefied natural gas (LNG) fell, albeit modestly, in September from August as scattered outages at four gas-processing plants led to lower shipments. A total of 7.12 million metric tons of LNG left U.S. ports in September, down from the 7.32 million metric tons exported in August, according to data from LSEG vessel tracking. That’s down just 2.7%. Maintenance outages were at Freeport, Sabine Pass, Corpus Christi, and Cove Point. In fact, Cove Point is still down for maintenance.

Freeport Needs FERC to Open Dock 2.  Thanks, MDNFreeport LNG’s export terminal with three liquefaction “trains” shut down in June 2022 after an explosion and fire (see Explosion Rocks Freeport LNG Export Plant – Offline for 3 Weeks). What was originally thought to be a three-week outage lasted for ten months! The plant finally returned online in March of this year (see Freeport LNG Plant Back to Full Capacity Using 2.1 Bcf/d of NatGas). However, something that had (until now) escaped our notice: The plant is not yet back to 100% full operational status. A second loading dock is still offline. Freeport recently asked FERC for permission to return Dock 2 to operational status, which would goose output from the current 2.1 Bcf/d to 2.38 Bcf/d.

EnergyMark Buys Crown Energy Services.  Thanks, MDN.   Western NY natgas utility EnergyMark buys Crown Energy Services. Marcellus Drilling News. Local natural gas utility EnergyMark, LLC located in Williamsville, NY (provider of natgas to the Buffalo Bills stadium), announced the acquisition of the assets of another gas utility, Crown Energy Services, Inc. of West Seneca, NY. The two energy supply companies are among the longest-standing suppliers of natural gas in Western New York. Both companies have provided natural gas supply service to industrial, commercial, and residential clients in New York and Pennsylvania for over 20 years.

Civitas Resources to Buy More Permian Assets.  Civitas Resources to buy Permian assets for about $2.1 bln. Reuters. Civitas Resources (CIVI.N) will buy acreage in the oil-rich Permian Basin from global energy trader Vitol’s U.S. upstream venture for about $2.1 billion in cash and stock, the U.S. oil and gas producer said on Wednesday. The acquisition from Vencer Energy, set up by Vitol in 2020, will add about 44,000 net acres in the Midland Basin, part of the larger Permian region, the company said. The Permian is a prime target for producers looking to increase their inventory. The shale patch, which lies between Texas and New Mexico, has the necessary infrastructure and is known for high productivity and large undeveloped reserves.

PA September 25, and October 4, 2023

County                                   Township                                           E&P Companies

1.    Butler                                            Middlesex                                          PennEnergy

2.    Lycoming                                     Cogan House                                   SWN

3.    Lycoming                                     Cogan House                                   SWN

4.    Lycoming                                     Cogan House                                   SWN

5.    Westmoreland                            Penn                                                   Apex

6.    Westmoreland                            Penn                                                   Olympus

7.    Westmoreland                            Penn                                                   Olympus

8.    Westmoreland                            Penn                                                   Olympus

9.    Westmoreland                            Penn                                                   Olympus

10. Westmoreland                            Penn                                                   Olympus

OH Permits September 23, to September 30, 2023

County                                   Township                                           E&P Companies

1.    No New Permits

WV Permits September 25, to September 29, 2023

1.    Monongalia                                                                                             CNX

2.    Lewis                                                                                                        HG Energy

3.    Lewis                                                                                                        HG Energy

4.    Lewis                                                                                                        HG Energy

5.    Lewis                                                                                                        HG Energy

6.    Marion                                                                                                      EQT

7.    Marion                                                                                                      EQT

8.    Marion                                                                                                      EQT

9.    Monongalia                                                                                             CNX

10. Monongalia                                                                                             CNX

11. Monongalia                                                                                             CNX

12. Monongalia                                                                                             CNX

13. Wetzel                                                                                                      Antero

14. Wetzel                                                                                                      Antero