Facts & Rumors # 537
January 6, 2024
Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays
Anti’s Funded by China and Russia. Thanks, MDN. The two biggest enemies of the United States, Russia and China, are attacking our country and its fossil fuel infrastructure using proxies — nonprofit groups — funneling money to said groups that use the money to finance a blizzard of lawsuits and other activities aimed at destroying our fossil energy industry. We’re in a war, and we don’t even know it! Just the News, one of the best independent news sites on the web, has an expose focusing on China’s role in funding Big Green groups that, in turn, attack our fossil energy industry.
No wonder there are limited funds for lawsuits. DOE and EPA need to wake up.
4 O&G Issues to Watch in 2024. E&E News. U.S. crude and natural gas production reached all-time record highs last year, putting President Joe Biden in a tricky political spot as the 2024 presidential campaign heats up and casting doubt on the industry’s ability to cut emissions. In 2023, there was a realignment of the U.S. industry following three years of upheaval from Covid-19 lockdowns and a European energy crisis. Now, oil and gas producers are pumping roughly 6 percent more annually than they were a year ago, while average production for natural gas is about 5 percent higher, according to the U.S. Energy Information Administration. As of September, companies were pumping more than 13 million barrels of oil a day. Record U.S. production is likely to remain a major headline this year, so much so that S&P Global analysts said in mid-December that the country’s output could help offset OPEC+ production cuts slated for 2024. Here are four things to watch with oil and gas in 2024.
U.S. NatGas Production Up in 2024. Led by Texas, U.S. natural gas production forecast to grow. BIC Magazine. In a recent EIA Short Term Energy Outlook, it was estimated that U.S. natural gas production in the Lower 48 states would grow by 5% in 2023, and by another 2% in 2024. More natural gas is produced in Texas than any other state, according to the EIA. Most of its natural gas production comes from the Haynesville and Eagle Ford formations and multiple shale formations in the Permian Basin. The Permian region, which spans western Texas and eastern New Mexico, currently accounts for a quarter of all marketed natural gas production in the Lower 48 states. Permian region gas production is forecast to increase by 11% in 2023 from year-earlier levels, and by another 6% in 2024.
U.S. NatGas Drillers Will Balance 2024 Market. U.S. NatGas producers seek to balance production cuts, demand rebound. Reuters. The longer natural gas prices stay lower in 2024 and drilling and related activity pulled back, the market could overshoot to both the downside and upside next year as it seeks to find an equilibrium, EQT’s financial head Jeremy Knop said. U.S. natural gas futures ended 2023 with the biggest percentage decline since 2006 due to record production, ample inventories and a mild winter. There is the risk of over-hedging causing the company to miss out on higher prices that would come when demand picks up, Knop told the Goldman Sachs Energy, Clean Tech and Utilities conference in Miami on Thursday.
Rig Count 25-Month Low.US oil, gas rig count stumbles near 25-month low amid bearish price outlook. S&P Global. The US oil and natural gas rig count sputtered through late December, hovering just above a two-year low as E&Ps continued to dial back drilling activity amid a souring outlook for commodity prices. In the week to Dec. 27, the number of operating US rigs edged up to 677 marking a gain of just two from the prior week when the total dropped to its lowest in just over two years. At the close of 2023, the US drilling fleet has now contracted by nearly 24% in the 12 months since reaching a post-coronavirus pandemic high at nearly 890 rigs, legacy IHS rig data from S&P Global Commodity Insights showed. Slowed drilling activity in recent months has hit hardest in the oil-focused basins.
2023 Final Rig Count. Final rotary rig count of 2023 shows notable drop for North America. Rigzone. Baker Hughes’ final rotary rig count of 2023 showed a notable week on week and year on year drop for North America. The region’s rig count decreased by 58 weeks on week and by 155 year on year, according to the count, which was released on December 29. Week on week, the U.S. added two rigs and Canada cut 60 rigs, and year on year the U.S. dropped 157 rigs while Canada added two rigs, the count highlighted. North America’s total rig count, as of December 29, was 708, comprising 622 rigs from the U.S. and 86 rigs from Canada, the count outlined. The total U.S. rig count was made up of 602 land rigs and 20 offshore rigs, according to Baker Hughes, which showed that the country had 500 oil rigs, 120 gas rigs, and two miscellaneous rigs. The total U.S. rig count comprised 565 horizontal rigs, 46 directional rigs, and 11 vertical rigs, the count showed.
TX December Permits. Texas Railroad Commission releases drilling permit, Completion Statistics for December. My High Plains. Officials from the Railroad Commission of Texas (RCT) released the Texas Drilling Permit and Statistics for December 2023 on Thursday. According to RCT officials, the RCT issued a total of 621 to drill new oil or gas wells, 14 to re-enter plugged wellbores and 33 for re-completions of existing wellbores. RCT officials noted the breakdown of the well types for the total original drilling permits as follows.
EOG Will Halve Output in 2024. Shale driller EOG braces for US oil output growth to halve this year. Bloomberg. EOG Resources Inc., one of the biggest independent shale producers, expects US crude output to grow at less than half of last year’s pace amid lower drilling activity in oil fields. After ending last year with an estimated production growth of 900,000 barrels a day higher than the end of 2022, US oil expansion will be “considerably less,” EOG President Billy Helms said Thursday in a presentation to investors.
U.S. #1 LNG Exporter. U.S. overtakes Qatar to become world’s top LNG exporter. Oil Price. The United States has become the world’s largest exporter of liquefied natural gas, surpassing Qatar and Australia for the first time. This development is at odds with the Biden administration’s goal of becoming the world’s climate leader. Bloomberg data compiled through Dec. 31 shows the US exported 91.2 million metric tons of LNG in 2023. This is a record for the Western country and was made possible by the restart of the Freeport LNG export terminal in Texas, which was closed for months after an explosion rocked the facility in June 2022. The US surpassed Qatar, previously crowded ‘king of LNG exporters’ in 2022 after export volumes dropped for the first time since 2016 by 1.9%. Australia ranked second.
Oil Industry Ends 2023 Strong. The US domestic oil industry closes a remarkably strong 2023. Forbes. As 2023 comes to a close, the United States is producing more oil and more natural gas than ever before, even in the face of efforts by government planners to force a move to other, greener, sources of energy. In fact, thanks to a major uptick in per-well recoveries in shale wells, the US is now producing more oil per day than any single nation has ever achieved. The fact that this has all been accomplished despite a domestic rig count that dropped by well over 20% during the year, according to Enverus, makes this one of the most remarkable outcomes in the industry’s long history. This outcome becomes even more remarkable given that it comes amid a presidential administration whose leaders repeatedly stress their desires to end the industry within a decade and serves as a reminder of the industry’s extraordinary resilience.
Bullish on Oil in 2024. U.S. shale growth could exceed forecasts in 2024. Oil & Gas 360. U.S. crude oil production has overwhelmingly exceeded earlier forecasts and has grown at a much faster pace this year, offsetting much of the OPEC+ efforts to push up prices by coordinated supply reductions. U.S. production growth is expected to continue into the new year, thanks to further gains in efficiency and higher spending and production plans by the U.S. supermajors that have just announced megamerger deals.
Henry Hub 2023 NatGas Price Analysis. U.S. Henry Hub natural gas prices in 2023 were the lowest since mid-2020. EIA. The U.S. benchmark Henry Hub natural gas price averaged $2.57 per million British thermal units (MMBtu) in 2023, about a 62% drop from the 2022 average annual price, according to data from Refinitiv Eikon. Record-high natural gas production, flat consumption, and rising natural gas inventories contributed to lower prices in 2023 compared with 2022. The monthly average Henry Hub price was below $3.00/MMBtu in every month except January, with the lowest monthly average in May at $2.19/MMBtu. Record-high natural gas production that outpaced growth in natural gas consumption was the primary driver of lower prices in 2023. We estimate that U.S. dry natural gas production averaged a record-high 104 billion cubic feet per day (Bcf/d) in 2023 in our December Short-Term Energy Outlook, 4% higher than the 2022 annual average. Production increased in the Permian region, driven by improved well-level productivity and higher crude oil prices in 2023, as well as in the Haynesville region and the Appalachia region, according to our Drilling Productivity Report.
PA Impact Fees Lowest Ever! PA drilling fees for 2023 estimated to be among lowest on record. WESA. The amount communities get to help offset the effects of natural gas drilling will likely be one of the lowest on record. A report from the state’s Independent Fiscal Office estimates drillers owe $174 million in impact fees for 2023. The IFO says that’s an effective tax rate of 2.5%. It’s about $100 million less than the previous year, a 37% drop. In 2022, drillers paid a record $278 million because of a spike in gas prices. Most years have seen the impact fee raise more than $200 million. The outliers are $146 million in 2020, $173 million in 2016, and $187 million in 2015.
MVP Scaling Back. Mountain Valley Pipeline developers scale back extension project amid regulatory obstacles. Politico. The Mountain Valley Pipeline’s embattled Southgate extension is shrinking by more than 40 miles after a series of regulatory hurdles, the project developers told FERC. Equitrans notified the commission on Friday that it had entered into an agreement with Dominion’s North Carolina gas subsidiary, the Public Service Company of North Carolina, and another “investment grade utility customer” to develop a redesigned version of Southgate. The new project is 31 miles instead of its original 75, and includes “substantially” fewer water crossings while avoiding a new compressor station, which had been rejected by Virginia regulators. The project originally aimed to stretch from southern Virginia into central North Carolina, but will now stretch a shorter distance into North Carolina.
Diversified Energy Sells in Appalachia. Diversified Energy sells some assets in Appalachia. Pittsburgh Business Journal. Diversified Energy Co. PLC announced Tuesday it had sold off more than $200 million of its oil and gas wells in Appalachia in a deal that allowed it to keep a minority stake in the assets as well as continue to operate them. Diversified, which is listed on both the London and New York stock exchanges, said it sold the assets to DP Lion Equity Holdco LLC, a special purpose vehicle. It received $200 million in asset backed securitization in the special purpose vehicle and a $30 million in the sale of an 80% interest in the special purpose vehicle. Diversified used the proceeds to pay part of a revolving credit facility and for other uses.
GasBuddy Predicts…. Gas prices will fall in 2024 and Americans will spend $32 billion less on fuel, GasBuddy predicts. CNN. Gas prices will fall in 2024 for the second year in a row, according to GasBuddy projections shared exclusively with CNN. GasBuddy, which had a forecast for 2023 that proved to be eerily accurate, expects US gas prices will average $3.38 a gallon in the key election year of 2024. That would represent a significant improvement from 2023’s average of $3.51 a gallon and an even bigger drop from 2022’s average of $3.95. Gas prices skyrocketed to record highs that year as Russia’s invasion of Ukraine set off global shockwaves.
Permian Methane Emissions Dropped 85%. Permian methane emissions dropped 85 percent in last decade: Study. Rigzone. Methane emission intensity in the Permian Basin decreased by almost 85 percent between 2011 and 2022, despite total oil and gas production increasing by over 416 percent. That’s the assertion of a recent study from the trade association Texas Independent Producers and Royalty Owners Association (TIPRO) titled “Permian Basin Producers: Charting a Cleaner Energy Future 2023”. The study noted that, although 2022 was a “stand-out year” for record production with the Permian Basin producing nearly 5.4 million barrels of oil and 21.2 billion cubic feet per day, methane intensity actually dropped by more than 29 percent year over year.
Civitas Resources Buying Vencer Energy. Civitas Resources expands Permian footprint with$2.1 billion Vencer Energy acquisition. World Oil. Civitas Resources, Inc. announced the closing of its acquisition of certain oil and gas assets in the Midland basin, part of the greater Permian basin, in Texas from Vencer Energy, LLC, a Vitol investment. Under the terms of the agreement, Civitas issued Vencer 7,181,527 shares of common stock and $1 billion of cash. A $550 million deferred cash payment is due to Vencer on Jan. 3, 2025. Civitas currently plans to use cash on hand and/or borrowings on the credit facility to fund the deferred cash payment. The deal, which was announced Oct. 2023, adds over 40,000 new-acres in the Permian’s Midland basin, production levels of approximately 62 MMboed, of which 50% is oil, and roughly 400 development locations in the Spraberry and Wolfcamp formations. The acquisition brings Civitas’ estimated Permian production to about 170 MMboed.
3-APA to Buy Callon Petroleum. UPDATE 3-APA to acquire rival Callon Petroleum in $4.5 billion deal. Reuters. U.S. oil producer APA announced on Thursday it was buying rival Callon Petroleum in an all-stock transaction valued at $4.5 billion including debt, following on the heels of a record year for dealmaking in the largest U.S. shale field. Callon’s assets will add heft to APA’s operations in the Permian shale basin of West Texas and New Mexico, with about 145,000 drilling acres that puts more of APA production in the United States. Callon and APA’s boards unanimously approved the deal, the companies said in statements announcing the merger, which is expected to close in the second quarter. Callon’s shares jumped 7% in premarket trading while APA shares were down 3.7%.
Battalion Oil and Fury Resources Merge. $450 million Permian Basin merger announced between Battalion Oil and Fury Resources. Carlsbad Current Argus. Oil production grew throughout 2023 in the Permian Basin, and multiple companies ended the year acquiring assets in the region and hoping for more growth next year. Houston-based Battalion Oil said Dec. 15 it planned to merge with Fury Resources in a $450 million deal that will see the combined company focus on increasing oil and gas production in the Permian Basin and its western Delaware sub-basin along the border between southeast New Mexico and West Texas. The merger was expected to close by the first quarter of 2024.
December 2023 DUC Report. The number of drilled, but uncompleted wells reported for November in four of the largest U.S. shale plays dropped 15.3% from a year ago, Energy Information Administration data reveals.
- The latest EIA Drilling Productivity Report shows 2,283 DUCs in place last month, down from 2,694 wells in November 2022. The latest total was down slightly from October 2023’s 2,329-well total.
- Three of the four shale plays recorded a year-to-year drop in DUCs, with the largest numerical drop in the Permian, down 222 wells from a year ago, to 821 from 1,043, a 21.3% fall. The latest Permian data was down 11 wells from October 2023’s 832.
- The Eagle Ford play dropped 186 wells last month from a year ago, to 372 from 558, a 33.3% plunge. The latest well number is down 15 DUCs from October’s 289 total.
- Appalachia (including the Marcellus and Utica Shale plays) was the lone play that reported a year-over-year increase in DUCs. Last month 761 DUCs were recorded in the dual play, up 167 or 28.1%, from November 2022’s 594 total.
The most recent Appalachia total was down three wells from October’s 764 total.
PA December 11, to January 4, 2024
County Township E&P Companies
1. Armstrong Manor Synder Bros.
2. Armstrong Valley Synder Bros.
3. Bradford Overton Chesapeake
4. Bradford Overton Chesapeake
5. Bradford Overton Chesapeake
6. Bradford Overton Chesapeake
7. Bradford Overton Chesapeake
8. Bradford Overton Chesapeake
9. Centre Snow Shoe XPR Resources
10. Greene Jefferson EQT
11. Greene Jefferson EQT
12. Greene Jefferson EQT
13. Greene Springfield EQT
14. Susquehanna Great Bend SWN
15. Susquehanna Great Bend SWN
16. Susquehanna Great Bend SWN
17. Tioga Middlebury Seneca
18. Tioga Middlebury Seneca
19. Tioga Middlebury Seneca
20. Tioga Middlebury Seneca
21. Washington Cecil Range
22. Washington Cecil Range
23. Washington Cecil Range
24. Washington Cecil Range
25. Washington Cecil Range
26. Washington South Franklin Range
27. Washington South Franklin Range
28. Washington South Franklin Range
29. Washington South Franklin Range
30. Washington South Franklin Range
31. Westmoreland Sewickley APEX Energy
32. Westmoreland Washington CNX
OH December 17, to December 23, 2023
County Township E&P Companies
1. Jefferson Wells Ascent
WV Permits December 11, to December 22, 2023
1. Doddridge Antero
2. Doddridge Antero
3. Doddridge Antero
4. Doddridge Antero
5. Marshall EQT
6. Marshall EQT
7. Marshall EQT
8. Marshall EQT
9. Marshall EQT
10. Marshall EQT
11. Marshall EQT
12. Marshall EQT
13. Marshall EQT
14. Marshall EQT
15. Ritchie Antero
16. Ritchie Antero
17. Ritchie Antero
18. Ritchie Antero
19. Ritchie Antero
20. Ritchie Antero
