Repsol Running 1 Rig, Experiments with Cluster Spacing in PA
Spanish-owed Repsol owns (at last check) around 214,000 net acres of leases in the Marcellus Shale, primarily located in northeastern Pennsylvania in Bradford, Susquehanna, and Tioga counties. Early last year (in January 2022), Repsol closed on a deal to buy Rockdale Marcellus out of bankruptcy for $222 million, adding Rockdale’s 66 producing wells on 42,897 net acres to Resol’s extensive Marcellus portfolio (see Sale of Rockdale PA Assets to Repsol Closes – $220M Cash, $2M Debt). Repsol’s planning and development manager, Jose Chirinos, spoke to Hart Energy editorial director, Jordan Blum, at the recent DUG Appalachia event in Pittsburgh. Chirinos discussed the company’s Marcellus drilling program.
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New shale permits issued for Nov 27 – Dec 3 in the Marcellus/Utica were much improved over the previous few weeks. There were 25 new permits issued last week versus 14 issued two weeks ago and just one new permit three weeks ago. So the trend is our friend! Last week’s permit tally included 15 new permits in Pennsylvania, 8 new permits in Ohio, and 2 new permits in West Virginia. Three companies tied for top place with 4 permits each: Seneca Resources in PA, Ascent Resources and Encino Energy in OH.
Epsilon Energy, a relatively small company, used to concentrate most of its effort on developing Marcellus Shale wells. However, over the past year or so, the company has expanded into other plays and now owns assets in the Anadarko (Oklahoma and Texas) and the Permian (Texas and New Mexico). Epsilon typically does not do its own drilling. The company joint venture partners with (gives money to) other companies, like Chesapeake Energy (in the Marcellus), and the other company typically does the drilling. The company’s net gas production during 3Q23 was 2.0 Bcfe (billion cubic feet equivalent) in total, NOT per day. That amounts to an average of 21.5 MMcfe/d (million cubic feet per day), down 14% compared to 2Q23 due to seven PA wells being offline for workover operations. Epsilon generated revenues of $6.3 million for 3Q23, down 3% from 2Q23.
A Susquehanna County, PA judge recently ruled against fractivist lawyers looking for a quick payday in a “Dimock” case stretching back to 2017. In a damning decision against the lawyers, the judge said they repeatedly refused to provide documents in the case even though ordered to by the judge. Not only that, but the lawyers destroyed evidence! They destroyed computers with emails and documents, and even destroyed hard-copy documents, to avoid handing them over to the court. Next up is a trial to determine how much the plaintiff (Coterra Energy) will receive after being wronged by these fractivist lawyers.
In August, the Executive Director of the Susquehanna River Basin Commission (SRBC) approved 34 water-use permits for individual shale gas well drilling pads in Bradford, Lycoming, Sullivan, Susquehanna, and Tioga counties. We’re just learning of the action via an official notice published in the Sept. 23 edition of the Pennsylvania Bulletin. The approvals, which are NOT subject to public review according to SRBC regulations, are general water permits. Each site will be required to receive a specific water withdrawal approval at a later date.
Is there now a truce in the long-running dispute between Epsilon Energy and Chesapeake Energy over drilling new wells in Susquehanna County, PA? Perhaps! Yesterday, Epsilon, a small publicly-traded energy company that joint venture partners with (gives money to) other companies, like Chesapeake Energy, with the other company doing the drilling, announced that “the operator of our upstream assets in the Marcellus recently notified us of near-term drilling plans on our acreage.” While not named, the “operator” must be Chessy. Epsilon has an ongoing lawsuit against Chesapeake for refusing to drill new wells on its jv acreage.
Coterra Energy, formed in 2021 by the merger of Permian oil driller Cimarex Energy and Marcellus gas driller Cabot Oil & Gas, issued its second quarter 2023 update yesterday. The company made far less profit in 2Q23 than it did one year ago, in line with other big Marcellus/Utica drillers. Coterra made $209 million in profit for 2Q23, versus $1.2 billion in 2Q22. Why the drop in profit? The crashing price of natural gas over the past eight months or so. Coterra received an average of $5.54/Mcf (before hedges) for its Marcellus gas in 2Q22, and $1.78/Mcf in 2Q23, a drop of 68%. Ouch. During a conference call with analysts, company management floated a potential plan to free up around $200 million from Marcellus operations in 2024 and reallocate it to other plays (the Permian or the Anadarko) by continuing to run just two rigs and one frac crew in the Marcellus.