CNX Resources 3Q18: Production 1.3 Bcf/d, $35M Profit

CNX Resources, formerly CONSOL Energy, issued its third quarter 2018 update yesterday. The company reports producing an average of 1.3 billion cubic feet equivalent per day (Bcfe/d) of gas, NGLs and oil, up 18% from 3Q17. They made $35 million in profit, up from a loss of $41 million for the same period last year. CNX drilled 23 Marcellus/Utica wells in 3Q18 using four rigs, and brought 35 wells online. Three frac crews completed 27 wells during the quarter. The 23 wells drilled over the past three months included: 15 Marcellus wells in Greene County, PA; 3 dry Utica wells in Westmoreland County, PA; 3 dry Utica wells in Monroe County, OH; and 2 Marcellus wells in Tyler County, WV. The company expects to produce close to 500 Bcfe for all of 2018. CEO Nick DeIuliis boasts, “the team is firing on all cylinders.”
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Chesapeake Now Gone from Ohio Utica; Spends $4B in Eagle Ford

Chesapeake Energy has just blown the minds (and confidence) of investors by plunking down $4 billion in cash and stock to buy WildHorse Resource Development Corp, a driller with big-time assets in the oily Eagle Ford Shale play in Texas. Investors didn’t like the news, punishing the stock by sending it 12% lower. Chesapeake Energy today is definitely not the same company it was even five years ago. Chessy was co-founded by the flamboyant Aubrey McClendon (God rest his soul). Aubrey, a landman by profession, founded the company as a natural gas driller–building it into the largest onshore natural gas-drilling company in the U.S. Today Chessy’s focus on gas is pretty much gone. While they still drill and maintain wells in both the Marcellus (in PA) and Haynesville (in Louisiana), most of the talk in Chessy’s 3Q18 update, which was issued yesterday, was oil, oil, oil.
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M-U NatGas Prices Dramatically Higher Thx to 3 New Pipes Online

“Come on Jim, quit writing so much about pipelines! Write more about upstream/drilling!” We have had MDN subscribers tell us that (no lie). But here’s the thing: What happens with pipelines *directly* affects what happens with drilling–the willingness of companies to drill more. Case in point: Over the past few weeks two new pipelines have come online: Williams’ Atlantic Sunrise and DTE Energy’s NEXUS. More capacity along Energy Transfer’s recently completed Rover also recently came online. The effect of the three combined has been dramatic. Production volumes have shot up another 1 Bcf (billion cubic feet) in the past month, to over 30 Bcf/d. And get this: While the Appalachian spot price for gas was $1/Mcf (thousand cubic feet) on Oct. 8 ($2 *below* the Henry Hub price), on Oct. 24 the Appalachian price was averaging $3/Mcf! Just 12 cents below Henry. A movement of $2/Mcf! Behold the power of pipelines and why we write about them so much.
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EQT Midstream Plans 1.2 Bcf/d Hammerhead Pipeline to Feed MVP

EQT Midstream, which is about to be renamed to Equitrans Midstream Corp. in a few weeks, recently issued its third quarter 2018 update (same day that EQT the driller issued its update). As you know, the two are about to split and become two independent companies. As part of the EQT Midstream update, the new midstream company leaders spoke about Mountain Valley Pipeline (MVP), a 303-mile pipeline from West Virginia into southern Virginia. MVP has experienced a lot of setbacks, most of them from a campaign of lawsuits filed by Big Green organizations (like the odious Sierra Club). A new pipeline project related to MVP was mentioned prominently in this week’s quarterly update. The pipeline is called Hammerhead.
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PA DEP Stops Revolution Pipe Repair Following New Problems

On Sept. 10, Energy Transfer’s 24-inch gathering pipeline in Beaver County, PA, called the Revolution Pipeline, caught fire and exploded during testing (see Revolution Pipeline Near Pittsburgh Explodes – Home & Barn Destroyed). Fortunately, nobody was hurt, although a nearby home, barn and two garages were leveled by fire from the blast. That area, like much of the northeast, has been pounded by rain week after week and month after month. All that rain resulted in a landslide, which caused the explosion. Since that time ET has been working, pushing dirt around the entire 100-mile length of the pipeline to ensure there are no other problems. Yesterday the Pennsylvania Dept. of Environmental Protection (DEP) put a stop to that work, at least for now.
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Retired Range VP of Marcellus Heads to Huntley & Huntley as COO

The man largely responsible for the huge success of Range Resources in drilling in the Marcellus Shale, Range’s former senior vice president in charge of the Marcellus, John Applegath, is heading to Huntley & Huntley to helm the drilling program there. Applegath recently retired from Range, but he’s not ready for the pasture just yet! He’s jazzed to be working with the much smaller H&H and the team they’ve assembled, to drill in the Pittsburgh area. H&H has roughly 100,000 leased acres in southwest PA.
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Moody’s Says Smaller Oilfield Services Cos. in Trouble from Debt

Moody’s Investor Service is sounding the alarm with respect to oilfield services (OFS) companies and debt. In a publication for Moody’s clients issued earlier this week, analysts said OFS companies don’t have the means to pay back towering debt in the short term, and “limited options” when it comes to raising equity to improve liquidity. What it means is this: Companies like Schlumberger, Halliburton, and Baker Hughes a GE Company are heading for rough waters. However, the biggies, like the three we’ve mentioned, will probably be OK. But their smaller competitors, according to Moody’s, may not be OK.
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Energy Stories of Interest: Wed, Oct 31, 2018

The “best of the rest”–stories that caught MDN’s eye that you may be interested in reading: PennDOT announces opening of 14th CNG transit fueling station in Indiana County; Main contractor on Atlantic Sunrise, Mariner East gas pipelines declares bankruptcy; Energy undersecretary pitches energy diversity at Southpointe; Duke brings first 820 megawatts online at natural gas plant in Florida; BHGE believes 2019 rig, well counts will grow; Cold snap could send natural gas to $5; BP’s Q3 European natural gas price realization jumps 53% to $7.79/Mcf on year; China’s tariff on US natural gas delays Louisiana LNG project.
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