Range Evaluating Its NE PA Drilling Program, Likes Early Results
Two days ago, Range Resources issued its third quarter 2022 update, and yesterday the company held a conference call for upper management to brief analysts. By all accounts, Range had a great 3Q. Range produced an average of 2.13 billion cubic feet equivalent per day (Bcfe/d), with approximately 70% of it as natural gas and the rest in NGLs. Range only spent $138 million to drill, but cash flow from operations was a staggering $550 million–the highest in company history. The company drilled 7 wells and completed 22 wells during 3Q. Range brought 12 wells online to sales in the southwestern part of PA, and it brought 6 wells online to sales in northeastern PA.
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A court case decided in late April in Pennsylvania Superior Court appears (to us) to have significant ramifications for landowners and drillers with respect to deducting post-production expenses. The case is Dressler Family, LP v. PennEnergy Resources, LLC (copy of the decision below), and it addresses “market enhancement” royalty clauses found in many PA leases. Market enhancement clauses typically prohibit the deduction of post-production costs that are incurred when transforming gas into a marketable form. Some drillers ignore such clauses and deduct all “post-production costs” from the landowner’s royalty based on the drillers’ incorrect assumption that gas is “marketable” at the wellhead. This case and decision helped clear up definitions of what is and is not marketable gas.
Halliburton, the world’s second-largest oilfield services (OFS) company and the world’s largest vendor of fracking services, issued its third quarter update yesterday. Halliburton reported adjusted net income per diluted share of $0.60/share, more than double from the same period last year. Halliburton boosted sales by more than one-third to $5.4 billion, led by North America. Unlike the world’s largest OFS company, SLB (formerly Schlumberger), Halliburton has sold off its Russian operations and no longer does work in that country. SLB continues to work in Russia.
Although we didn’t watch all of last night’s debate between Pennsylvania Lt. Gov. John Fetterman and Dr. Mehmet Oz, we’ve read plenty of accounts and have watched some of the clips. Fetterman, by all accounts, was a disaster. We read numerous accounts by both Republicans and Democrats that watching Fetterman self-destruct was “painful.” In particular, Fetterman stumbled and bumbled when rigorously questioned about his flip-flop on the fracking issue. We watched it (segment embedded below), and indeed, it is painful to watch.
For at least five years, MDN has reported that the primary source of imported LNG for Boston, Trinidad & Tobago, has seen falling output of natural gas (see 
MARCELLUS/UTICA REGION: Josh Shapiro is a ruthless technocrat out for himself; OTHER U.S. REGIONS: West Texas nagas prices go negative for first time in two years; NATIONAL: U.S. natgas gains 5% on technical move, forecast LNG export rise; China’s thirst for U.S. natural gas triggers new fears.