Shell Annual Outlook Says LNG Demand to Double by 2040

Royal Dutch Shell, one of the world’s supermajors (oil and gas driller), is, in fact, one of (perhaps THE) largest producer of LNG, or liquefied natural gas, in the world. The company has just released its fourth annual LNG Outlook 2020 (full copy below) which highlights key trends in 2019 and hauls out the crystal ball to predict where things are heading over the next 20 years. Shell says global demand for LNG is expected to double to 700 million tonnes by 2040. Why? Because natgas emits less carbon dioxide into the atmosphere than other alternatives.
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Olympus Energy (former H&H) Plans 2 New Wells in Upper Burrell

Upper Burrell Twp

Olympus Energy, the renamed Huntley & Huntley Energy Exploration (HHEX), continues to make Upper Burrell in Westmoreland County, PA a key area of focus. Last April we told you about the company planning its twelfth well pad in Upper Burrell (see Huntley & Huntley Proposes Another Well Pad in Upper Burrell). We’ve since lost track of the number of pads Olympus/HHEX has built in the township, but we have two more to tell you about.

NOTE: Olympus emailed to say they currently have one well pad (not 12), the Zeus pad. That one well pad has three wells in production with three additional wells permitted. However, Olympus did recently apply to build two new pads (each with a single well). We thank Olympus for the correction!
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Antero Resources: Layoffs & Spending Cuts Ahead in 2020

Antero Resources, one of the biggest Marcellus/Utica drillers (with major operations in West Virginia) released its fourth-quarter and full-year 2019 update yesterday, along with hosting a conference call to discuss what investors can expect for 2020. There are loads of important details to share. Production was up 19% in 2019 over 2018. The company lost $482 million in 4Q19, compared to a $122 million loss in 4Q18. However, $463 million of the loss was an impairment charge (write-down) of Antero’s ownership interest in its midstream subsidiary (i.e. paper loss). Looking forward to 2020, the company plans to cut spending by 10% this year (spending $1.15 billion) and plans to make some layoffs. Antero plans to drill 95-100 wells and complete 120-130 wells this year.
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Chevron Hires Barclays to Help Sell Its Marcellus/Utica Assets

In December Chevron announced it was writing down over $10 billion worth of its U.S. onshore shale assets, with $6.5 billion of that number coming from their Marcellus/Utica assets (see Chevron Writes Down $5B+ in Marc/Utica Assets, Looks to Sell All). In addition, the company announced it is putting all of its M-U assets up for sale (see Chevron Confirms M-U Assets for Sale, Asks Vendors to Avoid Media). Just sticking a “for sale by owner” sign on more than a half-million acres of leases and over 500 wells doesn’t appear to be working. So Chevron has hired investment bank Barclays to help shop their M-U assets.
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The Big Write-Down for M-U Drillers; Banpu Stops New Drilling

A Reuters article warns that U.S. shale gas investors are “bracing” for write-downs by major drillers, particularly in the Marcellus/Utica region. The article chronicles the write-downs we already know about (EQT, CNX, Shell and Chevron) and speculates that others (like Antero and Cabot) may make announcements in the coming days. And then, in a bit of a twist, the article ends with information about BKV (Banpu Kalnin Ventures), to say (a) Banpu’s American shale assets have already been written down before they purchased them, and (b) Banpu will not do any new drilling until the price of gas recovers to at least $3.50/Mcf. They may wait a looooong time.
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CNX Proved Reserves Up 7%, More Color on 2019 Drilling Numbers

Nearly two weeks ago CNX Resources issued its fourth quarter and full-year 2019 update (see CNX Reports $271M Loss in 4Q19; Cutting Back on 2020 Drilling). Yesterday CNX issued a followup, further outlining details about their 2019 drilling program (41 Marcellus and 10 Utica wells), along with an update on the company’s proved reserves. CNX reports total proved reserves of 8.43 Tcfe (trillion cubic feet equivalent) as of December 31, 2019, a 7% increase over Dec. 2018.
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American Energy Partners Adds O&G Education Co. to Portfolio

American Energy Partners, Inc. (AEPT), based in Allentown, PA, has just added a fifth subsidiary/division to the company. AEPT agreed to acquire 100% of the membership units of Oilfield Basics, LLC in exchange for 1,000,000 shares of American Energy’s common shares. Oilfield Basics is an educational company, providing courses and training in the oil and gas space. It’s an interesting addition to a portfolio of companies that includes drilling, remediation, water, and valuation services.
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Snyder Bros Off the Hook for Penalties & Interest re Strippers

In December 2018, the Pennsylvania Supreme Court ruled that so-called “stripper wells” (low-producing wells) can be taxed under the 2012 Act 13 law, slapped with an impact tax assessment if those wells produce more than 90 thousand cubic feet per day (Mcf/d) of gas in a single month, any month (see PA Supreme Court Rules Strippers Not Exempt from Impact Fee). Snyder Brothers, the driller whose stripper wells were the target of the lawsuit, asked the Supremes to reconsider their decision. They did, kicking elements of the case down to a lower court (Commonwealth Court). Synder still owes the impact tax, that’s not in question. But Snyder argued they shouldn’t also have to pay interest and late-payment penalties just because they challenged the original assessment.
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Gulfport Continues Board “Refreshment” – 5th Change in 2 Months

Valerie Jochen

In mid-November Gulfport Energy, one of the biggest drillers in the Ohio Utica Shale (210,000 acres), announced they would lay off 13% of their workforce, end (for now) their stock share buy-back program, and “refresh” the board with three new members (see Gulfport Fires 13% of Workers, Ends Stock Buy-Back, Board Changes). Five weeks later and the company announced yet another new board member (see Gulfport Continues Board “Refreshment” – 4th Change in 5 Weeks). And now, a fifth new board member in just a little over two months. What’s going on?
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PA AG Shapiro Says 2017 Inflection Wastewater Spill is a Crime

Pennsylvania Attorney General Josh Shapiro claims an accident in 2017 (based on human error) that resulted in 63,000 gallons of produced water in Lycoming County, PA spilling onto the ground (outside the well pad) is negligent and a crime. Shapiro has filed criminal charges against Inflection Energy and the subcontracting company they used, Double D. We view it as yet another stunt by a man who wants to tee himself up to run for governor.
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S&P Downgrades Credit Rating for Six Big Marcellus/Utica Drillers

click for larger version

Large Marcellus/Utica drillers continue to take it on the chin in the financial markets. The stock prices for almost all M-U drillers have tanked, and now (at least for some of them), their credit ratings have been downgraded too. Standard & Poor’s Global Ratings recently downgraded the credit rating for six of the biggest M-U drillers…
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EQT Subleasing Most of its Downtown Pittsburgh Office Building

EQT Tower

EQT is downsizing its footprint in the city of Pittsburgh–again. Last October we told you that EQT was looking to sublease space in its mammoth downtown office building (see EQT Looks to Sublease HQ Space – Leaving Downtown Pittsburgh?). The EQT building has 32 floors. Lately, the company has occupied 15 floors. By next month EQT’s occupancy will shrink to just five floors. Is EQT getting ready to leave downtown?
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Range Fights DEP Order to Fix Methane Problem They Didn’t Cause

A longtime dispute between the Pennsylvania Dept. of Environmental Protection (DEP) and Range Resources reemerged in January when the DEP ordered Range to fix a well in Lycoming County the DEP alleges is leaking methane into the surrounding ground and water supplies. The DEP says faulty cement casing allows methane to leak. Range maintains the methane was already in the ground/water supply long before it drilled the well. Range is appealing the DEP’s order to “fix it” to a special environmental court.
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Debunking the Divestment Meme: NY Teachers Invest $1M in Antero

We’ve reported on the divestment meme for years–the effort by anti-fossil fuel radicals to force banks and investment firms to withdraw funding and refuse to invest in (or lend money to) any company that produces “fossil fuels.” Most recently Jim Cramer from CNBC’s “Mad Money” said, “I’m done with fossil fuels. They’re done. They’re just done.” (see Jim Cramer Succumbs to the Dark Side – “Done with Fossil Fuels”) Cramer’s words seem to echo the sentiment of many in mainstream media. And yet…and yet, we have evidence that divestment is NOT happening. Not anywhere near the level anti-fossil fuelers would have you believe.
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Montage Resources 2020 Sneak Preview: More OH Marcellus Drilling

Montage Resources provided a sneak preview yesterday for what to expect in 2020. You may recall Montage is the name of the company that resulted after the merger of Eclipse Resources with Blue Ridge Mountain Resources 11 months ago (see Blue Ridge Merges with Eclipse, Renamed to Montage Resources). Montage says it will drill 65% of its 2020 wells in the Ohio Marcellus. You read that right–the Marcellus play in Ohio!
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