3 Drillers Pay $50K to Fund Mobile Emergency Unit for Belmont, OH

New mobile emergency response trailer (Credit: WTOV)

A feel-good story for your Friday. Three Utica Shale drillers operating in Belmont County, OH–EQT Corp., Ascent Resources and Antero Resources–between them donated $50,000 to the Belmont County Emergency Management Agency to purchase a mobile command unit trailer that can be hauled to sites where’s there is an ongoing emergency/crisis and used on location. Neighboring Monroe County will get to use it too. Taxpayers didn’t have to pay a dime. Everyone is tickled pink. Yes, there is some self interest in the donation, since better emergency response can theoretically aide their own workers in case of an emergency. But such incidents (in the shale industry) are rare. Chances are the trailer will be used for other types of emergencies. Which is just fine with the shale industry.
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Antero 3Q18: Production Passes 3 Bcf/d in Oct; Less Drilling 4Q

Antero Resources, one of the biggest drillers in the Marcellus/Utica, passed an important milestone last month: Producing more than 3 billion cubic feet equivalent per day (Bcfe/d) in natural gas (and related hydrocarbons). All of that production is in the Marcellus/Utica. Looking strictly at the third quarter–July through September–Antero’s production averaged 2.7 Bcfe/d (29% of it liquids), which is a 17% increase over 3Q17 and an 8% increase over 2Q18. We’re pretty sure we are on solid ground in saying the only company that produces more is EQT, with an average of 4.1 Bcfe/d in 3Q18. Watch out EQT, Antero is catching up!
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Antero Resources Provides Update on Barbour County, WV

Location of Barbour County, WV

You don’t hear much about shale drilling in Barbour County, WV. In fact, the last time we tagged a post for Barbour was in 2013! (see CONSOL Buys 90K WV Marcellus/Upper Devonian Acres, Well Report). Let’s be honest–Barbour is not a hotbed of drilling activity. Antero Resources’ VP Al Schopp recently provided an update on Barbour at a local Chamber of Commerce luncheon. Antero owns no active wells in the county, but has paid out money in severance and property taxes (perhaps a joint ownership in some wells?). Regardless, Al did his homework and provided excellent up-to-date numbers for what is (and is not) happening in Barbour with respect to shale drilling.
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By the Numbers – Revenue & Profitability for M-U Drillers

The expert analysts at RBN Energy have just published their “fourth and final” in a series of posts looking in detail at E&Ps (exploration & production companies, or “drillers”). One of the groups of E&Ps they examine are “gas-weighted” E&Ps–or drillers who mostly extract natural gas. In looking through the list, you immediately realize every one of them has operations in the Marcellus and/or Utica Shale region. Yes, a few also have operations in other plays, but they all have at least some operations here. The real value in the article is an accompanying spreadsheet comparing various financial metrics (apples to apples)–things like total revenue, lifting costs, production costs, and “pre-tax income,” meaning profitability. How do our drillers compare with each other?
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Antero Sheds MLP, Consolidates 2 Midstream Subsidiaries into One

Antero Resources, one of the biggest drillers in the Marcellus/Utica, is the latest in a string of companies to shed its master limited partnership (MLP) structure. Antero uses an MLP for two different pipeline subsidiaries. The company announced yesterday that one of the subsidiaries will buy out the other, and then convert the merged entity into a corporation. The move simplifies Antero’s midstream operations. Here’s the details.
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Antero Nuisance Case by Surface Landowners Goes to WV Supreme Crt

We’re not quite sure how to tackle this story as there are so many aspects to it. Let’s start here: Two years ago lawsuits filed by some 200 West Virginia residents against Antero Resources were combined into a class action lawsuit. The lawsuits are called “nuisance” lawsuits because, according to the plantiffs, Antero is a nuisance to them (truck traffic, noise, lights at night, etc.). That massive class action lawsuit, filed in early 2016, is about to be heard by the WV Supreme Court–a court in disarray after all of its sitting justices were impeached and removed.
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3 Counties, 5 Drillers Led OH’s 50% Increase in 2Q Gas Production

The Pareto Principle is alive and well in the Buckeye State. You may know it as the 80/20 rule, or in this case, the 75/25 rule. The rule that states roughly 80% of the results come from 20% of the effort. Last week MDN brought you the latest update from the Ohio Dept. of Natural Resources–their second quarter 2018 report showing all production coming from the Ohio Utica Shale (see Top 25 Producing Gas & Oil Wells in Ohio Utica for 2Q18). While MDN provided you with Top 25 lists showing the best-performing wells (both gas and oil) during 2Q, and while we provided you with a better spreadsheet to view the information than that provided by the ODNR itself, our analysis was basic and high level. Utica natgas production was up a big 42% over the same period last year, and Utica oil production was up 11%–a cumulative 50% increase when you convert it all into equivalents. The experts at S&P Global Platts have done a deep dive into the numbers and have found that three counties represent 75% of all production in 2Q18, and five drillers represent 75% of all production in 2Q18. Which counties and which drillers? Read on…
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Rover Pipe Asks FERC to Start Up Final 2 Laterals, for Antero

We finally come down to the final two lateral pipelines for Rover. The Federal Energy Regulatory Commission (FERC) played a game of hardball with Energy Transfer (ET) over the Rover Pipeline. For months FERC refused to allow four Rover laterals–feeder pipelines to shuttle gas from where it’s produced into the main Rover pipeline–to start up (see FERC Plays Hardball with Rover – Refuses to Certify 4 Laterals). The reason? ET had not, according to FERC, lived up to its word on restoration work. Things like smoothing over the dirt and replanting grass/other vegetation over top of the buried pipeline. In early August ET assured FERC it would have the majority of restoration work done on two key laterals–the Burgettstown Lateral in southwestern PA, and the Majorsville Lateral in the northern panhandle of WV–by the end of August. FERC made ET sweat. Finally, near the end of August, FERC gave ET permission to start up both the Burgettstown and Majorsville Laterals on Sept. 1 (see FERC Finally Approves 2 Key Rover Pipeline Laterals, Sept 1 Start). That leaves just two final laterals, the CGT (Columbia Gas Transmission) and Sherwood Laterals, still not online. On Friday ET asked FERC to approve the startup for those two laterals, along with a compressor station and two meter stations associated with them. The driller with the most at stake in the startup of these two final laterals is Antero Resources…
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Antero 2Q18: 2.5 Bcfe/d; $136M Loss; No More Utica Drilling This Yr

Antero Resources released its second quarter 2018 update yesterday. Antero is one of the largest drillers in the Marcellus/Utica with massive amounts of acreage in West Virginia (and elsewhere). Revenue was up in 2Q18 to $989 million, compared to $790 million in 2Q17. However, profits were down. In 2Q17 Antero lost $5.1 million, while in 2Q18 they lost $136 million. Antero produced a record 2.52 billion cubic feet equivalent per day (Bcfe/d) of natural gas–27% of that was liquids, including oil. In 2Q the company drilled 22 new Marcellus wells and brought 25 Marcellus wells online. They drilled 6 Utica wells and brought 5 Utica wells online. The company is pausing any new OH Utica drilling for the rest of this year in order to concentrate on the liquids-rich Marcellus region. Antero would have drilled and produced more except there is a trucking shortage in WV. Antero uses trucks to get its crude to market, and lack of trucks meant 100,000 barrels of crude are stored and can’t be moved, and that means the company has curtailed production in a number of WV wells. Antero expects the situation to improve by September. During 2Q Antero drilled what is (so far) the longest lateral for a WV shale well–15,100 feet!…
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Financial Checkup for Marcellus/Utica Drillers

RBN Energy, headed by founder Rusty Braziel (co-founder of Bentek Energy), is, in our opinion, the premier oil and gas analytics firm out there. Smart people working at RBN. And they offer up some amazing content on their blog site–for free! At least it’s free for a while, then it goes behind a paywall. A few days ago RBN published a blog post on the financial health for the 44 major publicly-traded U.S. exploration and production companies (drillers). RBN groups them into three categories: Oil-Weighted, Diversified, and Gas-Weighted. We found the Gas-Weighted list of 10 companies and the information revealed about them to be fascinating and worth studying. Each of the companies has major operations in the Marcellus/Utica–some of them totally focused on our region. Among the data points shared: revenue, production costs, lifting costs and more. We think of the following as a handy financial health scorecard/checkup for 10 of the biggest drillers in the M-U, including Antero Resources, Cabot Oil & Gas, Chesapeake Energy, CNX Resources, EQT, Gulfport Energy, National Fuel Gas (Seneca Resources), Range Resources, Southwestern Energy, and Ultra Petroleum…
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Antero Res. 1Q18: Record High 2.4 Bcfe/d Production, $4+ Hedges

Part of the rush of first quarter 2018 updates released this week included an update from one of the biggest Marcellus/Utica drillers–Antero Resources. Antero drills in WV, OH and PA–but their main focus is on drilling in WV (see Antero Resources Spent $1B in WV Last Year, Another $1B This Year). In a trend we’ve seen with other early-reporting drillers, Antero’s net income was down. However, the company still made money–$14.8 million of net income in 1Q18, down from $268 million of net income in 1Q17. Antero arguably has the best hedging program in the business–the ability to pre-sell their gas (and liquids), fetching prices higher than most others get. Most of Antero’s sales are hedged. The company reports that in 1Q18, if you were to combine natural gas and NGLs and oil, converting it all to natural gas equivalents, Antero sold their production for an average of $4.04 per thousand cubic feet equivalent (Mcfe). Impressive in a market where sometimes the price dips below $1/Mcfe. Speaking of impressive, Antero CEO Paul Rady opened his comments on an analyst phone call by saying, “First and foremost we had an exceptional quarter on the operational front. Despite difficult operating conditions, processing outages and severe weather, Antero delivered record production volumes.” The company hit a record-high of 2.4 billion cubic feet equivalent per day of production…
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Antero Resources Spent $1B in WV Last Year, Another $1B This Year

Antero Resources is seriously in love with West Virginia. Antero is headquartered in Denver, CO but is totally focused on drilling for natural gas, NGLs and oil in the Marcellus/Utica. Antero owns over 484,000 net acres in the southwestern portion of the Marcellus Shale, and over 137,000 net acres in the core of the Utica Shale. Most of their acreage is in WV. Of the $1.3 billion the company spent last year, and plans to spend again this year, around $1 billion (per year) is spent on drilling in WV–close to 80%. Over the next five years, Antero says it will invest $6 billion in the Mountain State. That’s some serious love! As the technology gets better, it takes less time to drill. Antero said it used to take 30 days to drill an 8,000-foot well. Today? They can do it in one day. One of the secrets to Antero’s success in WV is their new Clearwater facility that recycles 98% of the frack wastewater (flowback and produced water) coming from Antero’s wells. Below is an article in which Antero gushes about their love (and future plans) for WV…
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Antero Res. Considers Mining its Own Frac Sand to Cut Costs

If you hang around the business world long enough (as we have), you notice certain trends. One such trend from yesteryear is companies integrating up and down the supply chain. Like when a widget manufacturing company buys the company that supplies it the raw materials used to make the widgets. Example: a car manufacturer buys the company that supplies it with plastic dashboards–and then buys the chemical company that produces the plastic to make the dashboards. And then the same car company, on the other side, buys the credit union that makes the loans to buy their cars! The company becomes integrated. But then the pendulum swings and in recent years, the trend has been about dis-integrating–spinning things off into their own self-contained units. Better to focus on one thing and do it well, rather than be like GE and spread yourself around to multiple industries and specialties. In the oil and gas world, Chesapeake Energy once owned its own oilfield services company (Chesapeake Oilfield Services)–which they later sold. One thing you don’t hear much about is shale companies vertically integrating and buying suppliers. However, Antero Resources, one of the biggest and best drillers in the Marcellus/Utica, is actively considering such a move. Antero wants to buy its own frac sand company as a way of controlling costs. Is it a good idea, or a bad idea?…
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Antero 2017: Big Swing from Red into Black, 9 Long Marc. Laterals

Lots of news coming out of Antero Resources, one of the Marcellus/Utica’s biggest (and best) drillers. Antero issued its fourth quarter and full year 2017 update, along with a statement about the company’s proved reserves, earlier this week. Perhaps the biggest news is that after losing $849 million in 2016, net income for Antero in 2017 was $615 million–a $1.4 billion swing (to the good) over the course of a single year! Average daily production in 2017 was 2.25 billion cubic feet equivalent per day (Bcfe/d)–a 22% increase over 2016. Zooming in on just the fourth quarter, Antero completed and placed on line 28 Marcellus and 10 Utica wells. Antero said they are getting into long laterals. Of the Marcellus wells drilled in 4Q17, nine had laterals over 12,000 feet, with two of those exceeding 14,000 feet in length (over 2.5 miles horizontally underground). Even with long laterals, Antero decreased the average number of days it takes to drill a well–from 15 to 12 (20% less). They also upped the amount of sand they use in fracking by 23%–to over 2,000 pounds of sand per foot. At the end of 2017, Antero estimates it had 17.3 trillion cubic feet equivalent of natural gas sitting in the ground that can be extracted using today’s technology at today’s prices (“proved reserves”). That 17.3 Tcfe is 12% higher than at the end of 2016. Below is the whole enchilada–two updates from Antero, excerpts from the analyst phone call, and the latest and greatest PowerPoint presentation…
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Impressive 2018 Marcellus Growth Not So Impressive Because of DUCs?

Our lead story today is about Gulfport Energy which highlights some exciting news: This year (in 2018) Gulfport will fund their entire drilling budget out of the cash flow the company generates from selling gas/oil/NGLs (see Gulfport Energy Continues Focus on Utica for 2018, No Borrowing). Thing is, Gulfport isn’t the only Marcellus/Utica driller to advertise the fact that this year they are “living within their means” and not borrowing. Others include Range Resources, EQT and Antero Resources. Wow! We’re finally profitable!! Or are we? MDN spotted some analysis by a hedge fund manager. Writing on the Seeking Alpha investor’s website, Josh Young says (in our words) “hold on a minute” with respect to M-U drillers appearing to be able to grow production without borrowing. Why is Josh not convinced with this good news? Because when you dig deeper into the numbers, you find that “organic growth within cash flow is further from reach” because drillers are using DUCs to spend less on drilling, and grow production, than they otherwise would be. A DUC is a Drilled but UnCompleted well. Many times drillers will drill the initial hole in the ground, but then not “complete” (or frack) the well. Why do that? For a variety of reasons. The biggest reason is usually because the commodity price of gas (or oil, depending on the well) is not favorable. Rather than lose the lease (an expensive proposition), drillers will begin the process by drilling, and then leaving, the well, returning later to complete it when prices go up again. Josh’s thesis is that by using DUC inventory drillers aren’t really funding the entire budget from current year cash flow, because some of the money was spent in a previous year to drill the well. They are, in essence, still borrowing–from a different year. Josh estimates an average of 20% of the “new” wells coming online are DUCs and not truly new wells funded by current year dollars–meaning these companies aren’t as “profitable” as they may seem. Does he have a point? Is it all just financial mumbo jumbo? You decide…
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