Exclusive: CONSOL Energy Sells WV Acreage/Wells to Antero Resources
A week ago a sharp MDN reader (landowner) in West Virginia emailed us to ask about news of a sale by CNX Gas (i.e. CONSOL Energy) of their leases and wells in Doddridge County to Antero Resources. We were stumped. We’ve neither heard nor read anything about it. We searched. And searched. And searched. Nothing. She wrote again a few days later–had we heard anything? Nope. Then we got a second email from another MDN reader asking about the same thing. Our second questioner is in the oil and gas industry. When we questioned him, he gave us a few more clues: It may not only be in Doddridge, but also Tyler County too. There’s something happening in both areas. So we put our feelers out to a number of industry contacts and heard back from one of them–a highly placed source–who confirmed our tipsters. So we now have three people confirming. We know something has been sold and deeds are getting transferred from CNX to Antero in at least one county. Our best guess is that a sale is happening not just in Doddridge, but also in Ritchie, Tyler and Pleasants counties too. We have not (yet) been able to confirm this with Antero, but we feel we have enough to share with you, our valued readers. Here’s what we know, the evidence we have, and a map of the acreage we believe has been/is getting transferred from CNX to Antero…
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As we were reading about yesterday’s big news of EQT buying Rice Energy, we came across a couple of lists (same list, different sources) listing the top 10 natural gas-producing companies in the United States. The list was reworked to show that the combination of EQT and Rice will create the #1 largest natural gas-producing company in the country. An astonishing feat. But what caught our eye in looking over the “top 10” list was just how many of the companies in that list have operations in the Marcellus/Utica. At one time or another, all 10 of the top 10 owned leases and/or drilled in the Marcellus/Utica. By our count, 8 of the top 10 still do. You already know that EQT/Rice will become the #1 producer. But who is #2, and #3? And what about the rest of the list? We have it for you below…
Platts senior energy analyst Luke Jackson yesterday posted a Platts Snapshot titled, “New Northeast US Gas Pipelines Will be Hard to Fill.” Provocative title. It’s a video. Below is a transcript of the video. In it, Jackson says according to their analysis that drillers in southwestern PA and eastern OH and the northern panhandle of WV will struggle, but eventually succeed, in producing enough natural gas to fill new pipelines coming online this year. But they won’t be able to fulfill their obligations until perhaps December 2017. That is, Antero, Range Resources and Ascent Resources will need to rapidly ramp up drilling–or risk paying for pipeline capacity they’re not using. However, it was Jackson’s comment about pipelines coming online in 2018 and 2019 that really caught our attention. He says in the video: “This new capacity will be nearly impossible to fill, barring a massive ramp in drilling activity, which, per our forecast, is not expected to occur.” So Platts says Marcellus/Utica drillers will not be able to produce enough natural gas to fill all of the new pipelines that will be online by 2019. If we assume the price of natgas goes higher over the next few years (not an unreasonable assumption), what this means is that new drilling is going to ramp up like crazy in the next few years. Buckle up! Here’s the transcript…
Antero Resources, one of the biggest and best drillers in the Marcellus/Utica concentrating on just those two plays, turned in their first quarter 2017 numbers on Monday, and held an earnings call to discuss it yesterday. The first thing that caught our eye was that Antero hit a new production high in 1Q17. The company produced 2.1 billion cubic feet equivalent per day. Impressive. Perhaps even more impressive is that although the company lost $5 million in 1Q16, they swung to making a $268 million profit in 1Q17. Wow! Antero has one of the best hedging programs in the business. That is, they pre-sell their production at higher prices than other drillers, which is no doubt why they turned in such a great first quarter. The Marcellus was their main focus during 1Q17. Antero drilled and brought online 25 Marcellus wells. Although they fiddled with drilling and casing 13 Utica wells in the first quarter, they didn’t complete (i.e. frack) and bring any of their Utica wells online. Why? They’re waiting for the Rover Pipeline to get built first. Antero currently runs three rigs in the Utica. They plan to move one of the three to the Marcellus during 2Q17. Here’s a load of good information from Antero for 1Q17…
Yesterday CONSOL Energy, one of the larger drillers in the Marcellus/Utica, released its first quarter 2017 update. The company reports losing $34 million in 1Q17. Production was down too–but just slightly at less than 2% less than 1Q16. The big news is how fast CONSOL is selling stuff. CONSOL sold $108 million worth of assets in the Marcellus/Utica in 1Q17, part of their plan to sell off a total of $400-$600 million in assets this year. According to a CONSOL statement, the company “recently closed on three asset sale transactions for total cash consideration of $108 million…One of the transactions was the sale of approximately 6,300 net undeveloped acres of the Utica-Point Pleasant Shale in Jefferson, Belmont and Guernsey counties, Ohio, for total cash consideration of approximately $77 million, or approximately $12,200 per undeveloped acre.” We have a highly placed source that tells MDN that Ascent Resources is the buyer. CONSOL CEO Nick DeIuliis said on an earnings call yesterday that the bust-up with Noble Energy last year has allowed CONSOL to sell off acreage that was previously tied up in the joint venture. Noble is doing the same (see today’s lead story). Below we have the full update from CONSOL, including financial statements, along with the latest PowerPoint presentation…
We have sad news to report. A young man, just 19 years old, was killed when he was “struck by a truck, then pinned between the truck and a stationary object” at an Antero Resources well pad site in Tyler County, WV last Thursday. Hunter Osborn, of Lewis County, WV, worked for U.S. Well Services, the fracking company hired by Antero. The well pad is called the Hartley East Pad in Middlebourne. Mr. Osborn was pinned between a tractor trailer backing up to unload sand and a sand silo. Our thoughts and prayers go out to the family and friends of this young man. Below are the details we could find about the accident…
Rex Energy announced yesterday the company has cut a deal with Antero Resources to sell all of Rex’s “Warrior South Area” assets to Antero. Which may should like a big deal, but really isn’t. The assets sold include 4,100 net acres in perhaps the hottest part of the Ohio Utica Shale: Guernsey, Noble and Belmont counties. It also includes 14 Utica Shale wells. However, the wells are only producing 9 million cubic feet per day (MMcf/d) collectively. The sale price is $30 million–or $7,317 per acre. Rex says the acreage and wells are in a “non-core” area for the company. Rex, a driller focused mainly on the Marcellus/Utica (headquartered in State College, PA), has had its share of financial challenges. In December the company was warned by the New York Stock Exchange that the per share price is too low and the stock is in danger of being delisted (see 
Ladies and gentleman: Start your drill bits! Yesterday Antero Resources, one of the biggest drillers in the Marcellus/Utica, released their road map for what lies ahead in 2017 for the company. Among the gems: The company plans to do a serious amount of drilling. They will have drilled 170 new wells, bringing them online, by the end of the year, with another 30 drilled but not completed. Antero will spend $1.3 billion to do it–with another $200 million spent on land deals. Daily production is forecast to average somewhere around 2.1 to 2.2 billion cubic feet (Bcf) per day, up 20-25% over production in 2016. Observation: Antero will spend about what it spent last year, but still goose production by nearly a quarter more than last year. Talented folks! Antero, as we’ve previously highlighted, has what we consider to be the best hedging in the business. They announced two-thirds of their production for 2017 is hedged at $3.68/Mcf (thousand cubic feet). In fact, all of their production for this year is hedged, at various price points. The spot price of natural gas today, as this was being written, was $3.27/Mcf. Here is Antero’s success road map for the next 365 days…
A kerfuffle erupted yesterday when Chapter IV Investors, a Charlotte, NC-based investment firm with investments in EQT, Range Resources and Antero Resources, announced it had sent a letter to EQT urging the company to consider merging with either Range Resources or Antero Resources. Chapter IV, which is essentially two big-money investors (W. Barnes Hauptfuhrer, Managing Partner and Portfolio Manager, and Ryan J. Jack, Partner), does not own enough stock in any of the companies (less than 1% in each) to throw its weight around like a corporate raider. Rather, it appears to be two investors attempting to grab the attention of these companies and their shareholders by issuing a press release (full copy below) with a plan they say would create a new Marcellus/Utica driller worth more than $25 billion. Obviously the value of investments for Chapter IV would go up under such a scenario–so there is self-interest at work here. However, we don’t detect any kind of bullying on the part of Chapter IV, like that of a raider Carl Icahn (successful takeover of Chesapeake Energy & Cheniere Energy) or Keith “Mini-Me” Meister (unsuccessful attempt to takeover Williams). Rather, it appears to be a couple of investors who believe there is an honest and good case for a combination of EQT with another company, and were willing to spend $500 on a press release to make their case. Are they right?…
In September, MDN brought you research on 10 of the largest Marcellus/Utica drillers that have “hedged” their 2017 production (see