CNX Resources Sells Its Conventional Wells in PA, OH, WV for $85M
We spotted an announcement by Diversified Gas & Oil that they have just cut a deal with two different companies–Alliance Petroleum and CNX Resources–to purchase conventional well assets from both companies for a combined price of $180 million. Alliance, based in Akron, OH, has drilled and maintained conventional oil and gas wells in the Appalachian region since 1985. While that part of the story is of passing interest, the more interesting part (for us) is Diversified’s purchase of CNX’s conventional (non-shale) wells in PA, OH and WV. This deal echos a similar deal done by Cabot Oil & Gas last summer when they sold all of their conventional wells in Appalachia (primarily in WV) to Carbon Natural Gas Company for $21.5 million (see Carbon Natural Gas Buys Cabot’s Conventional Wells in WV-OH-VA). The CNX deal with Diversified is for $85 million. Is this now a bona fide trend–shale companies shedding their portfolio of conventional assets? Perhaps! Below is the Diversified announcement…
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CNX Resources, in addition to issuing an announcement about proved reserves yesterday (see today’s companion story), also issued an announcement about CNX the drilling company selling its Shirley-Pennsboro gathering system in West Virginia to CNX the pipeline company (CNX Midstream) for $265 million. Yes, in a sense it is moving assets around on paper. However, this seemingly innocuous announcement is interesting to MDN for a couple of reasons. First, there is a trend of splitting companies apart–to spin out the pipeline/midstream stuff into its own standalone company, separate from the drilling part of the company. EQT, a major CNX competitor, is going through the process of evaluating whether or not to spin off their pipeline subsidiary into its own company (see 
In November 2015 MDN reported on a seemingly obscure zoning court case in Westmoreland County, PA (see 
CNX Resources, the gas drilling part of what used to be CONSOL Energy (but now is it’s own separate company), issued guidance yesterday for how much money they intend to spend on drilling in 2018. CNX will spend somewhere between $790-$880 million on drilling and midstream projects this year, with 65% of that total going for Marcellus projects, and 35% for Utica projects. That high level number breaks down as $515-$580 million for drilling and completions, and $275-$300 million for water, land and midstream infrastructure. CNX expects to drill 75 wells, 60 of them in the Marcellus, in PA and WV, and 15 in the Utica, in PA and OH. CNX plans to frack 51 wells this year, mostly in PA, and bring 59 wells online to production, again mostly in PA. The company also provided a big tease by saying it will spend $75-$100 million on running water pipelines “for two major stacked pay project areas that the company expects to be ready in the fourth quarter of 2019.” Hmmm. Wonder where they intend to expand in 2019? No CNX’s tease will stoke the rumor mill. As part of yesterday’s announcement, CNX also provided impressive data on a pair of dry Utica wells they recently drilled in Westmoreland County, PA…
Yesterday we brought you the news that CONE Midstream has been renamed to CNX Midstream, and that CNX Resources is now the sole owner of the entire gathering pipeline system (see 
CONE Midstream is, or rather was, a pipeline joint venture between CONSOL Energy and Noble Energy (“CO” from CONSOL and “NE” from Noble Energy), formed in the summer of 2014 to service wells drilled as part of CONSOL & Noble’s drilling joint venture (see 
The Pennsylvania Dept. of Environmental Protection (DEP) has fined CNX Resources (formerly CONSOL Energy/CNX Gas) $433,500 for violations at four shale well sites in Greene County, PA. The violations, which happened in 2015/2016, include failure to control and dispose of wastewater properly and failure to prevent erosion. Some of the flowback/wastewater ended up in a small stream called Jacobs Run. We always find the language of these announcements by the DEP somewhat strange: “CNX Gas Company, LLC (CNX) has agreed to two civil penalties totaling $433,500 for violations at well sites in Greene County.” Really? The company getting fined has to “agree” to accept the fine? Apparently we don’t fully understand how regulatory agencies work in PA. What if CNX didn’t agree to the fine? Would the DEP come back with a lower amount, “Will you accept this fine instead?” But we digress. CNX themselves noticed the problems and self-reported the violations. After doing so, they fired two of the service companies they were using. The unnamed service companies were obviously guilty of cutting corners that resulted in improper disposal of wastewater. Interesting factoid: Half of all the wells CNX has drilled in PA are located in Greene County…
CONSOL Energy, headquartered in Pittsburgh, began life as a coal company some 150 years ago. For the past half dozen years MDN has reported on CONSOL’s transformation from coal company to natural gas company. That transformation, as of yesterday, is complete. In July CONSOL filed paperwork with the Securities and Exchange Commission that laid out a plan to split the company in two, into a coal company and a natural gas exploration and production company (see 
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…
This is a story we have not previously covered on MDN. It goes back to 2010 and involves two of the biggest Marcellus/Utica drillers–although in this case the issue is not related to the Marcellus/Utica. Landowners in southwestern Virginia previously sued both EQT and CONSOL Energy’s CNX subsidiary over charges that EQT and CNX shorted landowners out of royalties owed to them, claiming post-production expenses, deductions for severance taxes, etc. that should not have been taken. The wells drilled were conventional wells–some 3,347 EQT wells and 4,261 CNX wells. The vertical wells targeted methane extraction from coal seams–not horizontal wells through shale, which is far more common today. Some lawsuits were green lighted as class action cases in 2013, with a potential for “thousands of landowners” to participate in sharing $30 million in payouts. Last week a federal judge certified three of the five class action lawsuits, allowing them to move forward…
Yesterday CONSOL Energy released their fourth quarter 2016 results, along with a conference call to discuss those results. A few important items come out of yesterday’s activity. (1) The company lost $321 million in 4Q16. (2) CONSOL, originally a coal-only company, plans to either spin-off or sell the remaining coal assets it owns–this year–completing the process of transforming the company from coal to natural gas extraction. (3) CONSOL produced an average of 101.3 billion cubic feet equivalent of natural gas per day in 4Q16, up 6% from 4Q15. (4) The company shaved a dime off the costs to produce each thousand cubic feet (Mcf) of natgas–from $2.37/Mcf in 2015 to $2.27/Mcf in 2016. (5) Although the company lost money, the shale drilling business saw an increase in revenue in 4Q16 to $280.1 million (a 5.6% increase over 4Q15). (6) Although CONSOL has and continues to drill and complete wells in the Marcellus, their focus for new drilling is the Utica. Here’s the update…