Equinor Swaps Acreage with EQT in PA & OH, Exits Operated US Shale
We tried to cram the gist of the news into the headline but found we could not. This is a big story, for multiple reasons. Most news outlets are reporting (and this is not incorrect) that EQT pulled off a big deal to divest a good chunk of its nonoperated assets (acreage and functioning wells in which EQT owns a minority stake) in northeastern Pennsylvania, trading those assets for 10,000 operated acres in Lycoming County, PA (in northeastern PA), plus 26,000 operated acres in Monroe County, OH, plus receiving $500 million cash, in a deal with Norway’s Equinor (formerly Statoil). EQT divesting from its nonop assets is a big deal. However, the bigger news, in our humble opinion, is that Equinor has (with this deal) completely exited all operated assets in U.S. shale. The company wants to keep its fingers in the U.S. shale pie, but only as a nonop operator — that is, investing in wells that other companies drill and maintain.
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Yesterday, the Intermediate Court of Appeals for West Virginia issued an opinion in a case that had (until now) escaped our radar. Equinor, Norway’s state-owned oil and gas company (previously known as Statoil), said it had overpaid its severance tax bill in West Virginia for the years 2014 and 2016. Equinor said WV miscalculated the value of propane, butane, ethane, and methane produced by the company. A WV judge agreed, also granting Equinor a further 15% safe harbor deduction for transportation and transmission costs.
We continue to monitor the price of natural gas, which has remained mired in the mid-$2 range for months on end. Every time it seems like it might make a run for $3, the price slides–as it did yesterday (down $0.12 to close at $2.73). We spotted two somewhat contradictory stories about the price of gas, both published by Reuters. One story is about a prediction from Bank of America, which said in a note that if we have a mild winter (as some are predicting), it’s quite possible the price of natgas will crash below $2 during the first quarter of 2024.
New shale permits issued for Aug 14 – 20 in the Marcellus/Utica finally turned around. There were 27 new permits issued last week, way up from the 10 issued the prior week. Last week’s permit tally included 21 new permits in Pennsylvania, 2 new permits in Ohio, and 4 new permits in West Virginia (after no permits in WV for three weeks in a row). The top permittee for the week, for the second week in a row, was Chesapeake Energy, receiving 6 permits–5 in Bradford County and 1 in Susquehanna County.
One of two original “anchor” applicants in the billion-dollar hydrogen hub Hunger Games contest that was part of Pennsylvania’s application was Equinor (the Norwegian super major formerly known as Statoil). The Pittsburgh Business Times reports Equinor is now out and has been replaced by Mitsubishi Power, which (among other things) builds natural gas and hydrogen turbines to generate electricity. Why did Equinor leave? Is this proposal in trouble?
On Friday, MDN told you that the state of Pennsylvania has decided to endorse a private industry application (by Shell and Equinor) instead of doing the hard work of submitting its own official application to attract a $1 billion hydrogen hub (see 
Equinor, Norway’s largest oil company (state-owned, used to be called Statoil before they became ashamed to have the word “oil” in their name), announced it had achieved 100% certification for its natural gas produced in the Ohio Utica using Equitable Origin’s EO100™ standard. Equinor now produces “responsible” natural gas for its 27,000 operational net acres, and 242,000 non-operational net acres. Congrats!
Looks like $2 billion is just too much of a temptation for Shell, Equinor (formerly known as Statoil), and U.S. Steel to resist. Those three companies have been a part of a joint effort with EQT, Williams, Southwestern Energy, and a few other companies in a group called Appalachian Energy Future (AEF), which was supposed to be the “one ring to rule them all” group aimed at enticing a hydrogen hub to one of the three Marcellus/Utica states (see 
Oil and gas drilling giant Equinor (formerly called Statoil) is owned by the Norwegian government. Equinor/Statoil has drilled in the Marcellus/Utica for years. The company also invests in other M-U drilling programs. Equinor is reporting production from both its operated (drilled) and nonoperated (invested-in) wells increased in 1Q21, helping to offset an overall drop in oil and gas production.