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Chesapeake Royalty Lawsuit at PA Supreme Court – Can of Worms?
Yesterday MDN brought you the news the Pennsylvania Supreme Court has agreed to hear a case challenging whether or not the state Attorney General’s office has the right to use a consumer protection law to prosecute companies like Chesapeake Energy and Anadarko over royalty payment shenanigans (see PA Supremes to Consider Long-Running Chesapeake Royalty Lawsuit). The law the AG’s office wants to use has never been used that way before. According to legal experts, drillers are very concerned if the AG’s office wins this one.
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In December 2015, Pennsylvania’s felony-indicted Attorney General, Kathleen Kane (who later was convicted and did jail time) brought a lawsuit against Chesapeake Energy and Anadarko accusing them of royalty fraud (see 
Antero Resources, one of the biggest and best “pure play” drillers focused on the Marcellus/Utica (with major operations in West Virginia), released their third quarter update yesterday. The company reports producing an amazing 3.37 billion cubic feet equivalent per day (Bcfe/d) of natural gas production (32% liquids), while spending just $290 million to do it–the lowest quarterly spend since the company went public in 2013. On the down side, the company reported a $150 million net loss, but that’s mainly because of a one-time “impairment charge,” meaning it was a paper loss, not a cash out-of-pocket loss.
Southwestern Energy continues to be a trailblazer among Marcellus/Utica shale drillers. The company voluntarily participates in several environmental programs aimed at lowering methane emissions, including the TrustWell™ Responsible Gas Program and the ONE Future organization (see 
Spending went down, but natural gas production went up slightly (3%) at the very first Marcellus driller, Range Resources, in 3Q19. The company previously forecast it would spend $756 million in 3Q but spent $736 million instead. The savings came “as a result of continued efficiency gains, water savings, and service cost improvements.” The company connected 22 new wells in the Marcellus to production in 3Q19, the same number they connected in 3Q18. Our takeaway: the company is doing more, producing more, with less resources. Getting more efficient.
Cabot Oil & Gas, one of our favorite Marcellus drillers, continued to impress during 3Q19. The company reports free cash flow popped 150% higher than 3Q18–even though the price of natural gas was down 23% over the same period last year. Production was 2.3 billion cubic feet per day, all of it dry natural gas. They drilled 22 new Marcellus wells (in Susquehanna County, PA) and completed 29 wells, which means they’re drawing down their DUC (drilled but uncompleted) well inventory.
Southwestern Energy, now a pure play driller focused on the Marcellus/Utica since selling off their Fayetteville Shale assets in Sept. 2018, produced 2.2 billion cubic feet equivalent per day (Bcfe/d) of natural gas in 3Q19, up from 2.0 Bcfe/d in 3Q18. (Those numbers remove the Fayetteville to compare apples to apples.) Southwestern drilled 24 new Marcellus and/or Utica wells and completed 30 wells in 3Q, which means, like other drillers, they continue to draw down their DUC (drilled but uncompleted) well inventory. Unlike Cabot which produces 100% dry gas, some 22% of Southwestern’s production was natural gas liquids.
In September 2018 MDN brought you the news that Southwestern Energy had, for the first time anywhere, sold natural gas to a customer (utility company New Jersey Resources) that has been certified as “responsible gas.” The certification comes from Independent Energy Standards Corporation (IES) and they call it their TrustWell™ Responsible Gas Program certification (see 
In July MDN brought you the news that Range Resources had sold a 2% overriding royalty interest on 350,000 acres “in southwest Appalachia” for $600 million (see 
Last Friday, Oct. 18, was the 100th day since Toby and Derek Rice took over the leadership at EQT, the country’s largest natural gas-producing company. The Rice boys won a proxy fight in July to elect a new board (and themselves) to lead the company (see 
Leave it to ace reporter Paul Gough from the Pittsburgh Business Times to unearth some earth-shattering news–that ExxonMobil is actively looking at locations in Beaver County, Pennsylvania to potentially build a second multi-billion dollar cracker plant. Shell is already well along in building the region’s first ethane cracker–in Monaca (Beaver County). Will lightning strike twice for the good citizens of Beaver County? Maybe!
Last year the Pennsylvania Department of Environmental Protection (DEP) issued administrative orders requiring three oil and gas companies–Alliance Petroleum Corporation (a subsidiary of Diversified Gas & Oil), XTO Energy, and CNX Resources–to plug 1,058 abandoned oil and gas wells across Pennsylvania (see