Montage Resources 2020 Sneak Preview: More OH Marcellus Drilling

Montage Resources provided a sneak preview yesterday for what to expect in 2020. You may recall Montage is the name of the company that resulted after the merger of Eclipse Resources with Blue Ridge Mountain Resources 11 months ago (see Blue Ridge Merges with Eclipse, Renamed to Montage Resources). Montage says it will drill 65% of its 2020 wells in the Ohio Marcellus. You read that right–the Marcellus play in Ohio!
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John Hess Says Shale Oil Close to Peak; Global Warming is Real

John Hess

John Hess, CEO of oil giant Hess Corporation, had some interesting comments at the Argus Americas Crude Summit held yesterday in Houston, Texas. Among those comments is that while U.S. shale is important, it’s “not the next Saudi Arabia.” Hess says major oil shale plays will peak in the next few years and then decline. His strategy is to drill all he can in the Bakken, and then use the money to buy up offshore oil plays.
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Seneca Resources “Cracks the Code” on PA Utica; Cuts Coming in ’20

Late last week National Fuel Gas Company (NFG), the parent company of Marcellus/Utica driller Seneca Resources, issued its first quarter (everyone else’s fourth quarter) financial and operational update. NFG CEO and President Dave Bauer proclaimed, “Our team has done a great job cracking the code on our Utica development program” in Tioga County, PA. However, because of the ongoing pricemageddon with natgas prices in the basement, Seneca President John McGinnis said the company will drop to running a single rig for the balance of 2020.
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Range Resources Converts to Electric Fracking with US Well Serv.

Last November MDN told you that Range Resources was testing an all-electric fracking fleet at the Ziolkowski Pad in Allegheny County (see Range Resources Fracking Program – Meticulous & Thirsty). The results are in and Range likes what it sees. The company has signed on with U.S. Well Services to continue using “electric fracking.”
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CNX Reports $271M Loss in 4Q19; Cutting Back on 2020 Drilling

CNX Resources reports losing $271 million in the fourth quarter of 2019–but it wasn’t an actual money-out-of-pocket loss. The company wrote down the value of its Marcellus Shale assets (called an impairment). The company took a $327 million impairment charge for its Marcellus assets in PA, and a $119 impairment charge for unproved gas properties in the Marcellus. Below we have details on how many Marcellus wells CNX drilled and completed in 4Q and for the full year, and what company’s top brass says about what’s ahead for CNX in 2020 and beyond.
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CNX Files Lawsuit Against Builder of SWPA Compressor Station

CNX Resources is in a spat with Applied Construction Solutions over the construction of a compressor station Applied built for CNX. The spat is about money. CNX says it signed a contract to have its Morris Compressor Station built for $12.4 million. After several renegotiations (change orders) the price was adjusted to $15.2 million. But when CNX got a final bill for $19 million, they balked.
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Chesapeake 4Q19 Update – Using Pad Compressors in Marcellus

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Chesapeake Energy released preliminary 2019 fourth quarter production and operational results yesterday. The company said it’s making progress with reducing its mammoth debt. Oil production, which the company increasingly focuses on, was 6% higher in 4Q19 than 4Q18. But the stock price remains low, bumping along just above $0.50 per share (in danger of being delisted, see NYSE Warns Chesapeake Energy Stock to be Delisted…Unless). As always, our interest is in Chesapeake’s prolific Marcellus program. Although the Marcellus only gets a brief mention in this update, what they said certainly caught our attention.
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Bankrupt EdgeMarc Sells Butler, PA Assets to KeyBank for $70M

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EdgeMarc Energy, headquartered in Canonsburg, PA (once with 50,000 acres of Marcellus/Utica leases), filed for Chapter 11 bankruptcy last May, looking to sell all of the company’s assets (see EdgeMarc Energy Files for Bankruptcy, Blames Revolution Pipe). Diversified Gas & Oil picked up EdgeMarc’s Ohio Utica assets for $50 million in August (see Bankrupt EdgeMarc Sells Ohio Utica Assets to Diversified for $50M). And now, the balance of EdgeMarc’s assets–located in Butler County, PA– is slated to be sold too.
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Range Recycles ALL its Wastewater + Water from 14 Other Drillers

A number of Marcellus/Utica drillers recycle most, if not all of, the flowback and produced water from the wells they drill. Produced water (from the depths) continues to pour out of wells for years after they’re drilled. Produced water is super salty, filled with minerals. If a driller can’t reuse the water, they must dispose of it–typically via an injection well (in Ohio). Range Resources not only recycles all of its own produced water but also accepts and reuses produced water from 14 other drillers!
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Even Unhedged, Cabot O&G Still Makes Profit with $2 Gas

How many times over the years has MDN made this observation, using words along these lines: Cabot Oil & Gas is the only Marcellus drilling we know that can spin gold out of straw. Meaning they make money even at some of the lowest natural gas prices in the country, found in northeastern PA. A recent post by an energy investment advisor examines Cabot’s unique ability to make money at low prices.
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EnCap Keeps $6B Spigot Open to Fund New Shale Drilling

EnCap Investments is a venture capital investor that funds independent companies in the U.S. oil and gas industry. EnCap has its fingers in a number of pies in the Marcellus/Utica. According to a Bloomberg article, EnCap plans to use a pile of $6 billion in cash it’s sitting on to drill new oil and natural gas wells this year. EnCap currently runs 23 drilling rigs at its various portfolio companies. Two of those companies drill in the Marcellus/Utica.
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Questerre Energy Closes on Deal to Buy 753K Utica Acres in Quebec

Utica Shale in Quebec – click for larger version

Last March MDN told you that Questerre Energy, a Canadian driller who has patiently waited for years to begin drilling on their extensive Utica Shale acreage in the St. Lawrence Lowlands of Quebec, Canada, had hammered out an agreement with joint venture partner Repsol to buy out Repsol’s ownership interest in 753,000 Utica acres (see Questerre Energy Picks Up Another 753K Utica Acres in Quebec). The deal is now, finally, done. The question is: Will Questerre ever get to drill on their acreage?
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HUGE NEWS: PA Supreme Court Keeps ‘Rule of Capture’ for Fracking

There is one court case in Pennsylvania that we’ve been concerned about since April 2018. The Briggs v Southwestern Energy case had the power to block most new Marcellus Shale drilling in the state. The case, revolving around the oil and gas “rule of capture” principle, was appealed by Southwestern all the way to the PA Supreme Court. We are elated to report that yesterday the Supremes ruled supreme and found in favor of Southwestern–retaining the rule of capture in the Keystone State. This is seriously good news for both drillers and leased landowners. Below we explain what the rule of capture is, the background of the case, and what the Supremes said in yesterday’s important ruling.
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EPA Fines Gulfport $1.7M for Clean Air Violations in Ohio Utica

Yesterday the U.S. Environmental Protection Agency announced it has reached a settlement with Gulfport Energy over alleged air emissions violations found at 17 well pad locations Gulfport operates in the Ohio Utica. The violations happened in 2015. The settlement includes Gulfport paying $1.7 million in fines and spending another $2 million in “improvements” to cut down on volatile organic compound (VOC) emissions at the 17 well pads.
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