EQT 3Q16: Company will Soon be Primarily a Utica Driller
EQT issued its third quarter 2016 update yesterday. The company reports losing money on its drilling operations ($22 million), but making money on midstream operations ($133 million), so they ended the quarter in the black. Highlights include production zooming up 26% higher over the same period last year. EQT drilled 24 wells in 3Q16, which breaks down as 21 Marcellus wells, 2 Upper Devonian wells and 1 Utica well. However, the biggest news coming from yesterday’s update came from the analyst phone call when EQT president Steve Schlotterbeck said, “We continue to make solid progress on both the cost and recovery efforts and we’re encouraged that the Deep Utica can compete with or surpass our core Marcellus economics in the near future.” That is, although they just got done drilling a bunch of Marcellus wells, it is the Utica that has turned EQT’s head in a major way. Why? Schlotterbeck also said he thinks Utica drilling will end up costing the company half as much as Marcellus drilling (due to higher production in Utica wells). The company sees itself as primarily a Utica driller in the not-too-distant future. Here’s the update, along with a select portion of yesterday’s analyst phone call…
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Yesterday Murray Energy, which operates coal mines in Ohio, Illinois, Kentucky, Utah, and West Virginia, announced it had sold the leases for 5,900 of the acres it owns in Belmont and Monroe counties (in eastern Ohio) to an unidentified shale driller for $63.6 million. That works out to be ~$10,800 per acre. According to Murray officials, the sale will allow the company to focus on its core activity–coal mining. The money will also help the company stay out of bankruptcy court. The sale, which is slated to close “in the coming weeks” doesn’t ID the buyer. But we have a guess as to who bought…
Antero Resources, one of the biggest drillers in the Marcellus, released their second quarter 2016 update in August which showed natgas production was up 19% over 2Q15 (see 
Yesterday MDN reported that EQT is buying another 60,000 Marcellus/Utica acres (along with buying out Trans Energy) in transactions totally $683 million (see 
Magnum Hunter Resources Corporation (MHR), a driller 100% focused on the Marcellus/Utica emerged from bankruptcy in May, less than five months after filing (see 
A landowner in northeastern Pennsylvania signed a lease with Southwestern Energy, leasing her property for shale gas drilling. Southwestern eventually showed up and drilled a well on her property. But the landowner then said the drilling was too loud, and lights at night too bright, and it disturbed her “peace of mind”–so she sued Southwestern for eight weeks of “peace of mind” disruption and a prescription for Xanax. Fantastically, a judge is letting the lawsuit proceed. Earth to landowners: When drillers show up, it’s an INDUSTRIAL activity. It’s loud. There’s lots of trucks. There’s lights at night. And in a month or two, it all goes away. And when the royalty checks arrive in the mail, you’ll forget all about the inconveniences. So what’s really going on in this case?…
Range Resources, the very first company to sink a Marcellus well, issued their third quarter update yesterday. Among the highlights: Range lost $42 million for the quarter, which is a vast improvement over 3Q15 when the company lost $301 million. So things are getting better, financially. Marcellus production was 1,396 million cubic feet equivalent (Mmcfe) per day, a 9% increase over 3Q15. Range’s “Southern” division, in SWPA, saw a 23% increase in production, but because Range sold some assets in Bradford County, their “Northern” division saw a 39% decrease (year over year) in production. Range continues to focus its efforts in the southwest PA area, saying the company “continues to drill and complete outstanding wells, with peer-leading EURs, while continuing to drive costs lower.” Here is yesterday’s 3Q16 update from Range…
Carrizo Oil & Gas, a Houston-based driller, actively drills in the Eagle Ford Shale in South Texas, the Delaware Basin in West Texas, the Niobrara Formation in Colorado, and until mid-year in 2015, they did have an active drilling program in the Ohio Utica and Pennsylvania Marcellus. No more. They haven’t drilled in Appalachia since 3Q15. That trend continues. It seems other plays have lured Carrizo’s heart, and money. Yesterday the company announced it is floating 6 million new shares of stock, hoping to raise $225 million. The reason? To buy another 15,000 acres of leases–in the Eagle Ford oil play in Texas. Once again Carrizo ignores the Mighty Marcellus. Their loss. Here’s an update on new stock and a new land deal in the Lone Star State…
Stone Energy, an independent oil and natural gas exploration and production company (E&P) headquartered in Lafayette, Louisiana drills mainly in the Gulf of Mexico but also has a presence in the Marcellus/Utica Shale with 90,000 acres of leases. Last year Stone quit drilling in the northeast and actually shut-in part of their production due to low prices (see 
Last week Jason Pigott, vice president of operations for Chesapeake Energy, addressed analysts at a conference and disclosed that the company ran an experiment by pumping 25,000 tons (i.e. 50 million pounds) of sand down a single shale well bore. Incredible! And they found by doing so that output from the well was 70% higher than it normally would have been. Sand acts as a proppant to “prop open” cracks and holes in the fractured rock, allowing gas trapped in small pockets to escape. Chessy is calling the experiment “propageddon.” Catchy. At the conference Pigott said, “What we’re doing is unleashing hell on every gas molecule downhole.” Strong words! The well they tried it with is located in Louisiana. We highlight this story because what they learn there will no doubt come to the Marcellus/Utica as well…
Bradford County, PA landowners and their titular leader, county commissioner Doug McLinko, are keeping up the pressure on PA’s legislators to pass House Bill (HB) 1391 to guarantee landowners receive 12.5% royalties. Earlier this week we noted the county had released a powerful new video to support their cause (see 
Southwestern Energy issued its third quarter 2016 update yesterday. The good news is that the company continued to drill in 3Q16 in the Marcellus, and was able to lower their losses. Southwestern is still in the red, losing $735 million in 3Q16. But that’s down from losing $1.8 billion in 3Q15–so they cut their losses by more than half. Still, you can’t be in the red forever. The average price Southwestern received for natural gas in 3Q16 was $1.73 per thousand cubic feet (Mcf), down from the $2.21/Mcf they averaged in 3Q15. In northeast PA Southwestern drilled 18 new wells in 3Q16, completing 9 of them. However, production in NEPA was down, from 93 billion cubic feet (Bcf) in 3Q15 to 84 Bcf in 3Q16. In Southwestern’s southwest PA/WV area they drilled 4 new wells and completed 8 wells. Production in that region stayed even at 37 Bcf/d. The company said they expect to exit 2016 with 85 drilled but uncompleted wells (DUCs). Here’s the update issued yesterday…
Just two months ago Rice Energy announced they are buying competitor Vantage Energy for $2.7 billion (see 
In December MDN wrote that Hilcorp Energy is making some magic happen in Lawrence County, PA–in the northern Utica Shale region (see