Energy Companies

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    Hess Says Harrison County, OH “Truly the Sweet Spot” of the Utica

    Last week Hess released their second quarter 2015 earnings and operations update. It didn’t really say too much at all about their drilling program in the Ohio Utica Shale. We did, however, get some color commentary from CEO John Hess on last week’s conference call with analysts. We learned from that call that Hess drilled, with joint venture partner CONSOL Energy, just 10 wells in 2Q15. They completed 15 wells (some previously drilled) and brought 9 wells online into production. Hess is dropping from 2 active rigs in the Ohio to just 1 rig for the balance of 2015 but even so, they expect to bring 25-30 new wells online for all of 2015. The interesting (kind of funny) thing to MDN was an off-the-cuff statement by Hess President & COO Greg Hill on the call. Hill said that Hess will continue to concentrate their Utica drilling in Harrison County, OH. Why? Not because that’s where most of their remaining Utica acreage is located–oh no. But because Harrison County is, according to Hill, “truly the sweet spot of the play” and “the wettest part of the play.” There you have it. Forget about Belmont, Monroe, Noble and Guernsey counties. Harrison is where it’s at…
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    New Underground Marcellus/Utica NatGas Storage Facility Proposed

    An open season–a time when customers can sign multi-year contracts with a pipeline company–begins today…but not for a pipeline. This open season connects to pipelines but is for storage of natural gas in the Marcellus/Utica region. Chestnut Ridge Storage, LLC is a proposed underground storage facility that will be built in the West Summit Field located under portions of Fayette County, PA and Monongalia and Preston counties in WV. The new facility will be able to store an initial 15 billion cubic feet (Bcf) of natural gas, and eventually 25 Bcf. The facility, if it gets approved by the Federal Energy Regulatory Commission (FERC), will not be fully operational for another three years–in 2Q18. The open season is “non-binding” meaning customers don’t yet have to sign on the dotted line. We don’t often talk about it, but a key part of the natural gas infrastructure that delivers gas to customers is storage. Not all gas can be used as soon as it’s extracted and flowed through a pipeline. There are a series of (mostly) underground storage facilities that act as a temporary rest stop along the journey to market. A very necessary and important rest stop. The interesting thing to MDN about this particular open season announcement, aside from the fact that it’s meant to store Marcellus and Utica Shale gas, is who is building it: eCORP International…
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    Shrill Opposition to Constitution Pipeline after Cabot Comment

    Flat-out, 100% lies is what best describes the claims being made by anti-pipeline groups like Stop the Pipeline in New York State in a letter sent to Gov. Andrew Cuomo, with respect to charges that the already-FERC-approved Constitution Pipeline would, if built, incite an environmental Holocaust in the state. These are the VERY SAME people who successfully pressured Cuomo into banning fracking in the state–so they’re hoping they can bully the pathetically weak Cuomo once again, this time to reject the Constitution Pipeline. The renewed and shrill campaign against the pipeline comes because last week Cabot Oil & Gas CEO Dan Dinges said he expects the NY Dept. of Environmental Conservation (DEC) to issue permits allowing the pipeline to cross streams and swamps (i.e. “wetlands”) any day now. The fact that this pipeline WILL get built is eating anti-drillers alive. They can’t stand it. So they whip up an email “letter” to Cuomo, and then get their sympathetic buddies at the Democrat Albany Times Union to run a story on their efforts, trying to manufacture the appearance that there is a groundswell of support against the pipeline–when there isn’t…
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    EQT Releases Data on Biggest Utica Well Ever; Dumping UD Drilling

    changing courseOne week ago MDN brought you the news of EQT’s monster Utica Shale well drilled in Greene County, PA–the single highest producing on-shore shale well on the planet with initial production (IP) of 72.9 million cubic feet of natural gas per day (see EQT’s 1st Utica Well Shatters Record – 72.9 MMcf/d IP Rate!). Yesterday EQT provided an update on the well. It’s currently shut in while they get all of the pipelines connected and things ready to rock and roll. But before they shut it in, they flowed it for seven days and the average per day production was 27 million cubic feet per day (MMcf/d). It’s a truly astonishing well. Interestingly, this one, single well has changed the course of EQT’s drilling program. In the update (full copy below) they’ve announced the results from this well are so good, they are abandoning their Upper Devonian (UD) drilling program before it ever really got under way. They also announced they will drill a second Utica well in Greene County in August. Here’s the full update on the record-shattering Scotts Run 591340 dry Utica well and how it’s changed the direction of EQT…
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    Range Resources Chops 11% of Workforce (so Far) in 2015

    The low price drillers receive for natural gas, NGLs and oil, and the results those prices have on revenues for drillers, continues to take a big bite out of the industry. Companies, rightly or wrongly, reduce head count in order to keep the balance sheet less red than it otherwise would be. One of the easiest and quickest ways to improve finances at big companies is to cut head count. Two weeks ago CONSOL Energy laid off 10% of its workforce–some 470 people (see CONSOL Slashes 10% of Workforce – 470 Jobs Gone). Range Resources is latest to confirm company-wide layoffs. So far this year Range has cut 11% of its workforce. In May, Range laid off 41 people in the Marcellus/Utica region…
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    Antero Resources 2Q15: Production Up 67%, Continues to Bleed $$

    Antero Resources, one of the biggest drillers in the Marcellus/Utica and a company totally focused on northeast shale drilling filed its second quarter financial update yesterday. On the positive side, Antero’s natural gas production rose 67% year over year to 1.5 billion cubic feet per day equivalent (Bcfe/d) in 2Q15. Looking forward, Antero says they expect when you compare all of 2015 production with all of 2016 production you will see an increase of 25-30% for 2016. The company continues to drive down costs–9% lower in 2Q15 from a year ago. On the negative side, Antero continues to bleed (a lot of) money. In 2Q14, Antero had a net loss of $42 million. In 2Q15 that expanded to a net loss of $145 million–a 245% increase in the wrong direction, down. Antero is a company with great assets and a solid operation, but losing money. Antero, backed by Warburg Pincus LLC, has been mentioned in the past as a possible target for a takeover (by Spanish energy giant Repsol, but Repsol ended up buying Talisman Energy instead). No, we’ve not heard any recent rumors, specific or unspecific. But don’t be surprised if one of the majors makes a play for Antero. Here’s their 2Q15 update…
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    Rex Energy 2Q15: Production Up 61%, MDN Provides Missing Rev # s

    Yesterday Rex Energy issued a second quarter 2015 “production and price realization” update–the first such update we’ve seen like it. It’s sort of a cherry-picking of the data and presenting only portions–perhaps in advance of poor financial information they’ll issue for 2Q15? Rex, our “little energy company than can and does” has plenty to boast about. Production for all hydrocarbons year over year increased an impressive 61%, from 128.8 million cubic feet equivalent per day (MMcfe/d) in 2Q14 to 206.8 MMcfe/d in 2Q15. But the second part of this brief update, in chart form, shows the prices they receive by hydrocarbon. Those prices are lot lower–through no fault of Rex’s–year over year. MDN has done some arithmetic to compare Rex’s revenues in 2Q14 and 2Q15. Here’s what we found…
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    2 Pipelines Will Raise Gas Sale Price by $1 for Range Resources

    As we told you yesterday, Range Resources is excited about two pipeline projects that will go online soon–Spectra Energy’s Uniontown to Gas City (U2GC) Project and Mariner East I–Sunoco Logistics’ NGL pipeline from western PA to the Marcus Hook refinery near Philadelphia. On the quarterly analyst conference call yesterday, Range Resources CEO Jeff Ventura led off with a discussion about those two projects. To point out the importance of pipelines, these two projects will mean, according to Ventura, that Range will get $1 per Mcf more for their production once the pipelines go online. That’s a huge increase–as much as 33%–over what they receive now. Here are Ventura’s enlightening comments from yesterday’s conference call…
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    PA Court: Gas Storage Fields Lock Up Property for Drilling Too

    In some locations there are small or large underground storage fields for natural gas located in the Marcellus/Utica. We’ve covered stories in the past about one such field–the Brinker Storage Field, a 35,000 acre area in Columbiana County, Ohio that Columbia has used to store natural gas going back more than 50 years (see Some Brinker Field (OH) Leases Revised, Others in Lawsuit). More often than not these fields seem to be a flash point with respect to leases and potential drilling under them. Because the fields were leased years ago, there are disagreements about what the leases say about royalties for any gas drilled under them. Little did we know (in fact we didn’t know) there are such storage fields located in Pennsylvania too. A case went to court challenging the right of Range Resources and NiSource (their Columbia Gas subsidiary) to retain lease rights for both storing natural gas and drilling for natural gas for property partially included in a unit that includes a 14,000 underground Donegal Storage Field operated by NiSource in Washington County, PA. The landowners have just lost the case–meaning units with storage fields under them can “hold by production” undrilled land in the unit solely because there is gas stored…
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    CONSOL Drills 2nd Best Utica Well Ever in PA, Flows 61 Mmcf/d!

    2nd placeYesterday CONSOL Energy’s management team hosted their second quarter 2015 analyst and investor conference call. There was major information contained in that call. The big news is that CONSOL just hooked up and tested a new Utica Shale well in Westmoreland County, PA that is the second best initial producing Utica well ever. Just last week MDN told you about the #1 Utica well drilled so far, by EQT (see EQT’s 1st Utica Well Shatters Record – 72.9 MMcf/d IP Rate!). The EQT monster Utica well is located in Greene County, PA. The CONSOL well just brought online is located about four miles away from that well–and is initially producing and flowing at 61 million cubic feet per day! [Correction: CONSOL’s 61 MMcf/d gusher is the Gaut 4IH. CONSOL is right now drilling the GH9 well that is four miles from the big EQT monster well.] This is really big news and is the reason that Utica drilling has turned CONSOL’s head away from Marcellus drilling…
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    Indian Giant RIL Looking to Dump its Marcellus Joint Ventures

    The single largest company in India, and one of the largest energy companies in the world, is Reliance Industries Limited (RIL). As of July 2013, RIL had invested a massive $5.7 billion in three shale joint ventures–the bulk of that in the Marcellus Shale. The company was planning to double it’s shale investment to over $10 billion! But a funny thing happened on the way the Forum. Prices for oil and gas started to slump, and RIL’s return on their shale investments slumped with it. RIL invested $3.5 billion in a Marcellus joint venture with Atlas Energy in 2010 (see Joint Venture Between Reliance Industries and Atlas Energy Worth $3.5 Billion Over 10 Years). RIL later battled Chevron to buy Atlas–but Chevron won, so RIL became a jv partner with Chevron (see India’s RIL Loses Bidding War for Atlas Energy – $4.3 Billion Deal with Chevron Goes Forward). RIL currently has 3 jv’s, the Chevron jv in the Marcellus (owns 40% of that acreage), a jv with Carrizo Oil & Gas in the Marcellus (owns 60% of that acreage), and a jv with Pioneer Natural Resources in the Texas Eagle Ford (owns 45% of that acreage). Now comes word that RIL wants to exit all of their jv’s and wash their hands of U.S. shale, a 180 degree reversal from just a few years ago…
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    Range Resources 2Q15: Record High Production, Net Inc. Drops 168%

    Range Resources Corporation, the very first Marcellus driller and one of the largest, continues to focus primarily on the Marcellus/Utica region. They also drill in the Midcontinent region, but most of their effort and time is spent in the Appalachian Basin. Yesterday Range released their operating and financial update for second quarter 2015. Among the highlights: Production averaged 1.373 billion cubic feet per day equivalent (Bcfe/d), a 24% increase over 2Q14 and a new record high for the company. Range reduced drilling costs by 11% year over year. However, the company is clearly scaling back in 2015. Range drilled and completed 89 wells in the Marcellus/Utica region during the first half of 2015, but they plan to cut that in half for the second half of 2015–planning to drill and complete an additional 44 wells. Low prices have affected Range like all of the other E&Ps we’ve covered thus far. Quarterly revenues dropped 68% year over year–from $765.5 million in 2Q14 to $247.5 million in 2Q15. Adding in expenses, Range’s net income for 2Q14 was $171.4 million in 2Q14 and dropped to minus $118.6 million in 2Q15–a 169% drop. But help on the price front for Range is on the way according to the update, in the form of two pipeline projects Range expects to go online soon…
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    Eclipse Resources Releases Operations but not Financial Update

    Using the same strategy used by Gulfport Energy that we noted yesterday, Eclipse Resources, a smaller but important Utica/Marcellus driller based in State College, PA but drilling mostly in the Ohio Utica, released an operational update yesterday–but not their financials. Typically the operations updates are the good news, and the financials are the bad news. Eclipse’s operations update boasts an impressive 374% increase in production to 198.6 million cubic feet equivalent (MMcfe) per day in 2Q15 over 2Q14. Of particular note: Eclipse drilled a dry gas Utica well in eastern Monroe Country, OH with a 10,220 foot lateral (21,330 foot total measured depth), its longest lateral and deepest well to date–in just 17 days from Spud to Total Depth…
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    GreenHunter Brings 2 New Injection Wells Online in Meigs County, OH

    big newsBig news for GreenHunter Resources: They finally have two more wastewater injection wells up and running at their Mills Hunter facility in Meigs County, OH. In May we reported that GreenHunter was hoping to have four new injection wells operating at the Mills Hunter facility by the end of June, for a total of six operating wells (see GreenHunter Resources 1Q15: Bets the Ranch on OH Injection Wells). However, Mills Hunter has just two new wells now operating, for a total of four, and it’s nearly August. GreenHunter’s COO Kirk Trosclair continues to express his frustration at delays from the Ohio Dept. of Natural Resources (ODNR), saying instead of taking 30-45 days for approvals (which is what it used to take), it’s now taking ODNR more than 90 days to issue approvals. GreenHunter has two more wells at the Mills Hunter facility working their way through the approval process now. But let’s not dwell on the negatives…
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    Southwestern Energy 2Q15: Production Up 30%, Net Inc. Down 481%

    Southwestern Energy, one of the largest natural gas producers in the Marcellus Shale and the fourth largest natural gas producer in the Lower 48 States, issued their second quarter 2015 update yesterday. There is a lot to digest in this massive update. Southwestern, you may recall, added to their already-considerable northeastern Pennsylvania Marcellus holdings by purchasing WPX’s NEPA leases, wells and operations in a $300 million that closed in February of this year (see WPX Finalizes Sale of NEPA Marcellus Leases/Wells to Southwestern). So this 2Q15 update will be the first full quarter to include numbers from the WPX purchase. Late last year Southwestern picked up a massive amount of new acreage and already-drilled wells in the southwestern portion of the Marcellus–most of it in West Virginia–in a $5.375 billion deal with Chesapeake Energy (see Chesapeake Sells Close to 25% of Marcellus/Utica Operation). Yes, Southwestern is serious about the Marcellus! What do the 2Q15 numbers for Southwestern show?…
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