Epsilon Energy 2Q Update – CEO Talks About “Gnarly” Marcellus Price
Epsilon Energy, a relatively small company, used to concentrate most of its effort on developing Marcellus Shale wells. However, over the past year, the company has expanded into other plays and now owns assets in the Anadarko (Oklahoma and Texas) and the Permian (Texas and New Mexico). The company, which is traded publicly, issued a quarterly update last week. In a first (that we’ve noticed), Seeking Alpha listened in and provided a transcription of the company’s conference call with analysts. During the Q&A portion of the call, Epsilon CEO Jason Stabell said the netback price the company gets for its production in the Marcellus during the summer is “gnarly.” During 2Q23, Epsilon received an average of $1.35/Mcf for its produced gas.
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Banpu is Thailand’s largest coal mining company. However, it is looking to reduce the amount of revenue it derives from coal from around 66% today to 50% by 2025. One of the ways Banpu is accomplishing that objective is by investing in American shale gas, American gas-fired power plants, and now, American carbon capture and sequestration (CCS). Banpu partners with Kalnin Ventures and operates BKV Corporation (Banpu Kalnin Ventures), the American arm of Banpu (96% owned by Banpu). Over the past seven years, BKV has become one of the top 20 gas-weighted natural gas producers in the U.S.
Ascent Resources, founded as American Energy Partners by gas legend Aubrey McClendon, is a privately held company focusing 100% on the Ohio Utica Shale. Ascent, headquartered in Oklahoma City, OK, is Ohio’s largest natural gas producer (356,700 leased acres) and the 8th largest natural gas producer in the U.S. The company issued its second quarter 2023 update on Wednesday. Ascent’s net production averaged 2.1 Bcfe/d (billion cubic feet equivalent per day) during 2Q23, up 6% over 2Q22 but down from 2.2 Bcfe/d in 1Q23. The company made $250 million in profit during 2Q23, down just a bit from the $285 million it made in 2Q22.
New shale permits issued for Jul 31 – Aug 6 in the Marcellus/Utica were down a lot from the previous week. There were 14 new permits issued last week, down more than half from the 29 issued the previous week. Last week’s permit tally included just 4 new permits in Pennsylvania (very low), 14 new permits in Ohio, and no new permits in West Virginia (for the second week in a row). The top permittee for the week was Encino Energy, receiving 8 permits spread evenly between Harrison and Tuscarawas counties in Ohio.
In 2015 Cunningham Energy, a small oil driller based in West Virginia, struck oil in the Big Injun sandstone formation in Clay County, WV (see 
Coterra Energy, formed in 2021 by the merger of Permian oil driller Cimarex Energy and Marcellus gas driller Cabot Oil & Gas, issued its second quarter 2023 update yesterday. The company made far less profit in 2Q23 than it did one year ago, in line with other big Marcellus/Utica drillers. Coterra made $209 million in profit for 2Q23, versus $1.2 billion in 2Q22. Why the drop in profit? The crashing price of natural gas over the past eight months or so. Coterra received an average of $5.54/Mcf (before hedges) for its Marcellus gas in 2Q22, and $1.78/Mcf in 2Q23, a drop of 68%. Ouch. During a conference call with analysts, company management floated a potential plan to free up around $200 million from Marcellus operations in 2024 and reallocate it to other plays (the Permian or the Anadarko) by continuing to run just two rigs and one frac crew in the Marcellus.
Greylock Energy is headquartered in Charleston, WV, with offices in West Virginia, Pennsylvania, Utah, and Wyoming and operations scattered throughout Appalachia and the Rockies. The company’s assets comprise more than 1.19 million acres, about 6,700 wells, including the operation of 4,000 wells throughout Appalachia (shale and conventional) and 2,600 miles of pipeline. Grelock has contracted with a company called Tachyus (headquartered in Houston, TX) to use its cloud-based greenhouse gas tracking and reporting service called Aurion. The purpose is, of course, to lower Greylock’s carbon and fugitive methane footprint–and to prove that it has lowered it.
There is trouble brewing along the Gulf Coast between Venture Global LNG and its biggest customers: BP, Shell, Edison International (an Italian utility company), Repsol, and GALP Energia (a Portuguese energy company). Venture Global is building the Calcasieu Pass LNG export facility in southwestern Louisiana’s Cameron Parish, less than 50 miles south of Lake Charles. While Venture Global is still working on completing Calcasieu Pass, it has, so far, shipped some 177 cargoes of LNG, much of that during the mega-high prices of last year when the Russia/Ukraine war was at its peak. Yet none of those cargoes went to the facility’s contracted customers, causing trouble.
Southwestern Energy, with major assets in the Marcellus/Utica and Louisiana Haynesville, issued its second quarter 2023 update late last week. The company generated $231 million in net income for the quarter versus profiting $1.2 billion in 2Q22. Like other gas drillers, the price of natural gas dropping into the basement over the past eight months or so has caused profits to slide. But hey, they’re still in the black! Southwestern reported total net production of 423 Bcfe (billion cubic feet equivalent), or 4.6 Bcfe per day, including 4.0 Bcf per day of gas and 106 MBbls (thousand barrels) per day of liquids (86% natgas, 12% NGLs, 2% oil). Southwestern invested $595 million of capital, drilled 38 wells, completed 46 wells, and placed 50 wells online to sales, including 28 in the Marcellus/Utica and 22 in the Haynesville.
In 2020, EOG Resources, one of the largest oil and gas drillers in the U.S. (with international operations in Trinidad and China), sold *all* of its Marcellus assets, which were located in Bradford County, PA, to Tilden Resources for $130 million (see 
National Fuel Gas Company (NFG), headquartered in Buffalo, NY, is the parent company for Marcellus/Utica driller Seneca Resources and the parent of midstream company Empire Pipeline. Yesterday, NFG issued its latest quarterly update. NFG operates on a weird fiscal year system. This latest update is for the company’s third quarter, which would be everybody else’s second quarter update. NFG said it plans to “further moderate” its Seneca drilling activity as it shifts to slower production growth in the “low single-digit” range.
Chesapeake Energy Corporation, the country’s third largest publicly-traded natural gas producer, issued its second quarter 2023 update yesterday. The company reports a profit of $391 million in net income during 2Q23, down from $1.2 billion in 2Q22. The drop was due to lower gas prices and less production. Second quarter net production was 3,653 MMcfe per day (or 3.7 Bcfe/d, 96% natural gas, and 4% liquids), down 11% from 4,125 MMcfe per day in 2Q22. In the Marcellus, the company drilled three of the five fastest wells in company history, including the fastest well, a 10,383-foot lateral, to a total depth of 17,083 feet in less than eight days.
Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), emerged from bankruptcy in May 2021 with a new board and top management. In January of this year, the company appointed a new CEO, John Reinhart, the former President and CEO of M-U driller Montage Resources Corporation before that company was gobbled up by Southwestern Energy (see 
Newly-elected Gov. Josh Shapiro, who appears to be completely ineffective since taking office (which is not necessarily a bad thing), appointed a working group in April to help guide him on what he should do concerning the Regional Greenhouse Gas Initiative (RGGI) carbon tax and the broader issue of global warming (see