Coterra 4Q Update: Marcellus Production Down, Profits Up
Coterra Energy, the new name for the former Cabot Oil & Gas that merged with oil driller Cimarex Energy, issued its fourth quarter and full-year 2022 update yesterday. Coterra’s natgas program is focused on drilling in Susquehanna County in northeastern Pennsylvania. A couple of things stood out for us from the update. First, Coterra’s Marcellus production dropped in 2022. During 4Q21, Coterra produced an average of 2.5 Bcf/d (billion cubic feet per day) of natural gas in the Marcellus, versus producing 2.1 Bcf/d in 4Q22–down 14%. For the full year, Coterra produced an average of 2.3 Bcf/d in 2021 and 2.2 Bcf/d in 2022–down 6%.
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On February 15, 2023, the Supreme Court of Pennsylvania agreed to hear the case Dressler Family, LP v. PennEnergy Resources, LLC, a case addressing the question of whether Pennsylvania is an “at-the-well” jurisdiction, or a “first-marketable product” jurisdiction. The case may have profound implications for Pennsylvania landowners and drillers. The issue in this case revolves around whether or not a driller is allowed to deduct expenses from royalty payments for transporting and cleaning up natural gas between the well and the point of sale. Can a driller claim post-production deductions even if there are clauses that prohibit them?
New shale permits issued for Feb. 13-19 in the Marcellus/Utica remained elevated last week. There were 35 new permits issued in total last week (down slightly from 40 the week before), including 27 new permits for Pennsylvania, three new permits for Ohio, and five permits issued in West Virginia. Last week the top receiver of new permits was Coterra Energy, with 13 new permits for Susquehanna County, PA. The number two permittee was Apex Energy with five permits in Westmoreland County, PA.
Chesapeake Energy issued its quarterly and 2022 annual update yesterday. The company drills primarily for natural gas in both the Marcellus and Haynesville shale plays. Chesapeake’s net production in 4Q22 was approximately 4.05 Bcfe/d (90% natural gas and 10% total liquids), utilizing an average of 14 rigs to drill 58 wells and place 66 wells on production. That was for drilling across all of its shale plays, including the oily Eagle Ford. However, given the crash in prices for natural gas, CEO Nick Dell’Osso said the company is cutting rigs this year–axing two rigs in the Haynesville and one in the Marcellus.
Yesterday morning Harrison County, OH, commissioners got a face-to-face update from Encino Energy’s director of external affairs, Jackie Stewart. You may recall that Encino bought out and took over all of Chesapeake Energy’s existing Ohio assets–both shale and non-shale–in November 2018 for $2 billion (see 
Since 2015 we’ve reported on the case of Grant Township (Indiana County, PA), a town that passed an ordinance cooked up by the radical Big Green group Community Environmental Legal Defense Fund (CELDF) to try and block a state-approved injection well proposed by Pennsylvania General Energy (
Chesapeake Energy has cut a deal to sell a second portion of its remaining Eagle Ford assets to U.K. chemical company INEOS Energy for $1.4 billion. The deal includes 172,000 net acres and approximately 2,300 wells. It is the first time INEOS will own U.S. shale assets. In 2018 Chesapeake, under the direction of then-CEO Doug Lawler, purchased 420,000 net acres in the Eagle Ford shale and Austin Chalk formations in Texas from WildHorse Resource Development Corp for $4 billion (see 
Last week Antero Resources, which is 100% focused on the Marcellus/Utica with over 500,000 net acres under lease (and the largest M-U driller in West Virginia), issued its fourth quarter and full-year 2022 update. Antero management says the company can better handle low commodity prices for natural gas than other M-U drillers because (a) it sells 100% of its production outside of the M-U region, and (b) nearly half of the company’s revenues come from liquids, not methane.
Spanish-owed Repsol owns 214,000 net acres of leases in the Marcellus Shale, primarily located in northeastern Pennsylvania in Bradford, Susquehanna, and Tioga counties. Early last year (in January 2022), Repsol closed on a deal to buy Rockdale Marcellus out of bankruptcy for $222 million (see 
The Pennsylvania Dept. of Environmental Protection (DEP) issued a Notice of Violation (NOV) early last week to the Shell ethane cracker plant in Monaca (Beaver County), PA, now called the Shell Polymers Monaca facility, for the third time since it officially began operation last November. In a letter dated Feb. 13 (copy below), the DEP stated the facility violated rolling 12-month emission standards in both November and December. Shell faces fines of $25,000 per day for each day the facility exceeds emissions limits. In light of this most recent NOV, two anti-fossil energy groups have asked the DEP to immediately shut down the facility to stop extra air pollution in the region.
The difference between the Susquehanna River Basin Commission (SRBC) and the Delaware River Basin Commission (DRBC) is stark. The former is well-run and rational, the latter is disorganized and irrational. At least with respect to fracking. Over the weekend, the SRBC published a notice in the Pennsylvania Bulletin to announce that during the month of January, the agency approved 38 requests for daily water use on shale well pads in the SRBC’s jurisdictional territory in Pennsylvania, totaling some 233.5 million gallons. Put another way, this is a handy list of where drilling will soon happen in northeastern PA.
EQT Corporation, the largest natural gas producer in the U.S. (completely focused on the Marcellus/Utica), issued its fourth quarter and full year 2022 update yesterday. Both revenue and production fell slightly in 4Q22 over 4Q21 due to issues with third-party providers. Production for the entire year was just about even. However, because of the high price of natgas for most of 2022, EQT raked in $1.8 billion in net income last year versus losing $1.1 billion the year before.
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. Banpu partners with Kalnin Ventures and operates BKV Corporation (Banpu Kalnin Ventures), the American shale drilling 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. Last year, Banpu filed plans with the Securities and Exchange Commission to launch an initial public offering for BKV (see 
We suppose you can file this story under the category of “damned if you do, and damned if you don’t.” We’re referring to hedging–the practice of locking in prices to sell gas you will produce in the future for a specific price now. Last year natural gas producers, including most (if not all) of Marcellus/Utica producers, were caught flat-footed when the price of natgas skyrocketed and their hedges were locked in for much lower prices. So as the hedges “rolled off,” many producers either elected not to hedge again, or hedged very little of their future production. And now prices have crashed again, meaning those producers are not protected and must sell most (if not all) of their production at very low market prices.