Major New Player in the Marcellus Emerges: Mountaineer Keystone

Earlier this week Mountaineer Keystone, a shale driller headquartered in Pittsburgh, announced it had bought out PDC Mountaineer for half a billion dollars ($500 million). Who are these two players? Mountaineer Keystone is backed by the money of investment firm First Reserve. PDC Mountaineer is a joint venture between PDC Energy and investment firm Lime Rock Partners. The deal means Mountaineer Keystone picks up a huge 131,000 net acres in the Marcellus/Utica region, boosting the company’s position to a new 181,000 net acres. Also part of the deal is a small gathering pipeline operation. Here’s the details…
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PDC Energy 1Q13: Modest Uptick in Production, Utica Accelerating

PDC Energy, headquartered in Denver, CO, also has drilling operations in both the Marcellus and Utica Shale region. PDC released their first quarter 2013 update yesterday which shows production in the Marcellus/Utica was up a modest 5.9% year over year, and crude oil production (mostly in the Utica) is just starting to take off. PDC signed a midstream agreement in March for the Utica and expects development efforts in the liquids-rich Utica to “accelerate” this year.

The full update from PDC:
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PDC Energy: Production from 1st Utica Well, 2013 Forecast

PDC Energy issued their 2013 forecast yesterday, along with an impressive production report on their first Utica Shale well, drilled in Guernsey County, OH. They plan to spend $53 million next year to drill and complete five horizontal Utica Shale wells in Ohio. Part of that budget will also be spent on additional acreage to lease—acreage contiguous to their existing leased acreage. (Landowners who are not yet leased, here’s an opportunity for you.)

PDC also has a joint venture in the Marcellus Shale and plans to allocate $48 million for its 50% share toward drilling and completing 14 wells and certain midstream infrastructure projects (pipelines/processing) .

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EPA Fines PDC Mountaineer for Clean Water Act Violations in WV

The federal Environmental Protection Agency (EPA), under the guise of the Clean Water Act (CWA), is poking it’s unwanted nose into Marcellus Shale gas drilling—again. Yesterday the EPA announced a settlement with PDC Mountaineer for what they say are violations of the CWA at four locations (for two gas wells). The company will pay a fine of $177,500, in addition to paying big bucks to restore problems they created while drilling two wells in Harrison County, West Virginia.

What was PDC’s environmental crime? They drained a one-acre swamp (euphemistically called a “wetland”) without getting permission. Even though PDC has agreed to pay the fine and restore the swamp (if they can), as part of the deal they did not admit to any violations of the CWA.

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PDC Energy will Go-it-Alone with Utica Shale Drilling

go it alonePDC announced today they will “go it alone” and develop 45,000 acres of Utica Shale leases they own in southeastern Ohio without a joint venture partner. Apparently the offers they received weren’t good enough, so they’re committing $50 million to drilling efforts in the Utica in their 2013 budget.

Early results for PDC have been promising. They report drilling two wells in Guernsey County, OH. They plan to drill a third Utica well later this year in Washington County. Here’s the press release outlining early results, and their Utica plans for the next 12 months:

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Wolf Creek School District Leases to PDC Energy for $3K-18%

At a Monday meeting, the Wolf Creek Local Board of Education in Waterford (Washington County), OH voted to lease the mineral rights under school district property for Utica Shale drilling to PDC Energy. The lease terms are $3,000 per acre signing bonus and 18% royalties. School district officials, however, do not want any active drilling on the property—only underneath the property.

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PDC “Temporarily” Suspends All Marcellus Drilling Operations

Petroleum Development Corporation (PDC) announced yesterday that they are “temporarily” suspending drilling operations in the Marcellus Shale because of “depressed” natural gas prices. They will keep their planned 2012 capital budget the same, at $284 million, and reallocate the $12 million they would have used in the Marcellus operation to other liquids-rich operations. So far this year PDC has drilled three Marcellus wells and they will finish drilling a fourth well before suspending all Marcellus operations.

From the PDC press release:

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New Energy Company in the Marcellus Shale – PDC Mountaineer

Reuters (Nov 1):
Press Release: Petroleum Development Corporation Announces an Appalachian Joint Venture with Lime Rock Partners to Develop the Marcellus Shale Play

There’s a new drilling company entering the Marcellus Shale region by the name of PDC Mountaineer, LLC. The new company is a joint venture between Petroleum Development Corporation and Lime Rock Partners. Petroleum Development is putting up leased acreage and other assets, and Lime Rock is pumping in cash.

Read the press release for full details. The purpose of this notice is to let you know there’s a “new” player in town, just in case they come knocking on your door.