Equinor (Statoil) Stops All U.S. Shale Drilling, Incl. Marcellus
Oil and gas drilling giant Equinor (formerly called Statoil) is owned by the Norwegian government. Equinor/Statoil has drilled in the Marcellus/Utica for years. As recently as last June the company reported drilling 9-14 Utica wells per year (see Equinor (Statoil) Drilling Long Utica Laterals, Production Up 5X). The company also drills oil wells in the U.S., primarily in the North Dakota Bakken. All of that–both Utica and Bakken drilling–has come to a screeching halt. Yesterday the company announced it is reducing its drilling budget worldwide by $400 million and is “halting” all U.S. onshore (i.e. shale) drilling and completion activities.
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Diversified Gas & Oil owns close to 8 million acres of leases with some 60,000 (mostly) conventional oil and gas wells. Their focus has been to acquire quality production and cash flow–regardless of the well or commodity type (gas or oil)–in the Appalachian Basin. They currently have over 400 Marcellus/Utica shale wells in their portfolio too. When a gas or oil well quits producing, it needs to be plugged. We were aware of deals Diversified has cut with both Pennsylvania and West Virginia to plug old, non-producing wells (see 
Encino Acquisition Partners (aka Encino Energy) bought all of Chesapeake Energy’s Ohio assets for $2 billion in 2018 (see 
Many states in the northeast and in Appalachia are now in lock-down mode with most businesses shuttered to prevent the spread of COVID-19 coronavirus. However, certain activities and businesses continue to operate. They are called “life-sustaining” or “critical” or “essential.” On the list of essential businesses in both Pennsylvania and Ohio are shale drillers. Although drillers continue to work, at least one Marcellus/Utica driller, CNX Resources (we suspect others) is making changes to keep its employees and contractors protected against the virus.
Earlier this month the Ohio Oil & Gas Association (OOGA) held its 73rd annual Winter Meeting in Columbus. One of the speakers was Martin Shumway, technical director at Locus Bio-Energy Solutions. Shumway shared details from the latest DeBrosse Memorial Report (full copy below). What does the report show for 2019? Ohio oil production hit the highest level ever in state history in 2019. There were 406 oil and gas wells completed last year, of which 351 (86%) were Utica wells. Belmont County saw the most wells drilled (80). Ascent Resources (formerly American Energy Partners) drilled the most wells last year in Ohio (104 wells), up 49% from 2018.
Radicalized leftist groups pretending to care about the environment, including the Center for Biological Diversity, Sierra Club and Ohio Environmental Council, have struck again. In May 2017 the three groups sued the U.S. Forest Service and U.S. Bureau of Land Management (BLM) to block the sale of leases for oil and gas drilling in Ohio’s Wayne National Forest (WNF). Last week a federal judge ruled in their favor. The court has effectively blocked all future lease auctions for WNF and is considering overturning two previous auctions. This is a DIRECT attack on the property rights of private landowners.
One of our favorite Energy in Depth writers, Nicole Jacobs, has just published a great post that outlines the huge impact new natural gas-fired (mostly Utica Shale gas) power plants have had and will have in Ohio. She includes a list of 10 projects either already built and running, under construction, or on the books to get built. When you add up the total capacity for all 10 plants, they will generate an amazing 9,215 megawatts of electricity, enough to power upward of 9 million homes! The companies building those 10 plants are investing $15.9 billion. This is huge for Ohio’s economy.
Over 700 people gathered yesterday in Columbus, OH for OOGA’s (Ohio Oil & Gas Association) 73rd Annual Meeting. Industry leaders soberly assessed the state of current affairs. According to OOGA president Matt Hammond, the industry may have to downsize for a while. Jeff Fisher, CEO of Ascent Resources, agreed. Hammond said, “it’s just going to look a little bit different in the next few years” before the price of gas rebounds. The sentiment was clearly what we’ve been preaching: Expect lower for longer when it comes to gas prices.
Is history repeating itself? Ohio House Bill 55 would require certain pieces of information to be included on royalty statements landowners receive from Ohio drillers. Ohio State Rep. Jack Cera (Democrat from Bellaire) introduced HB 55 last year–for the third time since 2011. Like the two previous times, the bill is now mired in committee and doesn’t appear to be making any headway toward a vote. Let’s look at what information landowners receive now under existing law, and what details they would receive under this bill if passed.
Last Friday the Ohio Utica’s third-largest (by the number of wells drilled) shale driller, Gulfport Energy, filed its fourth-quarter and full-year 2019 update. The bad news is that the company lost just over $2 billion in 2019. The good news is that the entire loss was an impairment charge, a “paper loss” and not an actual, out-of-pocket money loss. When you dig deeper into the numbers, you’ll find the company actually produced free cash flow of $37.8 million last year.
The Ohio Dept. of Natural Resources (ODNR) issued fourth-quarter 2019 numbers for Utica shale oil and gas production last Friday. The numbers show new state record highs for quarterly oil and natural gas production, the most ever since quarterly reporting began in 2013. Utica oil production was up 17% over 4Q18, and Utica natural gas production was up 3.2% over 4Q18.
Ascent Resources, originally founded as American Energy Partners by gas legend Aubrey McClendon, is a privately-held company that focuses 100% on the Ohio Utica Shale. The company recently issued its full-year 2019 update with a look at what it plans for 2020. Ascent is Ohio’s largest natural gas producer, and 2019 was a VERY good year for the company’s production. Average daily production zoomed up 45% from 2018, to 1.97 billion cubic feet equivalent per day (Bcfe/d). Of that number, some 1.8 Bcf/d was natural gas, and oil production was 13,000 barrels/d. Most importantly, Ascent made a profit of $466 million in 2019, compared to losing $4 million in 2018. Way to go!
Bills aimed at clamping down on illegal pipeline protests (which pretending to be free speech but aren’t) have been introduced in both the Ohio and West Virginia legislatures. In WV, House Bill (HB) 4615 passed the House last week and is now under active consideration in the WV Senate. In Ohio, Senate Bill (SB) 133 was passed last May. The bill was recently reported out of a House committee and likely to see a full House vote soon. It’s obvious that regular folks are tired of radicals and their illegal attempts to block pipeline projects.