Equinor Swaps Acreage with EQT in PA & OH, Exits Operated US Shale
We tried to cram the gist of the news into the headline but found we could not. This is a big story, for multiple reasons. Most news outlets are reporting (and this is not incorrect) that EQT pulled off a big deal to divest a good chunk of its nonoperated assets (acreage and functioning wells in which EQT owns a minority stake) in northeastern Pennsylvania, trading those assets for 10,000 operated acres in Lycoming County, PA (in northeastern PA), plus 26,000 operated acres in Monroe County, OH, plus receiving $500 million cash, in a deal with Norway’s Equinor (formerly Statoil). EQT divesting from its nonop assets is a big deal. However, the bigger news, in our humble opinion, is that Equinor has (with this deal) completely exited all operated assets in U.S. shale. The company wants to keep its fingers in the U.S. shale pie, but only as a nonop operator — that is, investing in wells that other companies drill and maintain.
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There was a pretty dismal showing for new permits issued to drill in the Marcellus/Utica during the week of Mar. 18 – 24, with a drop of 11 permits from the prior week to just 5 new permits issued. Pennsylvania issued all 5 of the new permits. Ohio and West Virginia both issued no new permits during that week. EQT (Rice Drilling) was issued 2 new permits in Greene County. Blackhill Energy and Chesapeake Energy each received 1 new permit to drill in Bradford County. And Range Resources was issued 1 new permit to drill in Washington County.
The highly functional and responsible Susquehanna River Basin Commission (SRBC), unlike its completely dysfunctional and irresponsible cousin, the Delaware River Basin Commission (DRBC), continues to support the shale energy industry by approving water withdrawals for responsible and safe shale drilling. Last Thursday, the SRBC approved 23 new water withdrawal requests within the basin, eight of them for water used in drilling and fracking shale wells in Pennsylvania. The Marcellus/Utica shale drillers receiving a green light from SRBC included Beech Resources, Chesapeake Energy, Greylock Energy, Seneca Resources, and Southwestern Energy.
On February 8, 2024, the Pennsylvania Dept. of Environmental Protection (DEP) issued a notice of violation (NOV) to Blackhill Energy for failing to prevent the migration of shale gas into groundwater that contaminated three nearby private water wells in Springfield Township (Bradford County) in June of 2022. Yes, the NOV took nearly two years to get issued. We’re not sure why it takes so long to issue an NOV (perhaps a full investigation takes that long?), but it does. Blackhill self-reported the issue back in 2022 and presumably has already corrected it.
Spanish energy giant Repsol, with around 214,000 net acres of leases in the Marcellus Shale, primarily located in northeastern Pennsylvania in Bradford, Susquehanna, and Tioga counties, issued the company’s fourth quarter and full-year 2023 update last week. Among the tidbits coming to light is a statement by Repsol management that the company plans to spend €$1 billion (US$1.083 billion) in the Marcellus over the next four years. Repsol loves the Marcellus!
Reuters is reporting a rumor, based on “people familiar with the matter,” that EQT Corporation, the largest natural gas driller in the United States (by production), is shopping its 25% non-operated interest in a number of producing gas wells in northeastern Pennsylvania for $3 billion. Chesapeake Energy is the majority owner and operator of the wells.
Spanish-owed Repsol owns (at last check) around 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, adding Rockdale’s 66 producing wells on 42,897 net acres to Resol’s extensive Marcellus portfolio (see