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?
We have a second article today dealing with post-production deductions in Pennsylvania oil and gas leases. Although this is an “in the weeds” legal article, it’s worth your time and attention (if you are a PA landowner or driller) to read it and understand it. The lawyers at Houston Harbaugh, P.C. have discovered an ingenious way of exposing “net back pricing” and claiming post-production deductions under market enhancement royalty clauses as being hypocritical–by using a clause found in some leases that allows “free gas.”
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.
Big Green is Big Business–especially in Pennsylvania, where leftist groups routinely file a blizzard of lawsuits against the shale industry. Some Big Green groups receive funding from foreign sources, including Russia and China. They seem to have endless pools of money to litigate every square inch of new pipeline and every proposed new well pad. As if being repeatedly sued isn’t enough, these disgusting groups want the fossil fuel industry to pay them for their lawyers! When the groups are the ones filing the lawsuits!! The Democrat judges of the Pennsylvania Supreme Court, in a poorly reasoned decision issued yesterday, have granted Big Green the power to sue, and then get paid for suing.
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 (
Last summer then-Gov. Tom Wolf instructed the Pennsylvania Dept. of Environmental Protection (DEP) to conduct a comprehensive review of conventional oil and gas driller compliance with an eye on locating enough dirt to justify creating onerous new regulations for the industry (see 
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 
UGI, a diversified energy company with midstream (pipeline) operations and one of PA’s largest utility companies, is planning to build a second LNG peak shaver. The peak shaver will be located in Middlesex Township in Cumberland County, PA. In November 2020, UGI launched the operation of a new 2 million gallon LNG peak shaver in Bethlehem, PA (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.
Pennsylvania State Rep. Martin Causer, Republican from Bradford (McKean County), PA, is introducing a new bill to prohibit PA municipalities from banning the installation and use of natural gas stoves and furnaces. “Pennsylvanians deserve better than to have their freedom restricted by an overly involved government that thinks it knows better than they do,” Causer wrote in a memorandum to his fellow House members, asking them to join him in co-sponsoring the bill. In our opinion, every single Republican member of the PA House should be listed as a co-sponsor of Causer’s “energy freedom” bill.
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.
Evolution Well Services, headquartered in Houston with a regional office in Pittsburgh, specializes in “electric” fracking–using natural gas from the well pad (instead of diesel fuel) to power turbines to create electricity that drives fracking pumps. In September 2020, three former Evolution employees who worked at remote sites in the Marcellus/Utica filed a lawsuit against the company claiming Evolution failed to pay them for their commute to and from job sites. The lawsuit was turned into a class action in February of last year (see