Epsilon Energy 2Q22 – Production Dips, but Revenues & FCF Soars
Epsilon Energy concentrates most of its effort on developing Marcellus Shale wells in Susquehanna County, PA. Epsilon typically does not do its own drilling. The company joint venture partners with (gives money to) other companies, like Chesapeake Energy, and the other company typically does the drilling. Epsilon issued its second quarter 2022 update earlier this week. The company’s Marcellus net gas production was 2.324 Bcf (billion cubic feet) in total, not per day, during 2Q22. That number is down from 2.548 Bcf in 2Q21.
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During pipeline giant Williams’ 2Q22 update last week, company officials talked about expansion projects in the Marcellus/Utica region (see 
For the week of July 25-31, the three Marcellus/Utica states issued 24 permits to drill new shale wells, up from 16 the prior week. However, in a major turnaround, Pennsylvania only issued two new permits, one to Chesapeake Energy and the other to Olympus Energy. Ohio had the lion’s share of new permits, issuing 14. Eight of Ohio’s permits went to Encino Energy, and four to Utica Resources Operating. West Virginia issued eight new permits, with seven of them going to Antero Resources.
Coterra Energy, formed last October when Cabot Oil & Gas merged with Cimarex Energy, issued its second quarter update yesterday. The company made $1.2 billion in profit last quarter, versus making just $30 million a year ago. Natural gas production in the Marcellus stayed pretty much even at 2.22 Bcf/d. The company generated over $1 billion in free cash flowing during 2Q–one of the highest, if not the highest, we’ve seen. Coterra uses its free cash flow to issue dividends, buy back shares, and retire debt sooner.
Pennsylvania State Police are investigating the vandalism and theft of copper from a Coterra Energy well pad on Stockholm Road in Rush Township in Susquehanna County, PA, sometime between July 8 and 14. The case appears to be your garden-variety case of lowlifes stealing copper to resell it (a “crime of opportunity”), and not some sort of statement by environmental wackos. But, one never knows with wackos…
The Pennsylvania Environmental Hearing Board (EHB) is a special court set up in PA to hear appeals of decisions made by the PA Dept. of Environmental Protection (DEP). In February 2021, a landowner (three people living at the same address) in Susquehanna County, PA, filed a lawsuit with the EHB against the DEP and Coterra Energy (formerly known as Cabot Oil & Gas) alleging Coterra’s drilling program nearby had led to polluting their water well. As of last week, the case was dismissed and the Pittsburgh attorney for the landowner (for the first time ever) was sanctioned by the EHB.
We’re always on the lookout for indicators and trends that tell us whether or not there will be more or less drilling (and leasing) in the Marcellus/Utica. Lately, we’ve seen a couple of mentions of new leases signed, at least in the Ohio Utica (see 
The Pennsylvania Environmental Hearing Board (EHB) partially dismissed a challenge brought by Philly-area State Senator Katie Muth. She seeks to block Eureka Resources from moving forward with the construction of a new shale wastewater recycling facility in Dimock, PA–a location hours away from her own district. The EHB ruled that Muth has no standing under the PA Environmental Rights Amendment (ERA) to bring a challenge. The proposed facility is not in her district and there’s nothing that ties her to that location.
A group of international scientists has discovered a fourth type of natural gas. Wait, there are different “types” of natgas? Yes, at least different types of origins for natural gas. To date, three main sources of natural gas had been identified–microbial, thermogenic, and abiotic. Scientists have discovered a fourth type or origin for natural gas–natgas generated by radiolysis, which is the dissociation of molecules by ionizing radiation of the organic matter in shale rock. Yeah, it’s science and it’s complicated. Let us bottom line this for you right here: The presence of natural gas with a “thermogenic” signature (i.e. fingerprint), which indicates gas coming from a drilled shale well, has been blamed for contaminating water supplies in places like Dimock, PA. It’s quite possible thermogenic gas has been misidentified as radiolysis gas, and that leaky wells are not the cause of gas in water.
In March 2021, Eureka Resources announced plans to build a Marcellus Shale wastewater treatment facility in Dimock (Susquehanna County), Pennsylvania (see