Marcellus Drilling News

Commodity Price | Economic Impact | Industrywide Issues | Pennsylvania | Wyoming County (PA)

Oklahoma Manufacturer Buys Interest in PA Marcellus Wells
November 1, 2012November 1, 2012

This is a fascinating (to MDN) story about where the industry and economics for shale gas drilling may be heading. Yesterday LSB Industries, an Oklahoma City chemical (and equipment) manufacturer that depends on natural gas as its raw materials, announced they have purchased ownership interest in 14 producing natural gas wells, 7 soon-to-be producing wells and 36 yet-to-drilled wells in the Marcellus Shale, in Wyoming County, PA.

Why would a manufacturing company invest in natural gas wells? As a hedge against natural gas prices going higher—which they believe is going to happen relatively soon. They want a piece of the action that supplies their company with a key raw material, to keep their future costs down. Smart.

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Endeavour International | Energy Companies | SM Energy

Endeavour 3Q12: Income Way Up, Land Swap for Marcellus Acres
November 1, 2012November 1, 2012

A relatively young independent oil and gas company (started in 2004), Endeavour International, continues its rapid growth as reported in their third quarter financial and operational update. Endeavour has a large oil drilling operation in the North Sea. They also have a natural gas drilling presence in the Pennsylvania Marcellus Shale.

According to the 3Q12 update, Endeavour now owns about 31,000 acres in the Marcellus Shale leases (see the release below). However, last year Endeavour had a deal with SM Energy to purchase SM’s Marcellus acreage, which would have added 50,000 additional acres to their Marcellus portfolio (see this MDN story). For no publicly stated reason, Endeavour bailed out of the deal and SM threatened to sue last December (see this MDN story).

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1st NRG | Energy Companies | Utica Shale

1st NRG Corp Gets $7M Loan to Begin Drilling in Utica, Other Plays
November 1, 2012November 1, 2012

The Ohio Utica Shale’s newest entrant, 1st NRG Corporation, previously announced they would drill on 7,150 acres of the Utica Shale in eastern Ohio (see this MDN story). Yesterday they announced they have secured a $7 million loan which will help finance the drilling.

1st NRG’s announcement is, frankly, a lot of fluff aimed at reassuring investors. It’s big on broad descriptions of the shale plays where they plan to drill, but absent details about how and when that drilling will take place. Here’s the 1st NRG announcement:

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Energy Services | Williams

Williams Partners 3Q12 Update: Net Income Down 31%
November 1, 2012November 1, 2012

Williams Partners, the pipeline and processing subsidiary of energy giant Williams, released their third quarter financial update yesterday. Like many of the other energy companies with operations in the Marcellus and Utica Shale, Williams Partners did not have a good 3Q12 from a financial perspective. Net income for 3Q12 was $237 million, down from $342 in 3Q11 (31%). Why was 3Q12 tough for Williams and other energy companies? Low commodity prices for natural gas and natural gas liquids.

Relevant sections from the Williams announcement yesterday:

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Best of the Rest

Marcellus & Utica Shale Story Links: Thu, Nov 1, 2012
November 1, 2012November 1, 2012

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:

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Hydraulic Fracturing | Industrywide Issues | Litigation | New York | Statewide NY

53 NY Towns Ask to Join Fracking Ban Court Case
October 31, 2012October 31, 2012

While New York Gov. Andrew Cuomo dithers about whether or not to allow fracking in the state, two court cases that will have a profound effect on where fracking can happen (should he finally make up his mind) continue to work their way through the court system. Those cases address of the issue of whether or not local municipalities should have the right to completely ban fracking within their borders—sometimes referred to as “home rule.”

Not long ago MDN updated you on the status of those cases with word that oral arguments are likely to take place in February with a decision by late spring (see this MDN story). A new development in those cases: 53 municipalities have filed a request with the court to join the cases on the side of pro-ban/anti-fracking:

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Economic Impact | Hydraulic Fracturing | Industrywide Issues | Jobs | New York | Statewide NY

NY vs ND Unemployment Rates: Why is One High, the Other Low?
October 31, 2012October 31, 2012

We interrupt this blog post to bring you the following news: New York’s unemployment rate is 8.2% (a full 9% in Chemung County). The Bureau of Labor Statistics reports that 345 out of 372 metro areas in the country (93%) have lower unemployment rates than the New York State average. The lowest unemployment rate in the country? North Dakota—at 2.2%.

Why is ND’s unemployment rate so low? And why is NY’s so high? Is there a connection?

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Commodity Price | Economic Impact | Industrywide Issues | Pipelines

Marcellus May Produce Additional 5Bcf/d of Gas in Next 14 Mo
October 31, 2012October 31, 2012

A blogger on the Seeking Alpha website says the Marcellus is “a ticking time bomb” waiting to “explode” with a tremendous amount of new natural gas production that will flood into the U.S. marketplace over the next 1-2 years. How much new gas? Blogger David White makes a compelling case he believes an additional 5 billion cubic feet of new natural gas will flow—from just the Marcellus Shale region—by the end of 2013.

Here’s his reasoning:

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Anadarko | Energy Companies

Anadarko 3Q12 Update: Lowered Marcellus Well Cost by $1.5M
October 31, 2012October 31, 2012

Anadarko Petroleum reported third quarter results on Monday. Anadarko is an independent exploration and production (E&P) company—a very large one—with a good deal of drilling in the Marcellus Shale. Third quarter revenues were $3.33 billion for the company, up 4.2% on the year.

In their operations update (MDN has extracted the Marcellus/Utica Shale portion below), Anadarko reports they’ve lowered drilling costs by $1.5 million per well since 2011. It now costs them an average $2.3 million to drill a Marcellus Shale well. They also report encouraging results in targeting the shallower Geneseo Shale with plans for drilling the Geneseo in 2013.

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Economic Impact | Hydraulic Fracturing | Industrywide Issues | Ohio | Pennsylvania | Statewide OH | Statewide PA | Statewide WV | West Virginia

Sandy’s Affect on Drillers in the Marcellus & Utica Shale
October 31, 2012October 31, 2012

Although Hurricane turned Super Storm Sandy gave New York City, Delaware and New Jersey a big, black eye (and we grieve for their losses), further inland Marcellus and Utica Shale drillers prepared for and appear to have avoided any major impacts from the storm. Some production was and still is shut in to avoid potential problems, but given the storm is now mostly gone from the Marcellus and Utica Shale region, shut in production should quickly come back online.

Here’s a Sandy report from four of the largest drillers in the Marcellus:

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Antero Resources | Doddridge County | Energy Companies | Energy Services | Industrywide Issues | MarkWest Energy | Pipelines | Processing Plants | Statewide WV | West Virginia

MarkWest Opens Sherwood I Wet Gas Processing Facility in WV
October 31, 2012October 31, 2012

MarkWest, a huge midstream (pipeline & processing facilities) company and Antero Resources, a Marcellus Shale driller, inked a deal in May 2012 for MarkWest to gather and process Antero’s wet gas, or natural gas liquids in West Virginia (see this MDN story).

MarkWest announced today the first phase of that deal is now online with the commencement of operations at the Sherwood I facility in Doddridge County, WV. The Sherwood I facility has the capacity to process 200 million cubic feet per day of wet gas. MarkWest is building Sherwood II now, which would add an additional 200 Mmcf/d of capacity. Eventually a third Sherwood facility may be built for a total capacity of 600 Mmcf/d.

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Economic Impact | Industrywide Issues | Jobs | Ohio | Statewide OH | Supply Chain

Plugging in to the Marcellus & Utica Shale Supply Chain
October 31, 2012October 31, 2012

Although some of the initial frenzy of activity has subsided, drilling in Ohio’s Utica Shale continues, and along with it comes a growth in business, jobs and economic impact.

Here are a few stories of Ohio businesses that have seen a major impact from plugging in to the Marcellus and Utica Shale “supply chain”:

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Energy Companies | Talisman Energy

Talisman Energy’s Big 3Q12 Loss, Treads Water in Marcellus
October 31, 2012October 31, 2012

There’s no way to sugarcoat the dreadful third quarter results Talisman Energy reported yesterday—and they don’t try. The Canadian company, one of the larger drillers in the Marcellus Shale, announced a $731-million loss for the third quarter yesterday, which included $443-million of charges tied to exiting from Peru and setbacks with their operations in Norway and Quebec. Talisman’s stock dropped nearly 5% on the news.

The new president & CEO, Hal Kvisle, gave a sobering and frank review of the company and charted out four key priorities moving forward. One of those priorities is where they will focus their operations in the months and years ahead.

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Best of the Rest

Marcellus & Utica Shale Story Links: Wed, Oct 31, 2012
October 31, 2012October 31, 2012

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:

Read More “Marcellus & Utica Shale Story Links: Wed, Oct 31, 2012”
Economic Impact | Industrywide Issues | Ohio | Pennsylvania | Statewide OH | Statewide PA | Statewide WV | West Virginia

Sandy’s Effect on Marcellus/Utica Shale Drilling & Production
October 30, 2012October 30, 2012

It seems the entire country watched with morbid fascination as Hurricane-now-Super Storm Sandy slammed into the northeast yesterday. The exceptionally large and powerful storm—some 1,000 miles across—lingers over what is essentially the Marcellus and Utica Shale region of the U.S. As of early Tuesday more than 5 million people are without power due to storm damage. New York was heavily hit with the highest storm surge to hit Manhattan in over 200 years, flooding subway tunnels and covering some city streets. The New York Stock Exchange is closed for two consecutive days for the first time since 1888. Truly history in the making.

How will Sandy affect drilling, production and refining in the Marcellus? Reports came in yesterday that refineries were shutting down in advance of the storm. Production coming from the field likely will not be affected all that much, but drilling is another matter. Some drilling operators reported they would lay down rig masts until the storm passes.

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Energy Companies | EXCO Resources

EXCO Resources Posts 3Q12 Loss, Marcellus Production Up
October 30, 2012October 30, 2012

EXCO Resources released their third quarter financials and operational update yesterday. The company lost $346 million ($1.62 per share) in 3Q12, mostly because of an accounting “write-down” on the value of some of their oil and gas properties.

With most of their Marcellus drilling activity concentrated in Lycoming County, PA, EXCO reports year-over-year production for their Marcellus operation increased 35% from 3Q11. EXCO currently operates one drilling rig in the Marcellus and says although they previously committed to drill 49 wells this year, they “continue to evaluate” their 2012 drilling program. Translation: Don’t count on a full 49 wells being drilled this year.

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