Southwestern Spent $430M in 2Q to Drill 30 Wells, Incl. 16 in M-U
Southwestern Energy, with major assets in the Marcellus/Utica and Louisiana Haynesville, issued its second quarter update last week. You may recall that Southwestern agreed earlier this year to a deal to be acquired by and merged into Chesapeake Energy (see Deal is Done! Chesapeake & Southwestern Announce $7.4B Merger). Because of the impending merger, Southwestern has not held a quarterly conference call with analysts for the third quarter in a row, so we have to go on with the officially filed documents detailing the company’s recent performance. For 2Q24, Southwestern recorded a net loss of $608 million (after making a profit of $231 million in 2Q23). However, adjusting for impairment and other “one-time” charges, the company made $113 million in adjusted net income.
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Every major public “upstream” (exploration and production) company invests in finding and developing reserves — except one, which happens to be the largest owner of wells in the country. Diversified Energy (formerly Diversified Gas & Oil), with major assets in the Marcellus/Utica region (also assets in other regions, too), owns approximately 8 million acres of leases with 67,000 (mostly) conventional oil and gas wells. The company’s business model is to buy lower-producing wells on the cheap and find ways to make them more productive. The company doesn’t do any of its own drilling from scratch. It buys wells drilled long ago (or, in some cases, still under development).
Writing for Hart Energy’s Oil and Gas Investor magazine, author Nissa Darbonne penned a fabulous overview of the Utica, bringing us the history of oil drilling in Ohio (in the 1800s) all the way up to the present day and Encino Energy’s dominance in oil drilling in the Utica. The article includes details about Encino and other companies, including Infinity Natural Resources and EOG Resources. Yesterday, we brought you details about the founding and current status of INR (see 
We have often marveled at the innovation in the oil and gas industry that happens each year. When we first began to write about shale drilling in 2009, a long horizontal lateral was perhaps a mile. Today, there are wells that go over four miles underground! In 2009, it might take two months for a rig to drill a new well. Today, it’s done in a few weeks. The rigs operating today are doing the work of three to four times the same number just a few years ago. It’s astonishing. The end result is that shale drilling has gotten “leaner and meaner” and has resulted in lowered costs.
A major change in ownership is coming for gas-fired power plants through the Marcellus/Utica region as well as New England. Quantum Capital Group announced yesterday that it has entered into an agreement to acquire Cogentrix Energy, an independent power producer, from another investment firm (Carlyle) for $3 billion. The Cogentrix portfolio is comprised of 5.3 gigawatts of natural gas-fired power plants located throughout PJM (the M-U region), ERCOT (Texas), and ISO-NE (New England). M-U molecules feed most power plants in PJM and ISO-NE, ergo our molecules will feed the plants changing hands.
MARCELLUS/UTICA REGION: CNX expands Mentorship Academy program to new fields; Energy Innovation Center Institute lines up utility workers; NATIONAL: Polar bears, dead coral and other climate fictions; Far-left climate activists say Kamala Harris is one of them; Kamala Harris’ energy policy catalog is full of whoppers; No debate required with natural gas; Global energy transition will cost $3 trillion a year; INTERNATIONAL: Green-energy flops revive bets on natural gas; Satellite images show LNG ship at sanctioned Russian plant; A gas carrier faking its location helps Russia avoid sanctions.
Coterra Energy, formed by the merger of Cabot Oil & Gas (drills for natural gas in the Marcellus) and Cimarex Energy (drills for oil in the Permian and Anadarko basins), issued its second quarter 2024 update on Friday. The company turned in respectable financial numbers, making a profit of $220 million in 2Q24, up 5% from the $209 million it made in 2Q23. Unfortunately, there was bad news for the Marcellus. The company has just trimmed another 325 MMcf/d of production across the Marcellus basin, and once the three pads it is actively drilling have concluded in October, no new drilling is planned.
Antero Resources, which is 100% focused on the Marcellus/Utica with over 500,000 net acres under lease (and the largest M-U driller in West Virginia), issued its second quarter 2024 update last week. The company reports net production averaged 3.4 billion cubic feet equivalent per day (Bcfe/d) during 2Q24, an increase of 1% year-over-year (i.e., pretty much the same as last year). Of the company’s 2024 production, liquids (NGLs) averaged 212 thousand barrels per day (MBbl/d), an increase of 10% from 2Q23. Natural gas production averaged 2.1 Bcf/d, down 4% from 2Q23. The company lost $66 million in 2Q24 versus losing $83 million in 2Q23. The bleeding slowed, but the company is still bleeding.
In March 2021, Eureka Resources announced plans to build a Marcellus Shale wastewater treatment facility in Dimock (Susquehanna County), Pennsylvania (see 
Writing for Hart Energy’s Oil and Gas Investor magazine, author Nissa Darbonne penned a fabulous overview of the Utica, bringing us the history of oil drilling in Ohio (in the 1800s) all the way up to the present day and Encino Energy’s dominance in oil drilling in the Utica. The article includes details about Encino and other companies, including Infinity Natural Resources and EOG Resources. On Friday, we brought you excerpts from the article about Encino Energy (see 
The “front month” NYMEX natural gas price, based on the Henry Hub in Louisiana, closed below $2/MMBtu on Friday. It was the second day in a row the NYMEX price closed below $2. The cash price was even worse, averaging $1.89 on Friday after bottoming out earlier in the week at $1.80. Geesh. We thought we left that bottom-bumping low-price stuff behind a while ago, but apparently not. What’s going on? Even though temps have been hot hot hot, there are concerns over an uptick in production over the past week. Too much supply with the same demand equals lower prices.
The U.S. national oil and gas rig count lost ground last week it had gained the week before. The national combined Baker Hughes oil and gas rig count now stands at 586 rigs, down three from 589 two weeks ago. The Marcellus/Utica lost one rig last week. Pennsylvania lost a rig and now operates 20 active rigs. Ohio operated 11 active rigs. West Virginia remained the same with five active rigs. The M-U is operating a combined 36 rigs. The M-U’s primary competitor, the Haynesville, was down one rig from two weeks ago and now operates 34 rigs.
For the week of July 22 – 28, a total of nine permits were issued to drill new shale wells in Marcellus/Utica. Pennsylvania had the fewest with just two new permits, one each for Seneca Resources and Rice Drilling (i.e., EQT). Ohio had the most with four new permits, all of them for EOG Resources for a single pad in Noble County. West Virginia came in between with three new permits, all three for Antero Resources in Tyler County.