Southwestern Spent $538M in 1Q to Drill 29 Wells, Incl. 15 in M-U
Southwestern Energy, with major assets in the Marcellus/Utica and Louisiana Haynesville, issued its first 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 did not hold a quarterly conference call with analysts for the second quarter in a row, so we have to go on the officially filed documents detailing the company’s recent performance. For 1Q24, Southwestern recorded a net loss of $1.5 billion (after making a profit of $1.9 billion in 1Q23). Although adjusting for impairment and other “one-time” charges, the company made $131 million in adjusted net income.
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Two more tracts of Ohio public lands designated as “wildlife areas” have been nominated by shale companies to be drilled and fracked under (not on), which has the anti-fossil fuel group Save Ohio Parks up in arms. The tagline for Save Ohio Parks is “No fracking on public lands.” The thing is, there isn’t any fracking on public lands in Ohio. It’s UNDER, not ON. Well pads and equipment would be erected on PRIVATE land adjacent to the public land. There is no disturbance of any kind on top of Ohio’s public lands. The new parcels nominated include 84 acres in the Keen Wildlife Area in Washington Township (Harrison County). A second parcel of 30 acres has also been nominated for the Egypt Valley Wildlife Area in Flushing Township (Belmont County).
According to a new article by the Pittsburgh Post-Gazette, abandoned oil and gas wells can be found “everywhere” in Pennsylvania. An influx of new federal funding gives the state Dept. of Environmental Protection (DEP) new urgency in finding and plugging them. However, it is the thorny issue of who pays or should pay when the owner is known that caught our attention. In some cases, producers (and speculators) buy leases and land, knowing that new drilling (in particular shale drilling) may one day happen on the property, but the new owners didn’t sign up for the financial responsibility to plug old/existing wells on the property. Should they (instead of taxpayers) be on the hook to pay?
Have you noticed? The NYMEX price of natural gas has been on an upward trend over the past week or so. We’ve actually broken the $2 barrier, and it continues to climb. Which begs the question, why? There are typically a number of factors combined to drive the price. This time around, we think we can boil it down to a classic economics principle — there’s more demand and less supply. The demand is coming from the problem-plagued Freeport LNG facility, which is rockin’ and rollin’ once again. Lower supply is coming from fewer natgas drilling rigs in operation.
OTHER U.S. REGIONS: Mass. legislation seeks to phase out natural gas; ‘Gas shortage’ impacting some South Hadley residents; NATIONAL: Chevron CEO says natgas demand will be higher than expected; TC Energy preparing for natural gas demand surge; INTERNATIONAL: JP Morgan analysts look at next OPEC meeting; Global gas glut to be delayed by another year; China’s in talks for gas offtake, stake in Canada’s Cedar LNG; Shell sold millions of ‘phantom’ carbon credits.
We have to admit we’re disappointed. A section of the 303-mile Mountain Valley Pipeline (MVP) ruptured during pressure testing last Wednesday in Roanoke County, Virginia, according to a report from the state’s environmental agency. A landowner observed sediment-laden water in her pasture on Wednesday morning and reported it to the Virginia Department of Environmental Quality (DEQ). “The origin of the sediment-laden water reported in the complaint was from the rupture of a section of pipe during hydrostatic testing the morning of 5/1/2024,” wrote the DEQ expert, John McCutcheon.
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 first quarter 2024 update on Friday. The company turned in respectable financial numbers, making a profit of $352 million in 1Q24, albeit down 48% from the $677 million it made in 1Q23. The company produced 2.31 Bcf/d (billion cubic feet per day) in the PA Marcellus during 1Q24, up 8% from 2.13 Bcf/d in 1Q23. However, the money it received for its natgas production dropped like a rock. The average sale price for its gas in 1Q24 was $2.20/Mcf, down 41% from $3.71/Mcf in 1Q23. No wonder the company has pivoted to spend more time and money on oil drilling rather than gas drilling.
Last Thursday, MDN brought you the news that Ohio Attorney General Dave Yost asked a Belmont County judge to find Austin Master Services (AMS) and Brad D. Domitrovitsch, who is in control of the company (both CEO and CFO), in contempt for “failing to meet the court’s deadline to clean up the illegal levels of fracking waste stored at its recycling facility in Martins Ferry” (see 
The Cleveland Plain Dealer has the long knives out for Ohio State Senator Brian Chavez (Republican) and Ohio Gov. Mike DeWine (also a Republican). The Plain Dealer is accusing DeWine’s Ohio Department of Natural Resources (ODNR) of corruption in not charging an injection well company owned by Chavez called DeepRock Disposal $1.3 million for cleaning up wastewater that migrated from a DeepRock injection well to a nearby conventional production well in Noble County. Instead, says the Plain Dealer, the ODNR sent the bill to the conventional well operator!
We’re sad but not surprised. The last time we reported on Williams’ Northeast Supply Enhancement (NESE) Project slated for New York was last June when Williams asked the Federal Energy Regulatory Commission for a time extension to build it (see 
Last week, the Baker Hughes U.S. rig count lost another eight rigs, down to 605, the lowest the count has been since January of 2022. Since last October, the national count had gone as low as 616 and as high as 629, and that was it. No higher and no lower. That is, until two weeks when it crashed through the floor and went lower, down to 613. And now, it has gone even lower, down to 605. The Marcellus/Utica remained even at 40 rigs after losing one rig two weeks ago. Pennsylvania operates 21 rigs; Ohio operates 11 active rigs; and West Virginia operates 8 rigs.
Two weeks ago, during the week of April 15 – 21, there were 16 new permits issued to drill in the Marcellus/Utica. Last week, for the week of April 22 – 28, there were 26 new permits issued. Finally! A little good news on the permit front. Snyder Brothers took the top prize with eight new permits issued, all of them for a single well pad in Armstrong County, PA. Chesapeake Energy scored five new permits, all of them for a single pad in Bradford County, PA. EQT Corporation (using its Rice Drilling subsidiary) received four permits in Greene County, PA. Encino Energy also received four permits, all for one pad in Harrison County, OH. Antero Resources received three permits in Wetzel County, WV, and Southwestern Energy received two permits in Brooke County, WV.
Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), reported its first quarter 2024 numbers earlier this week. The company drills Utica *and* Marcellus wells in Ohio. It also has an active drilling program in the Oklahoma SCOOP shale play. Gulfport’s net daily production for 1Q24 averaged 1,053.7 MMcfe/d, down just a shade from 1Q23’s average of 1,057.4 MMcfe/d. Production in 1Q consisted of 831.3 MMcfe/d in the Utica/Marcellus (79%) and 222.4 MMcfe/d in the SCOOP (21%). The production mix was comprised of approximately 92% natural gas, 6% natural gas liquids (NGLs), and 2% oil and condensate.