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Thursday, July 31, 2014

Links for 7/31/14: Company Opens Office in Ohio, Utica Shale Draws Comparison to Eagle Ford, and More

Marcellus Drilling News:  Towns that Ban Fracking Could be Bankrupted by Takings Lawsuits (subscription required)   -   "One study mentioned in the NARO announcement says that bans and moratoria in Boulder County, CO could result in more than one billion dollars of “takings” lawsuits by landowners. In other words, the lawsuits will bankrupt the towns and villages stupid enough to enact a ban. Are you listening..."

PRWeb:  All Over the Map: Fenstermaker Extends Locational Reach to the Ohio Region   -   "Fresh on the heels of announcing the ribbon cutting ceremony for its office in Lakes Charles, Louisiana, Fenstermaker confirms that a new location has been established in Cambridge, Ohio. Providing energy services to a growing number of clients in the Utica Shale Play since October 2013, the company..."

Columbus Business First:  Utica shale production comparable to Eagle Ford’s startup, EIA says   -   "Initial natural gas production from the Utica shale mirrors that of the Eagle Ford shale in Texas and is slightly higher than the Haynesville formation in Louisiana, according to a recent Energy Information Administration report. But compared to..."

Seeking Alpha:  EQT's (EQT) CEO David Porges on Q2 2014 Results - Earnings Call Transcript   -   "As we discussed at the time of the first quarter call, we were revisiting our geologic and engineering analysis of the dry Utica/Point Pleasant potential on our acreage. As we look at the initial results of the wells drilled so far in the play by other operators, our technical teams are very encouraged that the results are basically in line with what our models would predict. Until now, we've been hesitant to drill our own well based solely on those models, given the lack of well control. But we think it is now time to drill a test well..."

The Plain Dealer:  Two drilling companies sue Broadview Heights over ban on oil and gas wells   -   "Two drilling companies with natural gas and oil wells in Broadview Heights have sued the city over its prohibition against future wells. Bass Energy Co. Inc., of Fairlawn, and Ohio Valley Energy, of Austintown, said the state of Ohio, not Broadview Heights, has sole authority to permit or deny drilling and..."

Columbus Business First:  Stark State’s oil and gas job-training center on track for January launch   -   "A training center for oil and gas jobs in northeast Ohio is on track to start classes in January. Stark State College, a community college in North Canton that has embraced training workers for the nearby Utica shale, is requesting $2.6 million in state funding ..."

Marcellus Drilling News:  Exclusive: Breakthrough Tech Cleans Frack Wastewater <30 Minutes   -   "What if you were convinced an invention IS the greatest thing since sliced bread–at least as it applies to the world of shale drilling? And what if that invention could clean thousands of gallons of frack wastewater right on site and turn it into DRINKABLE water–in less than 30 minutes? And what if..."

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Gulfport Production Sags With Slowdown in Utica Shale

From NGI:
Gulfport Energy Corp.'s second quarter production dropped by a little more than 1% from the first quarter after it pulled back the reins in the Utica Shale. 
The company produced a total of 2.4 million boe, or 26,725 boe/d in the second quarter, down from the 27,087 boe/d in the first quarter. The Utica accounted for 79% of second quarter production, or 1.9 million boe. 
Although it has a sizeable patchwork of assets in Southern Louisiana and the Bakken Shale and Niobrara formation, Gulfport has increasingly focused on 179,000 net acres in eastern Ohio. However, shortly after CEO Michael Moore was appointed in April, he said a close review of the company's operations revealed that earlier assumptions used to determine the pace of development in Ohio were too careless (see Shale Daily, April 24).
Read more by clicking here (subscription required).

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Study: States With Fracking Have Better Economies


New research shows states with hydraulic fracturing and horizontal drilling saw faster economic turnarounds after the recession in 2008 when compared to those who have no drilling activity.

New research has been released by Bernard L. Weinstein, an associate director of the Maguire Energy Institute at Southern Methodist University's Cox School of Business, that explained U.S. states with hydraulic fracturing and horizontal drilling saw faster economic turnarounds after the recession in 2008 when compared to those who have no drilling activity, Oil and Gas Journal reported.

Weinstein explained that job demands in shale developments have shifted dramatically. According to the source, he believes the need for petroleum engineers, environmental specialists, drilling managers, equipment manufacturers and other natural resource workers has increased as the sector grows larger in active drilling states.

"But these high-paying specialties are not the only ones to benefit from the boom," said Weinstein, according to the source. "Almost all sectors of the local economies are experiencing greater-than-expected growth in employment opportunities and wages."

It's no surprise to see the unemployment rate drop to 5.1 percent in Texas, which is the lowest among any larger state, and witness crude oil productions grow by 100 percent since 2010, the source reported.
Texas and North Dakota leading production and job growth

Bentek Energy, an energy analyst and forecasting sector of Platts, a leading energy, petrochemicals, metals provider, said that in June, oil production had increased by more than 33 percent in Texas and North Dakota.

The Bakken shale in North Dakota produced 1.1 million barrels of oil per day (bpd) in June, which was nearly 30 percent higher than the figures recorded in June 2013, the research stated. Texas's Eagle Ford shale saw a nearly 38 percent increase in oil production from June 2013 to 2014 with 1.4 million bpd recovered last month.

"Bentek estimates that internal rates of return on drilling and carrying costs exceed 65% in the Eagle Ford and 50% in the Bakken," said Jack Weixel, the director of energy analysis at Bentek Energy. "To the average producer that means for every $1 million they sink into drilling a well, they can expect to recover at least $1.5 million in crude oil, liquids and natural gas over the course of a year."
States avoiding fracking see higher unemployment

Some states have avoided fracking altogether with rich producing oil shale developments underneath their feet. According to Oil and Gas Journal, New York has a large and possibly one of the "sweet spots" of the Marcellus shale spreading through a major portion of the state.

However, New York currently bans fracking operations, but their unemployment rate is at 6.7 percent, and some other northeastern states have rates as high as 7.5 percent.

With the production continuing in fracking states, original equipment manufacturers can turn to Broadwind Energy for precision gearing needs.

News Source : States with active fracking and horizontal drilling see better economic success
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20 New Utica Shale Permits Issued Last Week

The Ohio Department of Natural Resources has issued its latest weekly update on permitting activity in the Utica shale.

20 new permits are listed for last week.  The breakdown by county:  Guernsey (6), Monroe (5), Harrison (3), Belmont (2), Noble (2), and Washington (2).  Gulfport Energy was the most active driller on the report, with 6 of the 20 permits issued.  Eclipse Resources was right behind, with 5.

This activity moves the cumulative numbers to 1,421 permits issued, 970 wells drilled, and 487 wells producing.  The Utica rig count is 49.

Click here to view the report.

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Wednesday, July 30, 2014

Investment Company Behind New Utica Shale Hotels Moving On to Other Plays

From Columbus Business First:
Drill Capital LLC, the investment company that has opened one hotel in the Utica shale and is working on a second, has plans for one more eastern Ohio hotel. 
Then it’s on to other emerging oil and gas areas. 
Drill Capital’s 80-room Microtel Inn and Suites, part of the Wyndham Hotel Group, opened in Carrollton last Wednesday, founder Farid Guindo told me. 
The New York-based firm had hoped to lure a restaurant chain to Carrollton, the county seat of Carroll County and home to oil and gas activity and related travel. But Guindo said restaurants want to wait to ensure there’s enough people staying at the hotels. A restaurant is off the table for now.
Click here to read the whole article.

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Gates Mills Residents Looking to Ban Oil and Gas Drilling

From Energy in Depth:
The highly questionable use of the community “bill of rights” is making headlines again this week in Ohio. While there is a petition being circulated in Gates Mills, two operators are taking action against these costly initiatives. 
In Gates Mills, activists are attempting to circulate a petition to get a community “bill of rights” on the November ballot, which of course is an attempt to ban shale development in the city limits. This comes after the Mayor came up with the idea to put together a land trust for landowners to maximize their bargaining position. You can learn more about what the community “bill of rights” entails here
There is currently no Utica Shale development taking place near Gates Mills, and more than likely will never take place anywhere near the village. However, that doesn’t change the fact that the community “bill of rights” has been soundly defeated three times in Youngstown. In Bowling Green, a similar measure was defeated not because of oil and gas development there, but because the “bill of rights” is widely considered aggressively anti-business. 
The business manager of the United Association of Plumbers and Pipefitters Local 396 called one such measure in Youngstown a “jobs killer.” Business leaders in Bowling Green said the “bill of rights” could discourage other business in Bowling Green not associated with oil and gas, which means putting men and women out of work who have nothing to do with “fracking” whatsoever.
Click here to read the whole article.

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Monday, July 28, 2014

State Rep. Hagan Renews Call For Fracking Chemicals Disclosure


Today, State Rep. Robert F. Hagan urged Gov. Kasich to support his legislation that would better inform communities and local agencies about chemicals used in regional fracking projects. In 2013, Rep. Hagan introduced legislation, House Bill 42, to require oil and gas companies in Ohio to disclose a full list of chemicals used in the fracking process to better serve local medical professionals and responders during spills and other accidents.

Recent reports indicate that Halliburton delayed for five days the disclosure of a list of harmful chemicals that spilled into the Ohio River. The chemical information is typically used by emergency responders to make efficient decisions regarding the health and safety of community members and the surrounding environment.

“While this is not the time for ‘I told you so,’ it is disheartening to me that this disaster could have been better controlled if this piece of common-sense legislation was enacted,” said Rep. Hagan. “We have been told to trust the state agencies that oversee the fracking process. What we see now is the result of that blind trust­—earthquakes and chemical spills.”

Rep. Hagan’s legislation has only received sponsor testimony in House Agriculture & Natural Resources Committee.

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Benesch Releases Quarterly Ohio Shale Update




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Rex Energy Announces That Estimated Mid-Year 2014 Proved Reserves Exceed 1.0 Tcfe


  • Estimated mid-year 2014 proved reserves reach 1,057.8 Bcfe, highest level in company's history
  • PV-10 of approximately $1.0 billion represents a 56% increase over year-end 2013 PV-10
  • Increased acreage position in the Butler Operated Area by ~ 2,200 net acres since year-end 2013
  • Butler Operated Area well costs decreased by ~7% during first half of 2014
STATE COLLEGE, Pa.July 21, 2014 (GLOBE NEWSWIRE) -- Rex Energy Corporation ("Rex Energy") (Nasdaq:REXX) today announced total estimated proved oil, NGL and natural gas reserves as of June 30, 2014.

Estimated Mid-Year Proved Reserves

Rex Energy reported total estimated proved reserves as of June 30, 2014 of 1,057.8 Bcfe, an increase of approximately 208.0 Bcfe, or 24%, from total estimated proved reserves reported at year-end 2013. The estimated proved developed portion of the reserves as of June 30, 2014 increased approximately 90.7 Bcfe, or 25%, from proved developed reserves as of December 31, 2013. In addition, the company's PV-10 (a non-GAAP measure of estimated future cash flows, excluding income taxes, discounted at 10%) increased approximately $372.4 million, or 56% to $1.041 billion, from year-end 2013 PV-10 of $668.7 million. Of the approximately 1.1 Tcfe of estimated total proved reserves, 38% was attributable to oil, natural gas liquids and condensate, with 62% attributable to natural gas. Estimated proved developed reserves were 447.2 Bcfe at mid-year 2014, as compared to 356.5 Bcfe at year-end 2013. Estimated proved undeveloped reserves as of mid-year 2014 were 610.6 Bcfe, compared to 493.3 Bcfe at year-end 2013.
Rex Energy's estimated proved reserves at June 30, 2014 were prepared by its internal reservoir engineers and have not been prepared or audited by its independent reservoir engineers. The EURs used for booking proved reserves in the Butler Operated Area and Warrior Prospects were substantially similar to those used at December 31, 2013. The company's PV-10 for its Butler Operated Area increased substantially due to additional proved reserves, improved commodity prices as well as shallower than forecasted production declines from its producing properties.
Below is a reconciliation of the changes in the company's estimated proved reserves between December 31, 2013 and June 30, 2014 (SEC pricing for the trailing twelve months ended June 30, 2014 was the West Texas Intermediate spot price of $100.20/Bbl for oil and the Henry Hub spot price of$4.08/MMbtu for natural gas, adjusted for contractual agreements).
 Natural Gas
(MMcf)
Oil 
(Mbbl)
C3+ NGLs
(Mbbl)
Ethane
(Mbbl)
Total
(MMcfe)
Balance - December 31, 2013521,2838,62022,26823,862849,785
Extensions and discoveries147,2041727,8047,852242,175
Production1(15,835)(502)(631)(14)(22,717)
Revisions to previous estimates6,848(355)(448)(2,247)(11,452)
Balance - June 30, 20142659,5007,93528,99329,4531,057,791
Proved Developed Reserves as of June 30, 2014275,8737,12410,78910,640447,193
Unaudited June 30, 2014 production figures for the six months ended June 30, 2014
Estimated total proved reserves increased ~24% as compared to December 31, 2013
At June 30, 2014, the company included proved reserves on 31 operated wells in the Ohio Utica, including 16 wells producing into sales and nine proved developed non-producing wells. The 31 operated wells booked at June 30, 2014 represented an increase of eight wells, or 35%, overDecember 31, 2013. The company had only six operated wells with proved undeveloped reserves booked at June 30, 2014.
The following table summarizes Rex Energy's estimated total proved reserves by region as of June 30, 2014:
 Estimated Proved Reserves by Asset Area
 PDP
(MMcfe)
PDNP
(MMcfe)
PUD
(MMcfe)
Total
(MMcfe)
PV10(1)
(M$)
Appalachia Basin     
Butler Operated Area263,75717,834542,195823,786$633,397
Ohio Utica Warrior Prospects38,47326,12322,23686,832141,382
WestmorelandCentreClearfield Counties - Non-Operated59,762--42,020101,78281,813
All Other Appalachia2,000----2,0001,294
Illinois Basin37,3511,8934,14743,391183,184
Total401,34345,850610,5981,057,791$1,041,070
PV-10 is a non-GAAP financial measure because it excludes the effect of income taxes and asset retirement obligations. A further discussion of PV-10 as well as a reconciliation to the most directly comparable GAAP measure is included in the appendix attached to this release.
Below is a summary of the number of net wells by proved reserve classification for the company's Appalachian Basin assets as of June 30, 2014 andDecember 31, 2013 and 2012.
Total Company Net Appalachia Basin Wells1
 12/31/201212/31/20136/30/2014 
PDP53.685.099.9 
PDNP0.40.711.6 
PUD58.185.6100.4 
Total112.1171.3211.9 
PUD:PD Ratio1.081.000.90 
1Includes Marcellus, Utica and Upper Devonian wells only
The proved undeveloped to proved developed ratio for the period ending June 30, 2014 is 0.90 to 1.00.
During the first six months of 2014, Rex Energy successfully added approximately 2,200 net acres to its core Butler Operated Area. Rex Energy's core Butler Operated Area acreage as of June 30, 2014 represents an increase of approximately 4% over its acreage at December 31, 2013. The company believes that the acreage added thus far in 2014, combined with results from its recent well downspacing tests, will lead to a significant increase in its inventory of drillable locations by the end of the year.
Butler Operated Area Well Cost Update
The company successfully reduced its costs to drill and complete wells in its Butler Operated Area by approximately 7% during the first half of 2014 to approximately $5.5 million per well (for a 4,000 foot lateral), exceeding its previously stated goal of a 3% to 5% reduction in well costs in 2014. The company's most recent 10 wells in the Butler Operated Area were drilled in an average of 15 days, which was approximately 20% fewer days than expected. The company plans to include the updated well costs for its Butler Operated Area in its estimated proved reserves at the end of 2014 and has not included the recent well cost reductions in its mid-year estimated 2014 proved reserves. The company continues to pursue additional cost savings through greater operating efficiencies and increased well density per pad and will provide an update in late 2014.
Butler Operated Area Economics
The company has updated its well-level economics for the Butler Operated Area based upon the improved well performance and lower well costs discussed previously. The updated results, as well as a comparison to the results as of December 31, 2013, are included on slide 23 of the company's updated July corporate presentation. The company's corporate presentation can be found at www.rexenergy.com.
About Rex Energy Corporation
Rex Energy is headquartered in State College, Pennsylvania and is an independent oil and gas exploration and production company operating in the Appalachian and Illinois Basins within the United States.
Forward-Looking Statements
Certain statements made in this release, including those related to the number of our potential drilling locations, plans to reduce our well costs and timing of our announcement of the results of those efforts, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may contain words such as "expected", "expects", "scheduled", "planned", "plans", "anticipates" and similar words. These statements are based on management's experience and perception of historical trends, current conditions, and anticipated future developments, as well as other factors believed to be appropriate. We believe these statements and the assumptions and estimates contained in this release are reasonable based on information that is currently available to us. However, management's assumptions and the company's future performance are subject to a wide range of business risks and uncertainties, both known and unknown, and we cannot assure that the company can or will meet the goals, expectations, and projections included in this release. Any number of factors could cause our actual results to be materially different from those expressed or implied in our forward looking statements, including (without limitation):
  • economic conditions in the United States and globally;
  • domestic and global demand for oil, NGLs and natural gas;
  • volatility in oil, NGL, and natural gas pricing;
  • new or changing government regulations, including those relating to environmental matters, permitting, or other aspects of our operations;
  • the geologic quality of the company's properties with regard to, among other things, the existence of hydrocarbons in economic quantities;
  • uncertainties inherent in the estimates of our oil and natural gas reserves;
  • our ability to increase oil and natural gas production and income through exploration and development;
  • drilling and operating risks;
  • the success of our drilling techniques in both conventional and unconventional reservoirs;
  • the success of the secondary and tertiary recovery methods we utilize or plan to employ in the future;
  • the number of potential well locations to be drilled, the cost to drill them, and the time frame within which they will be drilled;
  • the ability of contractors to timely and adequately perform their drilling, construction, well stimulation, completion and production services;
  • the availability of equipment, such as drilling rigs, and infrastructure, such as transportation, pipelines, processing and midstream services;
  • the effects of adverse weather or other natural disasters on our operations;
  • competition in the oil and gas industry in general, and specifically in our areas of operations;
  • changes in our drilling plans and related budgets;
  • the success of prospect development and property acquisition;
  • the success of our business and financial strategies, and hedging strategies;
  • conditions in the domestic and global capital and credit markets and their effect on us;
  • the adequacy and availability of capital resources, credit, and liquidity including, but not limited to, access to additional borrowing capacity; and
  • uncertainties related to the legal and regulatory environment for our industry, and our own legal proceedings and their outcome.
The company undertakes no obligation to publicly update or revise any forward-looking statements. Further information on the company's risks and uncertainties is available in the company's filings with the Securities and Exchange Commission (SEC).
Note on Hydrocarbon Volumes and Estimates
The estimates of proved reserves as of June 30, 2014 in this release are based solely on the review and calculations of our internal reservoir engineers and have not been prepared or audited by our independent external reserve engineers. The estimates of proved reserves as of December 31, 2013 in this release are based on a reserve report of our independent external reserve engineers. Investors are encouraged to refer to the Company's Current Report on Form 8-K filed February 3, 2014 for additional information regarding the estimated proved reserves as of December 31, 2013.
"Proved reserves" are estimates that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions (see Rule 4-10(a) of Regulation S-X for the SEC definition of "proved reserves"). The SEC permits publicly-reporting oil and gas companies to disclose "proved reserves" in their filings with the SECSEC rules also permit the disclosure of "probable" and "possible" reserves. Rex Energy discloses proved reserves but does not disclose probable or possible reserves. We use certain broad terms and other descriptions of volumes of potentially recoverable hydrocarbons in our public statements. These broad classifications do not constitute "reserves" as defined by the SEC and we do not attempt to distinguish these classifications from probable or possible reserves as defined by SEC guidelines. We are prohibited from disclosing hydrocarbon quantities that do not constitute reserves in documents filed with the SEC.
We believe the data we (i) prepared and reviewed internally in connection with our estimates of proved reserves as of June 30, 2014, and (ii) we prepared and supplied to our external reservoir engineers in connection with their preparation of the 12/31/2013 reserve report, and, in each case, the assumptions, forecasts, and estimates contained therein, are reasonable, however, we cannot assure that they will prove to have been correct. Estimates of reserves can be affected by inaccurate assumptions or by known or unknown risks and uncertainties.
APPENDIX REX ENERGY CORPORATION NON-GAAP MEASURES
Reconciliation of Standardized Measure to PV-10
PV-10 is a non-GAAP metric used by the industry, investors and analysts to estimate of the present value, discounted at 10% per annum, of estimated future cash flows of our estimated proved reserves before income tax and asset retirement obligations. The following table shows the reconciliation of PV-10 to our standardized measure of discounted future net cash flows, the most directly comparable GAAP measure, for the year ended December 31, 2013 and for the interim period ended June 30, 2014. Management believes that PV-10 provides useful information to investors because it is widely used by professional analysts and sophisticated investors in evaluating oil and natural gas companies. Because there are many unique factors that can impact an individual company when estimating the amount of future income taxes to be paid, we believe the use of a pre-tax measure is valuable for evaluating our company. PV-10 should not be considered as an alternative to the standardized measure of discounted future net cash flows as computed under GAAP. With respect to PV-10 calculated as of an interim date, it is not practical to calculate taxes for the related interim period because GAAP does not provide for disclosure of standardized measure on an interim basis.
 ($ in millions)
Reconciliation of Standardized Measure to PV-10 
PV-10 - June 30, 2014$1,041.1
Less: Change in PV-10 from 12/31/2013 to 6/30/2014372.4
PV-10 - December 31, 2013$ 668.7
Less: Present value of future income tax discounted at 10%111.1
Less: Present value of future asset retirement obligations discounted at 10%(1)28.5
Standardized measure of discounted future cash flows - December 31, 2013$ 529.1
CONTACT: For more information, please visit our website or contact:



         www.rexenergy.com



         Mark Aydin

         Manager, Investor Relations

         (814) 278-7249

         maydin@rexenergycorp.com
Rex Energy Corporation Logo
Source: Rex Energy Corporation

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EPA Reports on Statoil Well Site Fire in Ohio

More than 70,000 fish and
wildlife died in the aftermath of
a Monroe County well pad fire
From The Columbus Dispatch:
A fracking company made federal and state agencies that oversee drinking-water safety wait days before it shared a list of toxic chemicals that spilled from a drilling site into a tributary of the Ohio River. 
Although the spill following a fire on June 28 at the Statoil North America well pad in Monroe County stretched 5 miles along the creek and killed more than 70,000 fish and wildlife, state officials said they do not believe drinking water was affected. 
But environmental advocacy groups said they wonder how the state can be sure.
Read the rest of that article here.

Here is the EPA report:




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Shale Boom Has Wide-Ranging Benefits in Ohio

From Columbus CEO:
It may seem like a stretch to say Honda is part of Ohio’s shale-gas boom. 
But a close look shows that the automaker is using the steady supply and low price of natural gas to improve its bottom line at plants in Marysville and East Liberty. 
Similar stories are taking place across the state, in places and at companies that may seem far removed from the drilling, refining and delivery of oil and gas. 
“There is no question that the benefits of shale go far beyond the energy industry,” says Jack Partridge, president of Columbia Gas of Ohio. 
The state average gas price has fallen for five years in a row, dropping last year to 45 percent less than it was in 2008, according to the Energy Information Administration. 
The price cut is a simple matter of supply and demand. Supply is way up, thanks to a flood of gas from domestic shale formations, and demand has been slow to recover from the economic downturn. 
In addition, the price of natural gas is a key variable in the wholesale price of electricity. Electricity prices have fallen in recent years across most of Ohio, although not nearly as much as gas prices.
Read more by clicking here.

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MarkWest Gives Utica Shale Updates

From a MarkWest press release:
In the Utica Shale, MarkWest Utica EMG, L.L.C. (“MarkWest Utica EMG”), a joint venture between MarkWest and The Energy and Minerals Group (“EMG”), is in startup mode for its third cryogenic processing plant at the Seneca complex in Noble County, Ohio. The 200 MMcf/d Seneca III plant will increase total processing capacity at the complex to 600 MMcf/d. The Seneca complex is supported by long-term, fee-based contracts with Antero Resources Corporation (NYSE: AR), Gulfport Energy Corporation (NASDAQ: GPOR), Rex Energy Corporation (NASDAQ: REXX), PDC Energy Inc. (NASDAQ: PDCE), and other producers. MarkWest Utica EMG continues to expand capacity at the Seneca complex and will complete a fourth 200 MMcf/d plant in the second quarter of 2015. 
In addition to the Seneca complex, MarkWest Utica EMG’s Cadiz complex in Harrison County, Ohio, also continues to grow rapidly. MarkWest Utica EMG recently completed a 40,000 barrel per day de-ethanization facility at the Cadiz complex. This new facility will provide MarkWest Utica EMG’s producer customers’ with the ability to meet residue gas quality specifications and downstream ethane pipeline commitments. Ethane produced at the new Cadiz facility will be delivered to the ATEX pipeline. In addition, during the third quarter of 2014, the Cadiz II plant will become operational and increase total cryogenic processing capacity at the Cadiz complex to 325 MMcf/d. 
MarkWest has completed 25 major infrastructure projects in the last two years, totaling over 3 billion cubic feet per day of processing capacity and nearly 200,000 Bbl/d of fractionation capacity to support producers’ midstream requirements primarily in the Marcellus and Utica Shales. In the remaining six months of 2014, the Partnership will complete five additional projects in the Northeast and is constructing eight additional projects, that are scheduled to begin operations in 2015 and beyond.
You can read the entire press release by clicking here.

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Family Makes Deal With MWCD for Mineral Rights

Tappan Lake
From the Akron Beacon Journal:
The Muskingum Watershed Conservancy District has received a strange Utica shale leasing donation. 
Jeff and Kathleen Paravano who own 35 acres at Tappan Lake in Harrison County have offered the district a 20 percent interest in their mineral rights. 
The district accepted the offer. 
The donation is being made with the expectation that the district will, in good faith, attempt to include the Paravano property in any lease negotiations with drillers for adjacent MWCD property. 
The request was prompted by an appreciation of the district's ability to negotiate an environmentally friendly leases. 
The district has not leased any of its lands at Tappan.
Read the original article by clicking here.

This is an interesting arrangement, especially considering that it was "prompted by an appreciation of the district's ability to negotiate...environmentally friendly leases."  With the way environmental groups lambaste the MWCD every time they sign a new lease or water sales agreement, it didn't seem like anyone appreciated the environmentally friendly nature of the leases they had negotiated.

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Apologies for Lack of New Posts

I apologize for the lack of new posts over the past week.  I have been out of town, and while I hoped to find time to post some of the latest stories while I was away, it just didn't materialize.

There were not a lot of new happenings in the Utica shale over the past few days, although there are some notable stories.  I will be posting them this morning to get our readers caught up, and then things will get back to normal for the rest of the week.

Thank you for making The Daily Digger your one-stop source for quick access to the latest Utica shale news!

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Monday, July 21, 2014

Utica Shale Passes 1,400 Permits, Closes in on 500 Producing Wells

The latest weekly update of permitting activity in Ohio's Utica shale shows that another milestone number has been passed.

15 new permits were issued last week.  The key spot was Harrison County, with 7 of the 15 issued for wells there - all to Chesapeake Energy.  The other 8 permits were spread across 5 different counties: Belmont (2), Carroll (2), Guernsey (1), Jefferson (1), and Monroe (2).

With these 15 there have now been 1,410 permits issued for horizontal drilling in Ohio's Utica shale.  The number of wells drilled increased to 971, and the number producing jumped to 483.  The Utica rig count also increased, to 48.

View the report by clicking here.

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Links for 7/21/14: Lies About Fracking, Bans Rejected, and More

Bloomberg:  Fracking Sends Northeast Natural Gas Output to Record   -   "Record natural gas production from the Marcellus shale deposit in the Northeast is helping send U.S. output to an all-time high, as hydraulic fracturing and horizontal drilling unlocked underground supplies. Gross output from the region will average 15.235 billion cubic feet a day this month, up 28 percent from a year earlier, and..."

Natural Gas Now:  100 or So Lies About Fracking – Part I   -   "There was a news conference the other day where the usual suspects, operating under one their various aliases, the Concerned Health Professionals of NY (CHPNY), attacked natural gas yet again with a new “study.” It’s anything but a study, of course. Rather, it is a collection of allegations and anecdotes; the sort of pseudoscience we’ve come to expect from this gang. Their latest report is pompously titled as a..."

ABC News:  North Texas City Rejects Partial Fracking Ban   -   "The council governing a North Texas city that sits atop a large natural gas reserve rejected a bid early Wednesday that would have made it the first city in the state to ban further permitting of hydraulic fracturing in the community. Denton City Council members voted down the petition 5-2 after eight hours of public testimony, sending the proposal to a public ballot in November. Fracking involves..."

NOLA.com:  Fracking receives support in survey of St. Tammany West Chamber of Commerce members   -   "Nearly 70 percent of the responses to a St. Tammany West Chamber of Commerce survey about fracking expressed support for the method of oil extraction or no opposition as long as safeguards are put in place to protect the parish's drinking water. The chamber released the results of its survey as it considers taking a formal position on fracking, a controversial issue..."

Pike County Courier:  Expert: Pa. didn't address fracking health impacts   -   "Pennsylvania's former health secretary says the state has failed to seriously study the potential health impacts of one of the nation's biggest natural gas drilling booms. Dr. Eli Avila, who is now the public health commissioner for Orange County, N.Y., also says the state's current strategy is a disservice to people and even to the industry itself because..."

Fox & Hounds:  CA Fossil-Fuel Foes Want To Ban More Than Just Fracking   -   "California foes of hydraulic fracturing, or fracking, have been surprised and disappointed at their inability to get Gov. Jerry Brown or the Legislature to ban the practice. Brown’s support for a law regulating but permitting the newly improved drilling technique barely seemed to..."

Investors.com:  Shale Drilling Heads Abroad But U.S. Has Advantages   -   "Significant shale production overseas may be only a handful of years away, potentially accelerating a global transformation in energy and politics, but other countries may not be able to create the conditions that gave the U.S. its first-mover advantage. The first wells are being drilled in promising locations such as western Siberia, North Africa and the Vaca Muerta formation in Argentina, says Daniel Yergin, vice chairman of..."

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Article Details the Park Foundation's Scheme to Stop Shale Drilling

A small sampling of the many
anti-drilling articles financed by
The Park Foundation
From The Philanthropy Roundtable:
It’s hard to believe that natural gas was a favored fuel of leading environmental groups as recently as six years ago. In 2008, the Pew Center on Global Climate Change heralded its promise: “We also need to consider…how to better support natural gas as a bridge fuel to a more climate-friendly energy supply,” said president Eileen Claussen in a widely circulated speech.
This was a common view and had been for years. In 1997, when shale-gas reserves were beginning to be identified, the progressive D.C.-based Renewable Energy Policy Project waxed optimistic. “Natural gas is inherently cleaner than coal or oil,” the nonprofit wrote. “Since renewables will be unable to meet most energy needs for some time, gas is an essential bridge to a renewable energy era.” 
Natural gas used to be seen as a marriage of enlightened capitalism and pragmatic progressivism. It was welcomed as a relatively low-impact fossil fuel, much superior to America’s previous industrial and power-generating workhorse, coal. It was available in reserves of modest size but sufficient to carry us over until the price of alternative energies became competitive. 
But over the past few years, the rhetoric has completely changed. Sharp criticism of fracking and shale gas is now a staple of green activism. The online environmental magazine Grist regularly runs articles bashing shale gas, such as the recent “Will Obama allow fracking to endanger his own water supply?” The Nation launches anti-fracking broadsides conjuring “contaminated water wells, poisoned air, sick and dying animals, industry-related illnesses.” Earth Island Journal raises the specter of “water contamination, air pollution, global warming, and fractured communities,” and mocks Claussen’s “bridge fuel” reference, calling natural gas a “bridge to nowhere.”
The morphing of natural gas from promising next step to “worse than oil and coal,” as some activists now claim, happened almost overnight. What’s behind this abrupt turnaround? For one thing, advances in extraction technology have made gas inexpensive and caused it to be used much more extensively (usually as a substitute for coal). And while most scientists and economists see in shale gas an inexpensive fuel with relatively modest environmental impact compared to coal and oil, some environmentalists view it as a Trojan horse that is giving fossil fuel a new image—clean, abundant, not purchased from overseas tyrants—and thus a new lease on life.  
This swing against gas has been spurred by a carefully coordinated outpouring of research, media, and advocacy grants by the Park Foundation, headquartered at the epicenter of one of the most promising shale gas regions in the U.S., and home to Cornell University, the academic base for the country’s most vehement anti-shale activists.
Publications such as Grist, the Nation, Earth Island Journal, Mother Jones,American Independent News Network, Yes! Magazine, the American Prospect, and numerous other media elements have one thing in common. They have all received donations from Park in recent years to conduct anti-fracking journalism and related environmental reporting. Along with advocacy groups like Food and Water Watch, Friends of the Earth, Greenpeace, and more than 50 large and small groups, they were the recipients of anti-fracking grants from the Park Foundation that totaled $3 million in 2013. Park has a plan, and a savvy one, to kill the American shale-gas revolution.
There is much more in the article, which examines how the Park Foundation has played a crucial role in spreading the feeling that shale drilling is a danger.  Click here to read it all.

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BP Gets Approval to Plug Trumbull County Well

From the Akron Beacon Journal:
BP America has won approval from the Ohio Department of Natural Resources to plug one of its producing wells in Trumbull County. 
The company won approval on July 10 to plug its Jewett IH well in Johnston Township, said ODNR spokesman Mark Bruce. 
Last April, the company said it was abandoning its efforts in the Utica shale and putting its 105,000 leased acres up for sale. 
That was due to poor results in its Trumbull County wells in the northern section of the Utica shale. 
The company announced that it was taking a $521 million write-off for the Ohio Utica shale.
Read the original article here.

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Friday, July 18, 2014

Antero Resources Reports Mid-Year 2014 Reserves

  • Mid-year 2014 proved reserves increased by 19% to 9.1 Tcfe (13% liquids) from year-end 2013
  • Proved developed reserves increased by 37% to 2.8 Tcfe (12% liquids)
  • Pre-tax PV10 of proved reserves including hedges increased by 28% to $9.0 billion
  • 3P reserves increased by 7% to 37.5 Tcfe (15% liquids)
  • Pre-tax PV10 of 3P reserves including hedges increased by 24% to $26.4 billion
  • Utica Shale dry gas position increased to 146,000 net acres and 9.5 Tcf of net resource
Antero Resources (NYSE: AR) ("Antero" or the "Company") today announced that proved reserves at June 30, 2014 were 9.1 Tcfe, a 19% increase compared to proved reserves at December 31, 2013, in each case assuming ethane rejection. Proved, probable and possible ("3P") reserves at June 30, 2014 totaled 37.5 Tcfe, which represents a 7% increase compared to December 31, 2013, assuming ethane rejection. Antero's June 30, 2014proved and 3P reserves excluded 356 and 1,425 million barrels of ethane, respectively, due to the relationship between assumed ethane and natural gas prices which indicate ethane will be rejected as of June 30, 2014. The Company's proved and 3P reserves also excluded any reserves attributable to the Utica dry gas resource inWest Virginia or Pennsylvania.

Antero's reserves at June 30, 2014 were prepared by its internal reserve engineers and have not been reviewed or audited by its independent reserve engineers.

Proved Reserves

As of June 30, 2014, proved reserves increased by 19% from year-end 2013 to 9.1 Tcfe, of which 87% were natural gas, 12% were natural gas liquids ("NGLs") and 1% was oil. The Marcellus Shale accounted for 94% of proved reserves and the Utica Shale accounted for the remaining 6%. Of the 1.5 Tcfe of proved reserves added in the six months ended June 30, 2014, 1.3 Tcfe was attributed to the Marcellus Shale. NGLs and oil increased by 49 million barrels and 6 million barrels, respectively, due to Antero's drilling program targeting liquids-rich locations in the Marcellus and Utica Shaleplays. Positive performance revisions of 85 Bcfe were primarily due to improved Marcellus well performance from shorter stage length ("SSL") completions offset by the reclassification of 23 dry gas locations, representing 199 Bcfe, from proved undeveloped to the probable category due to the SEC's five-year development rule.

Approximately 26% of Antero's 488,000 net acres of current leasehold in the Marcellus and Utica were classified as proved at June 30, 2014. Based on Antero's successful drilling results to date, as well as those of other operators in the vicinity of Antero's leasehold, the Company believes that a substantial portion of its Marcellus and Utica Shale acreage will be added to proved reserves over time as more wells are drilled. Antero's estimated Marcellus and Utica proved reserves and undeveloped locations are primarily booked assuming 660 foot and 1,000 foot interlateral distance, respectively.

Proved developed reserves increased 37% from year-end 2013 to 2.8 Tcfe at June 30, 2014. The Company added 59 Marcellus wells to proved developed reserves in the six months ended June 30, 2014. Virtually all of the wells utilized SSL completions and had an average estimated ultimate recovery ("EUR") of 1.9 Bcfe/1,000 feet of lateral (12% liquids) which is consistent with previous estimates. Out of the 689 gross proved undeveloped Marcellus locations, 251, or 36% of the total, are booked assuming SSL completions.

Antero added 22 Utica wells to proved developed reserves in the six months ended June 30, 2014, consisting of 4 rich gas (1100-1200 Btu), 2 highly-rich gas (1200 to 1225 Btu), 3 highly-rich gas/condensate (1225 to 1250 Btu) and 13 condensate (1250 to 1300 Btu) wells. The wells located in the rich gas and highly-rich gas regimes had an average EUR of 2.6 Bcfe/1,000 feet of lateral (14% liquids) and 2.8 Bcfe/1,000 feet of lateral (21% liquids), respectively. The wells located in the highly-rich gas/condensate and condensate regimes had an average EUR of 1.9 Bcfe/1,000 feet of lateral (26% liquids) and 1.1 Bcfe/1,000 feet of lateral (35% liquids), respectively. These EURs are consistent with previous estimates.

The percentage of proved reserves classified as proved developed increased to 30% at June 30, 2014 as compared to 27% at year-end 2013. Proved undeveloped reserves increased by 13%, primarily as a result of the successful execution of Antero's Marcellus Shale development drilling plan. Antero's 6.3 Tcfe of proved undeveloped reserves will require an estimated $5.8 billion of development capital over the next five years, resulting in an estimated average development cost for proved undeveloped reserves of $0.92 per Mcfe.

SEC prices for reserves were calculated as of June 30, 2014 on a weighted average Appalachian index basis and were $88.82 per Bbl for oil and $3.95 per MMBtu for natural gas. Using SEC prices, the pre-tax present value discounted at 10% ("pre-tax PV10") of the June 30, 2014 proved reserves was $8.5 billion, excluding the value of the Company's natural gas and oil hedges. Including the value of Antero's hedges as of June 30, 2014 and usingSEC prices, the pre-tax PV10 value of proved reserves was $9.0 billion, a 28% increase over year-end 2013. The pre-tax PV10 value of proved developed reserves was $4.4 billion excluding the value of hedges and $4.9 billionincluding the value of hedges, a 41% increase over year-end 2013.

Summary of Changes in Proved Reserves (in Bcfe)

Balance at December 31, 2013

7,632

Extensions, discoveries and additions

1,531

Performance revisions

85

Price revisions

11

Estimated Production

(152)

Balance at June 30, 2014

9,107

3P Reserves

As of June 30, 2014, 3P reserves increased by 7% from year-end 2013 to 37.5 Tcfe, of which 85% were natural gas, 14% were NGLs and 1% was oil. The Marcellus, Utica, and Upper Devonian Shale comprised 26.4 Tcfe, 6.4 Tcfe and 4.7 Tcfe of the 3P reserves, respectively. The 7% increase in 3P reserves was driven primarily by the leasehold addition of 22,000 net acres in the Marcellus Shale core in northern West Virginia and 13,000 net acres in the Utica Shale core in southern Ohio, including 6,363 net acres associated with Antero's previously announced Piedmont Lake lease acquisition.

Based on the results from SSL completions, Antero has increased the number of locations assuming SSL from 1,768 gross undeveloped 3P Marcellus locations to 1,893 gross undeveloped 3P Marcellus locations, or 62% of the 3,057 total gross undeveloped 3P Marcellus locations. Importantly, 25.5 Tcfe of Antero's 26.4 Tcfe 3P reserves in the Marcellus, or 97%, were classified as proved or probable (2P), reflecting Antero's extensive delineation and development activities in the Marcellus Shale.

Using SEC prices, the pre-tax PV10 of the June 30, 2014 3P reserves was $25.9 billion, excluding the value of the Company's natural gas and oil hedges. This represents a 27% increase from the pre-tax PV10 of the year-end 2013 3P reserves. Including the value of Antero's hedges as of June 30, 2014 and using SEC prices, the pre-tax PV10 value of 3P reserves was $26.4 billion, a 24% increase over the pre-tax PV10 of the year-end 2013 3P reserves including Antero's hedges.

The table below summarizes Antero's estimated reserve volumes using SEC pricing, broken out by operating area.   (CLICK HERE TO VIEW THE ORIGINAL RELEASE WITH THE TABLE PROPERLY FORMATTED)

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