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Thursday, June 30, 2016

Rasmussen Poll: 49% of US Voters Favor Fracking, 34% Oppose It

From Rasmussen:


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Anti-Drilling Group Gives Ohio's Shale Policies a "D" Grade

From a press release:
While drilling of new gas wells in the Marcellus and Utica Shale plays has fallen recently, industry experts expect renewed activity over many years once prices rebound. To help drilling communities and the states of Pennsylvania, Ohio, and West Virginia get the response to drilling right in the future, the Multi-State Shale Research Collaborative (MSSRC) today released two documents: Lessons from the Gas Patch: A Local Government Guide for Dealing with Drilling; and A Report Card on Shale Gas Policies in Ohio, Pennsylvania, and West Virginia, which grades three states on nine fiscal, social and economic policies related to fracking. 
The MSSRC is a project of the Pennsylvania Budget and Policy Center, the West Virginia Center for Budget and Policy, and Policy Matters Ohio. 
“A lull in the intensity of drilling provides an opportunity for local and state government to digest what has been learned from the 2007-12 drilling boom that caught most people by surprise,” said Jan Jarrett, a PBPC consultant who coordinated the publication of both documents. “Local governments are on the front lines of helping quiet rural communities manage the influx of workers, trucks, and activity that come along with unconventional gas drilling. State governments set the boundaries within which local governments respond and also have more authority in some areas. Taken together, these two documents present best practices to help communities and states learn from each other and from past experience.” 
Lessons from the Gas Patch distills lessons for local communities from MSSRC case studies on four drilling counties (two in PA, one each in WV and OH) and from statistical analysis on the social impacts of fracking in drilling-intensive counties. 
The Report Card grades state policies in nine areas such as whether the state has effective policies for growing in-state Shale jobs, mitigating the boom-bust character of extraction, ensuring supplies of affordable housing, taxing the shale industry, and tracking health impacts. The report card does not address environmental impacts. All states get at least one F but any state would achieve a solid report card if it adopted in each area the policies of the state with the highest grade. Achieving the “honor roll” would require lifting some grades above those currently received by any of the three states.
Read more by clicking here.  You can view the reports by clicking here and here.

The MSSRC claims to be non-partisan and independent, but it has been pointed out by some that the organization is funded by anti-drilling groups such as the Park Foundation and counts among its leadership a former president and CEO of the anti-drilling group Penn Future.

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Eclipse Resources Changes Plans, Gets Back to Drilling in Ohio

From an Eclipse Resources press release:
Eclipse Resources Corporation (NYSE: ECR) (the “Company” or “Eclipse Resources”) today is pleased to provide the following operational update, revised capital expenditure plan for 2016 and amended guidance. 
  • During the second quarter, the Company recommenced its operated drilling program and is currently drilling its second well in the program in the dry gas area of Monroe County, Ohio. Additionally, the Company commenced completion operations on its drilled but uncompleted wells and has completed two wells in the ongoing program to date
  • The Company intends to spud a total of 10 to 12 net wells for the full year 2016
  • The Company intends to complete a total of 21 to 24 net wells for the full year 2016, which includes 16 to 19 net wells of drilled but uncompleted wells that are currently held in inventory
  • Given current forward commodity prices, the Company expects to cease its voluntary production curtailment program at the end of the third quarter of 2016
  • For the full year 2016, the Company is raising its production guidance to approximately 205 to 210 MMcfe per day as it expects to reestablish flowing its wells at normal type curve rates during the fourth quarter of 2016 and now anticipates fourth quarter 2016 production to average approximately 240 MMcfe per day
  • The Company’s board of directors has approved an increase to the Company’s capital expenditure budget of approximately $28 million, which budget was previously set at $168 million
Read more by clicking right here.

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Energy Transfer Equity Terminates Merger with Williams Partners

From an Energy Transfer Equity press release:
Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE” or the “Partnership”) today announced that it has terminated its merger agreement with The Williams Companies, Inc.(“Williams”) effective June 29, 2016. 
As previously announced, on Friday, June 24, 2016, the Delaware Court of Chancery issued an opinion finding that ETE is contractually entitled to terminate the merger agreement with Williams in the event ETE’s counselLatham & Watkins LLP (“Latham”) were unable to deliver a required tax opinion prior to the June 28, 2016, outside date in the merger agreement. Latham advised ETE that it was unable to deliver the opinion as of the outside date. Consistent with its rights and obligations under the merger agreement, ETE subsequently provided written notice terminating the merger agreement due to failure of conditions under the merger agreement, including Latham’s inability to deliver the required tax opinion, as well as the other bases detailed in ETE’s filings in the Delaware lawsuit referenced above. 
Williams has appealed the decision by the Delaware Court of Chancery to the Delaware Supreme Court.
View the entire release by clicking here.

Williams has issued a statement regarding ETE's termination of the merger:
Williams does not believe ETE had a right to terminate the Merger Agreement because ETE breached the Merger Agreement by (among other reasons) failing to cooperate and use necessary efforts to satisfy the conditions to closing, including delivery of Latham & Watkins LLP’s Section 721(a) tax opinion. Accordingly, on June 27, 2016, Williams filed an appeal with the Delaware Supreme Court in connection with the Delaware Court of Chancery's June 24, 2016 ruling relating to the Merger Agreement between Williams and ETE. 
Williams recognizes the practical fact that ETE has refused to close the merger. Williams has concluded that it is in the best interests of its stockholders to seek, among other remedies, monetary damages from ETE for its breaches. So, while taking appropriate actions to enforce its rights and deliver benefits of the Merger Agreement to its stockholders, Williams will renew its focus on connecting the best natural gas supplies to the best markets. 
Williams remains well-positioned to meet the rapidly growing demand for natural gas and experience significant fee-based growth. Williams’ focus on fee-based revenue has produced strong cash flow, and looking forward, Williams expects continued growth from its portfolio of large scale demand driven projects and a fully contracted natural gas transmission business coming on in the balance of 2016, 2017 and 2018.

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Natural Gas Prices Continue to Rise

From Seeking Alpha:
It was a wild week in markets. In the lead up to the Brexit vote, market action signaled confidence that the United Kingdom would remain within the European Union, but the results of the referendum on Thursday night shocked markets causing wild volatility to reverberate across all asset classes. Commodity markets were no exception as the dollar rallied and oil, agricultural products, and industrial metals and minerals moved sharply lower. The uncertainty caused by the European shocker propelled gold, silver, and platinum prices higher. All the while, natural gas had a very quiet week, and its response to Brexit was a nonevent. Last Friday, while all hell was breaking loose in other markets, daily volume in natural gas was the lowest it had been in a very long time as traders, speculators and investors had more important things to do than pay attention to the natural gas market. 
Since making lows of $1.6110 on the active month NYMEX natural gas futures market in early March, the price of the energy commodity has recovered. Last Friday, natural gas closed at around the $2.67 per MMBtu level, marginally higher than the prior week and higher for the fifth straight week.
This article can be continued by clicking here.

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Company Behind Keystone XL Pipeline Sues Obama Administration for $15 Billion

From The Daily Caller:
The company behind the Keystone XL pipeline filed a $15 billion lawsuit Friday against the Obama administration under the North American Free Trade Agreement (NAFTA). 
TransCanada claimed that Obama spent seven years using “arbitrary and contrived” analyses and justifications to delay the pipeline for political reasons. TransCanada’s suit also says that the company had reason to believe that the pipeline would be approved before it was rejected by the Obama administration in November
“None of that technical analysis or legal wrangling was material to the administration’s final decision,” TransCanada said in its lawsuit. “Instead, the rejection was symbolic and based merely on the desire to make the U.S. appear strong on climate change, even though the State Department had itself concluded that denial would have no significant impact on the environment.”

President Barack Obama rejected the pipeline due to the perception among environmentalists that it would increase global warming. The Keystone XL pipeline would have increased America’s carbon dioxide (CO2) emissions by less than three-tenths of one percent of the country’s total annual CO2 emissions, according to analysis by the Environmental Protection Agency (EPA).
Read more by clicking here. 

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Wednesday, June 29, 2016

Anti-Drillers Forcing Youngstown Vote on Fracking Ban for Sixth Time

From a press release:
The Community Bill of Rights Committee has once again exercised its democratic right to petition local government and put a charter amendment on the November 2016 ballot. The voters have again indicated via their petition signatures that they want to vote in November 2016, on whether or not to ban shale gas development (fracking, injection wells and other shale gas infrastructure) within Youngstown city limits and uphold their unalienable right to local control to protect their public health, safety, well-being and the democratic process. 
“We have received an overwhelmingly positive response from the community this year, and we thank them. We only lost by 2.49% in the November 2015 election,” said Lynn Anderson, a Community Bill of Rights Committee member. “We believe that voters are increasingly voting YES with us, in part, because they are seeing the truth and scientific facts about fracking and related processes. They understand that the risks are too great when injection wells and other heavy industrial operations are permitted in residential or populated areas near homes, schools, parks, cemeteries, farms, and even the protected Meander drinking water area.”
Read the whole release by clicking here.

Based on what has been happening in Ohio courts when similar actions have been approved and then challenged, the ban would be illegal if passed.  As Energy in Depth notes, the measure would likely be overturned and lead to a chunk of taxpayer dollars being spent defending it if approved:
So you have a fringe group of people, selectively choosing studies and portions of studies to fit their agenda, while ignoring studies paid for by fellow activist groups because the results don’t align with said agenda, and completely disregarding the will of the people they say they are standing up for. Not to mention the whole fact that Ohio’s Supreme Court declared in 2015 that local governments cannot supersede state authority by banning oil and gas development. So, even if the ban were to pass after so many failed attempts, it would likely mean an expensive court proceeding to determine if its even legal, which by the Supreme Court’s definition it would not be.
According to EID's research, this charter has also cost taxpayers over $16,000 each time it has been voted on, which means that this sixth vote would push the total cost to nearly $100,000 to keep having this appear on ballots.

Anti-drillers have vowed to keep pushing for repeat votes as long as the measure keeps being defeated.

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Yale University to Study Fracking in Belmont County

From The Intelligencer:
Yale University researchers plan to take air and water samples from 100 Belmont County homes to determine how Marcellus and Utica shale fracking impacts the environment.

Considering the many active drilling operations, pipelines and compressor stations one can find in Belmont County, the researchers may find plentiful data in the field. 
Nicole Deziel, an assistant professor in the Yale Department of Environmental Health Sciences, will serve as the study’s lead investigator. Deziel said she and three other Yale researchers will base their operations in the science lab at the Olney Friends School in Barnesville until they leave in August. 
“We are very interested in whether this expansion in natural gas extraction could contribute to the contamination of water and air supplies,” Deziel said. “Ohio is understudied. Most of the studies are from Pennsylvania or Texas. 
“We hope our results will advance understanding of the potential for exposure to volatile organic compounds and other toxic substances in communities with natural gas extraction by comparing concentrations of chemical contaminants in homes in close proximity to natural gas wells and homes located farther away,” Deziel said.
Click here to read more about this study.

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Tuesday, June 28, 2016

Court Rules That ETE Can Escape Merger With Williams; Williams Fighting Decision

From Seeking Alpha:
For investors in Williams Companies (NYSE:WMB), Friday was a bad day for a reason other than Brexit. A Delaware court ruled that Energy Transfer Equity (NYSE:ETE) will be able to get out of its deal to acquire Williams, due to concerns about how the deal will be taxed. This should substantially affect Williams shareholders as the deal was made when energy prices were much higher, and Williams wanted to force the deal in order to help maximize shareholder value. Without the deal, however, Williams will still be fine and has a few paths forward. 
Court Ruling 
It is not a secret that Energy Transfer wanted out of the deal. When they made the merger agreement with Williams, energy prices were high and there was the projection for large synergies between both companies. Now with the substantial drop in prices, Energy is facing a cash crunch caused partially by the cash portion of the deal. Energy has offered previously to renegotiate the deal with Williams, as they were hoping that Williams shareholders would accept more stock compensation instead of cash. However, Williams has refused to budge. While a court usually doesn't allow a company to get out of a merger that it doesn't like, in this case there was a specific question before the court.
The agreement between Williams and Energy contained a provision that would essentially let Energy walk away from the deal if the tax structure on the deal was not what Energy thought that it would be. While this is usually a routine matter, Energy's counsel refused to issue a letter addressing the merger as tax free. As a result, Energy has cited the tax issue as the reason that it wants out of the deal. Importantly for Williams, there is a $1.48 billion breakup fee should Energy back out of the deal.

The court ruled that Energy's lawyers were acting in good faith in their belief that the tax structure was not as initially thought tax free. While Williams leaned heavily on the argument that this is just a ploy by Energy's attorneys to help Energy get out of a deal that it now regrets, the court found the issue differently. While it may look suspicious, there is very little evidence that this is the case, and it does appear as though this is an issue where Energy's attorneys found a problem in the deal structure, and were acting in good faith. Williams is expected to continue to try to do everything that it can in order to help make the merger go through at its current terms.
Williams Partners is doing just that, trying to push for the merger.  First, the company announced in a press release that a majority of its shareholders have voted to approve the merger:
As previously announced, the cash and stock elections will be subject to proration and adjustment procedures that are further described in the merger agreement between Williams and ETE (the “Merger Agreement”). Subject to those proration and adjustment procedures in the Merger Agreement, common stockholders of Williams had the option to elect to receive for each share of Williams common stock (other than Williams shares held by Williams, subsidiaries of Williams, Energy Transfer Corp LP (“ETC”) and its affiliates and shares for which the holder thereof has perfected appraisal rights under Delaware law) the right to: $8.00 in cash and 1.5274 common shares representing limited partner interests in ETC (“ETC Common Shares”) (the “Mixed Consideration”); or 1.8716 in ETC Common Shares (the “Share Consideration”); or $43.50 in cash (the “Cash Consideration”). 
Based on the information as of the election deadline, 5:00 p.m., Eastern Time, on June 24, 2016 (the “Election Deadline”), the preliminary merger consideration election results were as follows: 
* Holders of 22,447,733.992 shares of Williams common stock, or approximately 2.859% of the outstanding shares of Williams common stock, elected to receive the Mixed Consideration; 
* Holders of 25,222,476.625 shares of Williams common stock, or approximately 3.212% of the outstanding shares of Williams common stock, elected to receive the Share Consideration; 
* Holders of 489,030,749.927 shares of Williams common stock, or approximately 62.291% of the outstanding shares of Williams common stock, elected to receive the Cash Consideration; and 
* Holders of 248,375,417.456 shares of Williams common stock, or approximately 31.637% of the outstanding shares of Williams common stock, failed to make a valid election prior to the Election Deadline.
Williams also issued another release announcing its intentions to fight the court ruling:
Williams today also filed papers commencing an appeal in the Delaware Supreme Court of the Delaware Court of Chancery’s June 24, 2016 ruling relating to the Merger Agreement between Williams and ETE. While Williams appreciates the Court of Chancery’s consideration of this matter, Williams does not believe ETE has a right to terminate the Merger Agreement because ETE has breached the Merger Agreement by failing to cooperate and use necessary efforts to satisfy the conditions to closing, including delivery of Latham & Watkins LLP’s Section 721(a) tax opinion. Williams remains ready, willing and able to close the merger under the Merger Agreement entered into with ETE on September 28, 2015. If ETE terminates the Merger Agreement, Williams will take appropriate actions to enforce its rights under the Merger Agreement and deliver benefits to Williams’ stockholders.

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Obama Administration Fights Back Against Ruling Striking Down New Fracking Rules

From the Washington Times last week:
In the latest rebuke of the Obama administration’s expansive view of executive power, a federal judge has struck down the Interior Department’s effort to regulate fracking for oil and natural gas. 
Judge Scott Skavdahl of the District Court of Wyoming already had put a hold on the regulations last year, and in a decision released late Tuesday, he ruled that Congress did not give Interior the power to regulate hydraulic fracturing, indeed it had expressly withheld that power with some narrow exceptions. 
Congress has not delegated to the Department of Interior the authority to regulate hydraulic fracturing,” Judge Skavdahl wrote in deciding a lawsuit brought by industry groups and a number of Western states. The “effort to do so through the Fracking Rule is in excess of its statutory authority and contrary to law.” 
The judge dismissed particularly the claim by the Interior Department and its Bureau of Land Management that it had inherent broad regulatory authority to pursue the public good on federal and Indian lands, the only place the regulations would have applied.
Now, from NGI:
Attorneys for the federal government have appealed last week's ruling by a federal judge in Wyoming that the Interior Department's Bureau of Land Management (BLM) does not have the authority to enforce a rule governing hydraulic fracturing (fracking) on public and tribal lands. 
Last Tuesday, U.S. District Court Judge Scott Skavdahl ruled that fracking was outside the regulatory jurisdiction of the BLM and disagreed with the agency's assertion that Congress had given it broad powers, citing several federal statutes (see Shale Daily, June 22). 
An appeal to the Tenth Circuit Court of Appeals in Denver was filed last Friday by six attorneys for the federal government, including four from the Justice Department's Environment and Natural Resources Division. 
Kathleen Sgamma, vice president of government and public affairs for the Western Energy Alliance (WEA), told NGI’s Shale Daily that the organization anticipated the government’s appeal.


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Utica Shale Rig Count Drops Again Last Week

The latest weekly permitting report from the Ohio Department of Natural Resources once again reflects the continued slowdown in activity.  Only two new permits were issued, and the rig count fell back to 10.  There are now 2185 permits issued for horizontal drilling in Ohio's Utica shale, along with 1751 wells drilled and 1328 producing.

View the weekly report below or by clicking here.


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Monday, June 27, 2016

Raymond James Sees Oil at $80 in 2017 and 2018

From NGI:
Raymond James & Associates has increased its 2017/2018 West Texas Intermediate oil price forecast by $5.00/bbl, but cautioned that given the U.S. unconventional industry's ability to post efficiency gains, the bias over time is for prices to move lower. 
Specifically, the 2017 and 2018 forecasts for WTI have been raised to $80/bbl from $75. Brent prices for 2017 are expected to average $83/bbl versus an earlier forecast of $79, while in 2018, prices should average $80/bbl from $75. In 2019 and beyond, the forecast is for $70 WTI and $75 Brent. 
"Given the U.S. shale industry's ability to post steady cost efficiency gains, our bias would be that, over time, oil prices move lower, or the futures curve becomes backwardated starting in mid-2017," said analysts J. Marshall Adkins and Pavel Molchanov. "This $70 price deck should support sufficient long-term U.S. oil supply growth to offset slowly rising global oil demand and falling non-U.S. oil supply." 
At the beginning of 2016, Raymond James energy analysts had forecast WTI/Brent would average $75/$79. In early February, they had forecast WTI would reach $50/bbl later this year in the face of a futures strip that was considered "simply unsustainable" (see Shale Daily, Feb. 8).
Click here to continue reading.

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Shell Places Shale Development at the Heart of Growth Plans

From Reuters:
Having turned round its North American shale business, Royal Dutch Shell (RDSa.L) is putting so-called unconventional energy at the heart of its growth plans, and believes lessons from the revamp can be applied across the company. 
Greg Guidry, head of the Anglo-Dutch group's unconventionals business, told Reuters a drive to slash costs and streamline decision-making had put his division largely on a par with leading rivals in terms of productivity and efficiency. 
And now the rest of Shell could reap the benefits too. 
"The executive committee charged us to be a catalyst for change within the broader Shell," Guidry said in an interview.
The rest of the article can be viewed by clicking here.

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Upstream Development Cut by $740 Billion From 2015-2020, Says New Report

From a Wood Mackenzie press release:
Global upstream development spend from 2015 to 2020 has been cut by 22% or US $740 billion since the oil price started to drop two years ago, according Wood Mackenzie's research. When we include cuts to conventional exploration investment, the figure increases to just over US $1 trillion. 
Malcolm Dickson, Principal Analyst at Wood Mackenzie says: "The impact of falling oil prices on global upstream development spend has been enormous. Companies have responded to the fall by deferring or cancelling projects and costs have also fallen. Our 2015-2020 forecast for capital investment has been reduced by 22% or US$740 billion since Q4 2014. In the nearer term the impact is even more severe: compared to pre-oil price fall expectations, capex will be down by around US$370 billion or 30% in 2016 and 2017." 
Wood Mackenzie expects to see further cuts throughout the year and investment levels continue to shrink as more projects are dropped and companies struggle to break even.
Read more by clicking right here.

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M3 Midstream Donates Building to North Township

From the Times Reporter:
A new building for North Township is just the latest contribution that a company operating the massive Harrison Hub natural-gas processing plant has made to this Harrison County community. 
The township building, located at 38170 Crimm Road, was dedicated last week at a ceremony attended by about 75 people, including local and state dignitaries and officials from M3 Midstream, which operates the Scio plant along with Williams Partners, a pipeline company. 
The structure is 56 feet by 80 feet, has five bays for equipment, a meeting room, bathroom, utility room and office for employees, said Dan Henry, chairman of the North Township trustees. Scio is located in North Township. 
"We can't thank them enough," Henry said. "We're a small township in a small community. We would never be able to afford this. If we tried this, it would create such a tax burden. You just can't do things like that in this small community."
Click here to continue reading this article.

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Halliburton CFO: Oil Recovery Will Continue to Be a Rocky Ride

From NGI:
North America's oil and gas industry is "coming off the bottom," but the recovery is unlikely to be a straight line, Halliburton Co.'s financial chief said Tuesday. 
CFO Mark McCollum spoke Tuesday at the Wells Fargo West Coast Energy Brokers Conference, where he discussed the failed merger bid for Baker Hughes Inc. and the Houston company's strategy moving forward. 
"We think at this point in time in the cycle in the market...we're coming off of the bottom...at least in North America and [we're] approaching a bottom internationally," he told the audience. "But the "recovery itself is going to be a lower slope recovery than maybe some others have been. And in that regard, it's probably not to going to be a straight line for the fact that this was a supply-based downturn and...relatively low demand growth overall..."
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Friday, June 24, 2016

Belmont County Farmers Discuss How Drilling Has Affected Them

From The Intelligencer:
Belmont County farmers Lova Ebbert and Larry Cain work their fields daily, just as they did before receiving significant checks for Marcellus and Utica shale drilling on their property a few years ago.

These farmers continue growing a variety of crops south of Bethesda, including corn, hay and tomatoes. 
Ebbert also raises beef cattle, while Cain raises dairy cows. 
“Farming is our livelihood. It’s what we do,” said Ebbert, who serves as co-operator of Ebbert Farm Market in St. Clairsville. “We certainly have not changed our day-to-day lives much.” 
Betsy Anderson, organization director for the Ohio Farm Bureau, acknowledged some farmers made adjustments upon receiving significant checks for their oil and natural gas deals.
Read the whole article by clicking here.

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Thursday, June 23, 2016

EIA Projects That Utica Shale Natural Gas Production Will Decline in June

From the Energy Information Administration's latest Drilling Productivity Report:



Up until now the Utica shale had been the one play that wasn't following the decline trend.  But for the first time, the EIA says June will see the natural gas production from the Utica decline from the previous month.

View the full report below:




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Wednesday, June 22, 2016

Two New Utica Shale Permits Last Week; 2,184 Permits Issued, 1,751 Wells Drilled, 1,327 Wells Producing

The latest weekly report from the Ohio Department of Natural Resources shows another slow week in Utica shale permitting.  Just two new permits are listed, both for Chesapeake Exploration in Jefferson County.  The Utica rig count is 11.

View the report below or by clicking here.


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Tuesday, June 21, 2016

Breaking Down the 1st Quarter 2016 Ohio Utica Shale Production Data

The Ohio Department of Natural Resources has now released the production data from the Utica shale for the first quarter of 2016. As always, we are going to give you a look at how the numbers compare to past quarters, past years, and how they break down among the various drillers who are active in Ohio and the counties where they are drilling. We also have the top 10 oil and gas wells detailed below. The latest production figures give the clearest view yet of how the downturn in oil and natural gas prices has affected production, with oil production declining from the previous quarter for the first time since the Utica shale boom began.

First up, let's take a look at how the quarterly data compares from the 1st quarter of 2014 through the first quarter of 2016.  As a reminder, all oil figures are 42-gallon barrels, and all gas production is measured in MCF:


QUARTER# OF WELLS/# WITH DATAOILGASDAYSOIL/DAYOIL/WELLGAS/DAYGAS/WELL
2014-1 476/4181,950,97967,333,94528,019704,6672,403161,086
2014-2562/5042,467,28388,673,74137,922654,8952,338175,940
2014-3717/6743,013,667132,017,38650,858594,4712,596195,871
2014-4828/7793,558,836164,815,00862,527574,5682,636211,573
2015-1926/8774,432,304183,585,25569,745635,0192,632209,333
2015-21020/9785,594,633221,860,16980,724695,7042,748226,851
2015-31134/10875,709,858245,747,68684,283685,2422,916226,079
2015-41265/12306,249,116302,505,428102,378615,0812,955245,939
2016-11351/13035,485,854329,537,838110,699504,2102,977252,907

The prevailing trend continued with oil production, as the rates per day in production and per well continued to fall - this time to levels we haven't seen in a couple of years. Gas production continues to be on the rise, though, reaching new peaks both in total production and in rate of production.

Next we have a look at all of the production in the Utica shale since the start of 2011, broken down by year and then adding in the production year-to-date in 2016:


YEAROILGAS
201146,3262,561,524
2012635,87412,831,292
20133,677,734100,119,054
201410,990,765452,840,080
201521,985,911953,887,763
2016 YTD5,485,854329,537,838
TOTALS42,822,4641,851,777,551

Next up, here are the top 10 oil-producing wells from quarter four:


OPERATORCOUNTYWELL NAME/NO.OILOIL/DAY
ANTERO RESOURCES CORPORATIONNOBLEHALL UNIT 1H57160628
ASCENT RESOURCES UTICA LLCGUERNSEYEGGLESTON WLS GR 4H56955633
ASCENT RESOURCES UTICA LLCGUERNSEYEGGLESTON WLS GR 2H52057578
ANTERO RESOURCES CORPORATIONNOBLEHALL UNIT 2H48665535
CHESAPEAKE EXPLORATION LLCHARRISONWILLIAM DENOON 17-12-6 2H43267528
ASCENT RESOURCES UTICA LLCGUERNSEYRED HILL FARM MDS GR 1H42490467
ASCENT RESOURCES UTICA LLCGUERNSEYRED HILL FARM MDS GR 3H41963461
ASCENT RESOURCES UTICA LLCHARRISONRH HAMILTON N MRF HR 7H40881449
CHESAPEAKE EXPLORATION LLCHARRISONWILLIAM DENOON 17-12-6 4H40011465
CHESAPEAKE EXPLORATION LLCCARROLLSAUERS 8-14-6 210H38912428


This represents the most even division of top-producing oil wells across different counties we have seen in a while. Guernsey County had 3 of the top 10 wells in the fourth quarter of 2015, but is back to having 4 this time.

Next, here are the top 10 gas-producing wells from the fourth quarter of 2015:


OPERATORCOUNTYWELL NAME/NO.GASGAS/DAY
RICE DRILLING D LLCBELMONTMOHAWK WARRIOR 12H1,629,077 52,551
RICE DRILLING D LLCBELMONTMOHAWK WARRIOR 8H1,621,869 52,318
RICE DRILLING D LLCBELMONTMOHAWK WARRIOR 10H1,515,077 48,873
ASCENT RESOURCES UTICA LLCBELMONTSMITH A 1H-121,345,080 14,945
ASCENT RESOURCES UTICA LLCBELMONTEUREKA SMT BL 6H-A1,325,913 14,732
RICE DRILLING D LLCBELMONTKRAZY TRAIN 4H1,320,931 42,611
RICE DRILLING D LLCBELMONTKRAZY TRAIN 2H1,280,914 41,320
RICE DRILLING D LLCBELMONTSON-UVA DIGGER 1H1,270,300 40,977
ANTERO RESOURCES CORPMONROEDELONG UNIT 4H1,263,024 13,879
RICE DRILLING D LLCBELMONTSON-UVA DIGGER 3H1,238,906 39,965


As has been the pattern on these production reports, Rice Drilling and Belmont County dominate the top gas-producing wells.

Now take a look at the production by county in the fourth quarter, along with charts that will show the comparison in production rates between the 4th quarter of 2015 and the 1st quarter of 2016:


COUNTY# OF WELLS TOTAL# OF WELLS PRODUCINGOILGASDAYSOIL/WELLOIL/DAYGAS/WELLGAS/DAY
Belmont175155104,06599,235,38412,2766718640,2288,084
Carroll4294271,292,46656,741,24337,3233,02735132,2641,520
Columbiana666028,16310,469,5895,3134695174,4931,971
Coshocton1147513,95391475513,953153
Guernsey1071051,182,20311,360,1449,39111,259126108,1921,210
Harrison2572552,238,90344,154,27921,8098,780103173,1542,025
Jefferson24201468,360,628164070418,0315,098
Mahoning13122,275741,558799190361,797928
Monroe13413164,13963,316,43610,3464906483,3326,120
Morgan226,65381,3731823,3273740,687447
Muskingum1157910,41291579610,412114
Noble116116537,32534,225,60010,2534,63252295,0483,338
Portage41143,403141413,403243
Stark221,45235,069182726817,535193
Trumbull441,80992,712278452723,178333
Tuscarawas7520,164108,9652714,0337421,793402
Washington965,023587,0904408371197,8481,334



And finally, breaking down the data by operator:

OPERATORTOTAL # OF WELLS# OF PRODUCING WELLSOILGASDAYSOIL/WELLOIL/DAYGAS/WELLGAS/DAY
Antero Resources Corporation129128426,28451,244,81311,3423,33038400,3504,518
Artex Oil Company663,892131,513546649721,919241
Ascent Resources Utica LLC84831,260,29729,954,2227,12215,184177360,8944,206
Atlas Noble LLC121217,1251,844,52910921,42716153,7111689
Carrizo (Utica) LLC4351,513261,97919017,17127187,3261379
Chesapeake Appalachia LLC64331688657329804221645133
Chesapeake Exploration LLC6085952,453,86986,385,52452,2224,12447145,1861,654
Chevron Appalachia LLC6684,818388,12743014,13619764,688903
CNX Gas Company LLC4241118,0839,615,9272,9042,88041234,5353,311
Eclipse Resources I LP5454334,96711,798,8044,8606,20369218,4962,428
EM Energy Ohio LLC221,099978,1121465508489,0566,699
Enervest Operating L553,86059,044455772811,809130
EQT Production Company6610,471102,7815371,7451917,130191
Gulfport Energy Corporation180180281,14677,532,84015,1981,56219430,7385,102
Halcon Operating Company Inc552,440123,010369488724,602333
Hess Ohio Developments LLC5451149,95218,685,1034,1382,94036366,3754,515
Hilcorp Energy Company101001,728,24483700172,8242,065
Mountaineer Keystone LLC200000000
NGO Development Corp.1147513,95391475513,953153
PDC Energy Inc2323145,325872,4232,0726,3187037,931421
Protégé Energy III LLC111,889276,776401,88947276,7766919
R E Gas Development LLC353584,5162,936,6152,6862,4153183,9031,093
Rice Drilling D LLC3316018,292,160553001,143,26033,078
Statoil USA Onshore Prop Inc9727,986396,6053573,9987856,6581,111
Triad Hunter LLC12822,8682,154,1137282,85931269,2642,959
XTO Energy Inc.22212,94612,071,96414551402574,8558,297




Click here to download the spreadsheet containing all fourth quarter production data.


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Monday, June 20, 2016

ODNR Publishes 1st Quarter 2016 Utica Shale Production Data

From the Ohio Department of Natural Resources:

"During the first quarter of 2016, Ohio’s horizontal shale wells produced 5,485,854 barrels of oil and 329,537,838 Mcf (329 billion cubic feet) of natural gas, according to figures released today by the Ohio Department of Natural Resources (ODNR).
Quarterly production from the first quarter of 2016 shows a significant increase from quarterly production from the first quarter of 2015.
2015 QUARTER 1 (SHALE)2016 QUARTER 1 (SHALE)INCREASE
Barrels of oil:4,432,1885,485,85424%
Mcf of gas:183,585,251329,537,83880%
The ODNR quarterly report lists 1,351 horizontal shale wells, 1,302 of which reported oil and gas production during the quarter. Of the 1,302 reporting oil and gas production results:
  • The average amount of oil produced was 4,213 bbls.
  • The average amount of gas produced was 253,101 Mcf.
  • The average number of first quarter days in production was 85.
All horizontal production reports can be accessed at oilandgas.ohiodnr.gov/production.
Ohio law does not require the separate reporting of Natural Gas Liquids (NGL) or condensate. Oil and gas reporting totals listed on the report include NGLs and condensate."

We will break down the data in our typical fashion in a later post, but a couple of quick notes: for the first time since the Utica shale boom started, oil production declined from the previous quarterly report. In the 4th quarter of 2015 there were 6,249,116 barrels of oil produced. Natural gas production did increase from the previous quarter.

Stay tuned for an in-depth look at the numbers tomorrow!

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Friday, June 17, 2016

06/17/16 Links of the Day: Donations, Pipeline Updates, Price Recoveries, Mergers, and More

Gas & Oil:  Utica Shale Academy Has Second Graduation   -   "The number of graduates is growing at the Utica Shale Academy. Members of the Utica Shale Academy Board of Directors was to confer degrees to 18 seniors during commencement on May 26, preceded by a dinner for the graduates and their families. Keynote speaker will be Rhonda Reda, executive director of the Oil and Gas Energy Education Program and Ohio Oil and..."

Alice-Echo News Journal:  Oil and Gas Recovery in the Horizon   -   "Expect a rise in the oil and gas industry by the end of this year is what experts from Invesco shared during the Fifth Annual Eagle Ford Consortium in San Antonio. Darrin Turner, Managing Directors with Invesco who performs quantitative and fundamental research on real asset securities addressed the consortium about the future of the..."

Press release:  Antero Resources to Acquire 55,000 Net Acres in the Core of the Marcellus Shale   -   "Antero Resources Corporation (NYSE: AR) ("Antero" or the "Company") today announced that it has signed a definitive agreement with a third party to acquire approximately 55,000 net acres in the core of the Marcellus Shale for $450 million. Approximately 75% of the 55,000 net acres contains dry Utica rights. The acquisition includes undeveloped properties located primarily..."

The Motley Fool:  Has Oil Risen Too Far Too Fast?   -   "Crude oil has been on a remarkable run since bottoming out earlier this year. After crashing into the mid-$20s to start the year, crude has rocketed higher passing $50 a barrel this week despite the fact that OPEC hasn't done a thing to help the oil market. Instead, what has fueled crude's surge is a combination of..."

Food & Water Watch:  Activists Deliver 90,000+ Petitions Calling on DNC to Add Fracking Ban to Party Platform   -   "A coalition of climate and environmental justice groups delivered over 90,000 petitions to the Democratic National Committee demanding that a ban on fracking be included in the party platform. The DNC platform committee is holding a public forum to receive input on this year’s platform today in Washington D.C. Petitions were collected and delivered by Food & Water Watch, Climate Hawks Vote, Environmental..."

Forbes:  In Some Corners of the American Oil Patch, $50 a Barrel Really is the New $100   -   "Oil is back at $50 a barrel. Militant attacks in Nigeria have cut that country’s oil output to a 20-year low. China’s output is collapsing. Even OPEC sees the world oil market tipping into undersupply this year. All of a sudden things are looking up for America’s frackers. A few American companies are feeling good enough about their prospects that they’ve even put drilling rigs back..."

Gas & Oil:  Do I Need More Than Insurance to Protect My Oil and Gas Interests?   -   "I have had a number of clients ask me if insurance is enough to protect their real property interests and specifically their oil and gas interests. I agree that insurance should be your first line of defense, but is it enough? In many cases in order to achieve proper asset protection, insurance must be used in conjunction with a proper legal entity, such as a Limited Liability Company (LLC). The question becomes “does the insurance I have or what I can buy, sufficiently protect..."

Seeking Alpha:  Prepare Yourself for a Clinton/Sanders Fracking Ban   -   "We still aren't exactly sure why we did it but we went ahead and followed Donald Trump, Hillary Clinton and Bernie Sanders on Twitter (NYSE:TWTR). Since we did that, we have been bombarded with a lot of, well, let's call it information. Investors might want to pay attention to what Clinton and Sanders are saying. They both have fracking directly in their..."

Market Realist:  Utica Shale's Natural Gas Production Rose 46% in a Year   -   "According to the EIA (U.S. Energy Information Administration), the Utica Shale in eastern Ohio has become one of the fastest-growing natural gas–producing regions in the US. In its Drilling Productivity Report released on June 13, 2016, the EIA estimated that the Utica Shale’s natural gas production reached 3.7 Bcf (billion cubic feet) per day in..."

The Medina County Gazette:  NEXUS Contracts Awarded for Pipeline   -   "A Texas-based company has awarded four contracts for the construction of a proposed 250-mile pipeline that includes a portion of the route through Medina County, a company spokesperson said. The awarding of the construction contracts in February for the proposed NEXUS Gas Transmission Pipeline comes in advance of an awaited approval from the Federal Energy Regulatory Commission on the $2 billion..."

Press release:  Leading Proxy Advisory Firm ISS Recommends Williams Stockholders Vote “FOR” the Merger Agreement with ETE   -   "The Williams Companies, Inc. (NYSE:WMB) (“Williams”) today announced that Institutional Shareholder Services (“ISS”), a leading independent proxy voting and corporate governance advisory firm, recommends that Williams stockholders vote “FOR” the merger agreement with Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE”) at Williams’ special meeting of stockholders scheduled..."

FX News Call:  Natural Gas Prices in U.S.: Large Stockpiles Choking Price Rally   -   "Recovery in US natural gas prices has been hit by heavy stockpiles. On Wednesday, natural gas July delivery settled 0.9 percent, or 0.3 percent down at $2.595 a million British thermal units on the New York Mercantile..."

Akron Beacon Journal:  Kinder Morgan Provides $15,000 to Wooster YMCA   -   "The YMCA of Wooster on Wednesday got a $15,000 gift for its youth fitness program. The grant for a new climbing room at the recently renovated gymnastics center came from Texas-based Kinder Morgan, a giant pipeline conglomerate. The company is building a cross-Ohio pipeline for..."

Press release:  OPEC Income Drops from $753 Billion to $404 Billion, EIA Says   -   "For 2015, the U.S. Energy Information Administration (EIA) estimates that members of the Organization of the Petroleum Exporting Countries (OPEC) earned about $404 billion in net oil export revenues (unadjusted for inflation). This represents a 46% decline from the $753 billion earned in 2014, mainly as a result of a precipitous fall in average annual ..."

Marcellus Drilling News:  Deloitte: Drillers Face a $2 Trillion Funding Gap Next 5 Years   -   "Consulting and accounting powerhouse Deloitte has just issued an important new report that sounds the alarm that upstream (i.e. drillers) are not spending enough money to replace proved reserves. Deloitte says there is a “funding gap” of $2 trillion over the next five years! Natural gas is more at threat than oil, because natural gas “reserves shortfall is bigger than oil since the commodity is yet to see its best years of demand growth in the..."

Bloomberg:  EPA Fracking Report Needs Qualifiers, Scientists Say   -   "A much-debated summary on the risks posed by hydraulic fracturing to drinking water was kicked around again June 14 by scientists discussing recommendations to improve an Environmental Protection Agency report. The EPA draft report said it found no “widespread, systemic impacts” on drinking water..."


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