Published: July 29, 2019 |

R. Brock Pronko.
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The “Oil Bust of 2014” took a heavy toll on the gas industry — 69 oil and gas pro­ducers with $34.3 billion in cumulative secured and unsecured debt went under. After share prices peaked in 2014, the oil bust wiped out about $1 trillion in equity, causing the Dow Jones U.S. Oil & Gas Index to fall by 40 percent.

The gas operators that survived did so by tenacity, efficiency, a dedicated workforce and good management.

Meet the “Shale Survivors.”

ANTERO RESOURCES CORP Corp

2019 is shaping up to be a red-letter year for Antero Resources. The company’s first- quarter financial report showed several uptrends: net daily gas equivalent produc­tion — 29 percent liquids by volume increased 30 percent year-over-year; liquids production increased 44 percent; and realized propane and NGL prices averaged $34.70 per Bbl during February and March after Antero began ex­porting significant volumes out of Marcus Hook via the newly opened Mariner East 2 pipeline. The company also set what it believes is a world record for a horizontal well by drilling a 9,184-foot lateral in 24 hours.

“We began 2019 with significant mo­mentum,” said Paul Rady, Antero Resourc­es chairman and CEO.

“On the organizational front, we closed the midstream simplification transaction in mid-March and reduced leverage to 2.1 times with the cash proceeds, and we deconsolidated Antero Midstream finan­cials from Antero Resources, which will result in more transparency for the up­stream business.

“On the operational front, we are the an­chor shipper on Mariner East 2 with nearly one-third of the total available capacity under contract and additional expansion rights. As the largest liquids producer in the U.S., we are well positioned to achieve superior margins on our liquids volumes going forward.”

CABOT OIL & GAS CORP

Cabot Oil & Gas Corp has focused its natural gas development on the “dry gas” (methane) portion of the Marcellus shale in northeast Pennsylvania. The company has 489 wells with approximately 11.6 Tcfe of total proved gas reserves.

While construction of the Constitution Pipeline, which is designed to transport gas through New York to high demand markets in New England, would greatly increase takeaway capacity for Cabot, the long-delayed project hasn’t deterred the company from drilling more wells. This year, Cabot plans to drill and complete 85 to 90 net wells and place 80 to 85 net wells in production.

“During the first quarter of 2019, we de­livered record levels of operating cash flow, free cash flow, adjusted net income and production, underpinned by the continued success from our operations in the Marcel­lus and our unwavering commitment to disciplined capital allocation and cost con­trol,” said Dan Dinges, Cabot’s chairman, president and CEO.

“Our first quarter net income was $263 million, which represents a 161 percent in­crease relative to the prior-year compa­rable quarter.

“Free cash flow for the first quarter was $308 million, which was approximately 3.5 times the amount from the prior-year comparable quarter and greater than our free cash flow generated for the full-year in 2018.”

CHESAPEAKE APPALACHIA LLC

Chesapeake Appalachia LCC, which has 835 wells, is the Marcellus drilling subsidi­ary of Chesapeake Energy Corp, the sec­ond largest natural gas producer in the U.S.

Under founder Aubrey McClendon’s controversial leadership, the company ran into a host of legal problems. In 2014, the state of Michigan charged the compa­ny with fraud and racketeering, for which it paid $25 million to defrauded landown­ers. In 2017, Chesapeake paid $30 million to Marcellus landowners it had under­paid. In 2016, McClendon was indicted by a federal grand jury on charges of conspir­ing “to rig bids to purchase oil and natural gas leases in northwest Oklahoma.” He died the next day in a high speed, single- vehicle collision.

Robert Lawler, who replaced McClen­don as president and CEO, moved the company toward greater fiscal and cor­porate responsibility. In October 2018, Chesapeake bought WildHorse Resource Development, an oil and gas company with operations in the Eagle Ford Shale and Austin Chalk formations in southeast Texas, for $4 billion.

“The encouraging early results from our [Eagle Ford] Brazos Valley business unit, which we now project will be cash flow positive at the asset operating level in 2019, demonstrates our capability to ap­ply our capital and operating efficiency to immediately transform a new asset in our portfolio,” said Lawler.

CHIEF OIL & GAS

Chief Oil & Gas, the nation’s biggest privately-owned natural gas producer, was founded in 1994 by Trevor D. Rees- Jones with four shareholders for a couple hundred thousand dollars. He previously worked as an attorney in oil and gas reor­ganization law. The company started out drilling wells in the Barnett shale in Texas. Chief has been operating in the Marcellus shale region since 2007.

With close to 600,000 acres of net lease­hold, Chief became one of the largest leaseholders in the Marcellus shale play. Its natural gas gross production is ap­proximately 1 Bcf/d, and it operates more than 330 wells in the region. Chief Gather­ing was established as a sister company to Chief Oil & Gas to build the infrastructure to meet the demands of the northeastern markets.

In 2010, Chief sold its Lycoming County, southern Sullivan and northern Columbia County, Pennsylvania, assets to EXCO Re­sources. The following year, it sold its south­western Pennsylvania, West Virginia and Maryland acreage and assets to Chevron.

Today, the company focuses its gas op­erations in four counties in the Northern Tier: Bradford, Susquehanna, Sullivan and Wyoming.

CNX RESOURCES CORP

CNX is one of the largest independent natural gas exploration, development and production companies in the U.S., with op­erations centered in the major shale for­mations of the Appalachian basin. CNX’s pedigree stretches more than 150 years. The company’s roots trace back to John D. Rockefeller’s Standard Oil Company, which played a vital role in powering the indus­trial revolution.

In 2017, the company, then known as CONSOL Energy Inc., separated its gas business and its coal business into two independent, publicly traded companies. The gas business was named CNX Resourc­es Corporation while the coal business was named CONSOL Energy Inc.

“Our objective was to once again trans­form a 150-year old institution, which owns and operates the best natural gas and coal assets in the world,” said Nicho­las DeIuliis, president and CEO of CNX Re­sources.

“The E&P company is now one of the premiere pure-play natural gas E&P com­panies with a significant Marcellus and Utica Shale legacy acreage position, low- cost structure and stacked pay opportuni­ties, while the coal company holds some of the best coal assets in the world and is positioned to dominate the coal space for years to come.”

EQT PRODUCTION COMPANY

EQT has been a major player in the Ap­palachian Basin for 130 years. As of year- end 2017, EQT’s assets consisted of ap­proximately 1 million net Marcellus acres, including approximately 680,000 core net acres in the Marcellus play; nearly 14,500 gross productive natural gas wells; and 21.4 trillion cubic feet equivalent of proved reserves.

In the first quarter 2019, the company reported income from continuing opera­tions of $191 million, compared to a loss from continuing operations of $1.6 billion for the first quarter 2018. The increase was primarily attributable to an impairment charge recorded in the first quarter 2018. Adjusted net income from continuing op­erations was $33 million higher than the same quarter last year.

“Our strong operational performance is demonstrated through our first quarter re­sults,” said Robert McNally, former president and chief executive officer of EQT.

“We have generated over $300 million in adjusted free cash flow over the last two quarters and remain on track to achieve our 2019 free cash flow target.”

In 2005, something extraordinary hap­pened that put Pennsylvania back on America’s energy map. Range Resources began exploring the Marcellus shale for­mation using horizontal drilling and hy­draulic fracturing after those extraction techniques had proved successful in un­locking the gas trapped within the Barnett shale in Texas. Range’s success ignited the Marcellus gas boom that enticed E&P com­panies out west to move their rigs to the Appalachian basin.

Range’s first quarter financial report showed that its southwest Pennsylvania production increased 14 percent over the prior- year period. Production averaged 2,256 mcfe per day, including approximately 31 percent liquids. The company has 960 wells, and its low-maintenance capital require­ments make it an efficient operator.

“Range got off to a great start in 2019, exceeding production guidance for the first quarter and paying down $48 million in debt with organically-generated free cash flow,” said Jeff Ventura, Range’s CEO.

“We remain on track to deliver on our annual production target while spending at or below budget for the year, and we continue to focus on translating our best- in-class inventory and well-level returns into corporate-level returns in the form of significant free cash flow generation in 2019 and beyond.”

REPSOL OIL & GAS USA, Inc.

Repsol Oil & Gas USA, Inc. is a subsidiary of Repsol S.A., headquartered in Madrid, Spain. Repsol Oil & Gas USA holds an inter­est in 168,400 net acres in the Marcellus shale. The company’s acreage is primarily located in northeastern Pennsylvania in Bradford, Susquehanna and Tioga coun­ties. Repsol’s working interest natural gas production from the play averaged 491 mcf/d during 2017.

“Seven or eight years after we started the development for the project, we were able to produce cumulatively 1 TCF of gas,” said Rick Kessy, vice president of Repsol’s Mar­cellus Business Unit.

“If we look at the remaining resource available to the Marcellus, which is six to seven TCF of resource and reserves, it would indicate that there would be 30 or 40 years of running room available to us in the project.”

According to Paul Ferneyhough, Repsol’s executive director for North America, Rep­sol plans to increase production in their Marcellus acreage by 50 percent by the end of next year.

SENECA RESOURCES CORP

Seneca is the exploration and produc­tion arm of National Fuel Gas Company, headquartered in Houston, Texas. Seneca controls 785,000 net prospective acres in Pennsylvania and operates approximately 600 unconventional shale wells. Of Sene­ca’s Marcellus holdings, approximately 80 percent is fee acreage, with the mineral rights owned outright by Seneca. The remaining Marcellus land rights, approximately 20 percent, are leasehold interests, most of which are held by production.

Seneca’s first quarter report showed the company produced 49.2 Bcfe compared to 40.1 Bcfe in last year’s first quarter, an increase of 23 percent. In Pennsylvania, the E&P produced 45.3 Bcfe, up by 28 percent compared to last year’s first quarter. Sequentially, quarterly production increased by about 2 Bcfe, or 4 percent.

“We had a really good opening quarter for our 2019 fiscal year,” said Ronald Tan­ski, Seneca’s president and CEO.

“The operating plans I laid out last No­vember are moving along right on target. Our [steady] approach in our upstream drilling business is working out quite well. We continue to fill the firm transportation capacity that we have lined up, and we don’t have to drill an excessive number of wells to hold expiring leases.”

SWEPI LP

SWEPI LP is the E&P subsidiary of Royal Dutch Shell plc, which operates in various shale plays across the country. The com­pany, which was incorporated in 1983, was formerly known as Shell Western E&P Inc. and changed its name to SWEPI LP in Sep­tember 2011.

Shell’s Appalachia operations are located in the predominately rural northern and western portions of Pennsylvania, where it drills and produces “dry gas” (methane) from the Marcellus and Utica formations.

Shell entered the area in 2010 after ac­quiring 750,000 leasehold acres from East Resources. Its Appalachian opera­tions have since grown to approximately 850,000 acres primarily in Pennsylvania, with additional acreage in Ohio and New York.

In 2018, Shell spent about $150 million to drill wells on four pads in Tioga County where it proved the Deep Utica has vast gas reserves below the Marcellus layer. Shell has over 300 wells and acreage in 10 Penn­sylvania counties, but has mainly focused on Tioga.

As Shell gears up its Appalachia cracker plant in Beaver County, Pennsylvania, it is selling some of its Marcellus gas acreage. Pin Oak Energy acquired 43,000 acres from Shell in northwest Pennsylvania.

By:  R. Brock Pronko, Pennsylvania Business Central

R. Brock Pronko has worked as a communications supervisor, tech writer, col­lege instructor and journal­ist. He has written for Penn­sylvania Business Central since 1991 and Marcellus Business Central since 2008. He majored in creative nonfiction at Penn State and gradu­ated with a Bachelor of Arts in 1989. His first novel, The Last Prophecy of Baba Vanga, will be published this summer.