Chesapeake
Reports "monster" Haynesville wells
October 20, 2016 |
EXCO
Firm proclaims Haynesville transformation
September 22, 2016 |
Rice Energy
Takeaway capacity fuels high return Utica drilling
September 6, 2016 |
EQT Corp
Exploiting Appalachia multi-zone potential
October 5, 2016 |
Chesapeake Energy is a major Marcellus producer, where it generates 1.95 Bcf/d or 20% of its total output. But in 2016 the company has no drilling rigs in the play. In contrast, it is running three in the Haynesville Shale, where it announced in August that it would double the number of planned wells this year. The reason is new drilling techniques that have generated a 250% increase in 90 day production and a rate of return that has increased from 3% in 2014 to 47% in 2016. |
EXCO Resources has been financially challenged since the plunge in commodity prices. Although it still has one of the highest debt to total capital ratios in the industry, the company has been successfully restructuring its debt with creditors because of dramatically improved results in its core Haynesville/Bossier shale positions. Although EXCO also produces from the Marcellus, it is allocating all of its limited investment dollars to North Louisiana and East Texas. Its efforts include a successful re-fracking program that has generated an extra 2.0 Bcf in production by applying new techniques to previously drilled wells. It is generating an average 27% rate of return, but expects that to improve when it renegotiates current midstream contracts. |
Rice Energy’s recent results demonstrate the impact of adequate takeaway capacity on natural gas returns. While Rice is a major Marcellus producer, its midstream operations have resulted in a major increase in the availability of pipelines to export from the dry gas Utica Shale in Ohio. Rice said it is now generating a 95% rate of return from the region, where it recently doubled its rig count from one to two. Like EQT, Rice announced a major acquisition, the $2.4 billion purchase of Vantage Energy that doubled its dry gas acreage in Pennsylvania. Interestingly, the purchase also provided 37,000 net acres in the Barnett Shale, another former premier play dimmed by the emergence of Appalachia. |
Appalachia-focused EQT Corp., the fourth largest US natural gas producer, has recently demonstrated its confidence in the long-term potential of the region by spending $1.1 billion in the last five months to expand its Marcellus position. While it awaits the completion of major pipeline projects to boost differentials, it has been generating attractive returns by targeting the Upper Devonian formation that overlays the Marcellus in its core region in southwest Pennsylvania and northern West Virginia. It added 30 Upper Devonian wells, along with 33 Marcellus wells, to its 2016 drilling program after gas prices increased, and expects the shallower wells to record a 27% rate of return for a 7,500 foot lateral at $2.50/Mcfe gas. Obviously EQT hasn’t move out of the Appalachia but why wouldn’t it? |
