Pennsylvania, unlike most other states, retains oil and gas rigs

http://www.bizjournals.com/pittsburgh/blog/morning-edition/2015/02/...

The number of rigs dropped in many states but remained steady in Pennsylvania, according to Baker Hughes' data released Friday.

There were 54 rotary rigs in Pennsylvania last week, unchanged from the prior week but up one from a year ago. Most other states saw declines. Among those states is Texas, where the count dropped by 56 to 598 in Texas. In New Mexico, the count fell by 12 to 66 in New Mexico, and in West Virginia, the count was down by two to 17 in West Virginia. There were 37 rigs in Ohio, down two from a week ago. West Virginia is down 13 from last year and Ohio is down two rigs.

There are two fewer rigs than last week operating in the multistate Marcellus Shale play, and two from the Utica Shale play, which includes part of Pennsylvania but also Ohio and West Virginia.

Rig counts - Baker Hughes data.csv

U.S. Breakout Information
This Week
+/-
Last Week
+/-
Year Ago
Oil 1056 -84 1140 -367 1423
Gas 300 -14 314 -37 337
Major Basins This Week +/- Last Week +/- Year Ago
Barnett 13 -6 19 -17 30
Eagle Ford 164 -4 168 -52 216
Fayetteville 9 0 9 0 9
Haynesville 41 -2 43 -1 42
Marcellus 69 -2 71 -11 80
Mississippian 54 1 53 -24 78
Permian 368 -49 417 -118 486
Utica 39 -2 41 -4 43   

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Replies to This Discussion

Permalink Reply by David on February 19, 2015 at 4:39am

I would guess because they are giving you lees than 1.00 for Marcellus gas and selling for about 2.67 on the open market.

Permalink Reply by Tim on February 19, 2015 at 4:51am

Dave,

Need pipeline infrastructure, and its coming!

Also need LNG exports, Sabine Pass opens 2H15.

Permalink Reply by David on February 19, 2015 at 5:29am

Yes I know but still I suspect the price disparity of the Marcellus to the Henry Hub is why still drilling in the PA Marcellus and also the proximity to NY City

Permalink Reply by Tim on February 19, 2015 at 6:15am

Dave, 

Please explain your line of thinking?

Permalink Reply by David on February 19, 2015 at 9:09am

if CHK or anyone else pays royalty owners 73 cents per unit of gas and can then sell it on the open market that is quite a spread. You do realize there is a Marcellus market price that is substantially below the true market price. For example the COMEX price for Nat Gas today is 2.793. What were you paid for your nat gas in your last check. I'm guessing way below $1.00?

Permalink Reply by Tim on February 19, 2015 at 2:16pm

Dave,

Yes, if CHK owns the midstream, and is selling their gas, at the end of the pipeline, to the end user, then yes, you absolutely have a point.

One better, what if CHK has secured a ten year contract with the midstream company, which they do not own, say 35c/mcf, so CHK is realizing 2.80 - .35 = 2.55, but is paying the mineral owner 73c?  That is a major issue.

However, if CHK is competing for pipeline capacity, due to production growth, and has to take a less than market price for its gas to get it to market, the negative differential, then I am of the belief that CHK is selling it for that price, and that is what the mineral owner deserves.

Is there not a current lawsuit against CHK for this issue?

I think you bring up extremely valid questions about 'how' the operator is 'selling' its nat gas.  IMO, this is a very different process than hedging, as this is based on an operator's gross production across geographical locations.  However, specific gas wells, pricing, and price to transfer is specific to well pads and mineral owners.

Do you have more information you can share on the subject?

Permalink Reply by LewPa on February 19, 2015 at 2:20pm

David,

I just got the royalty statement for Feb., which is actually Dec. gas, and the gas price paid to me was $2.98. Lowest price in 2014 was Oct. gas @ $2.17. Rex Energy well, Butler Co, Pa.  LewPa

Permalink Reply by David on February 19, 2015 at 2:41pm
I have 1.08 in Bradford co in November. Sold my rights in 2014. I have heard that CHK paid .73
Permalink Reply by LewPa on February 19, 2015 at 3:07pm

David,

Yikes!! That's obscene, glad I'm getting a fair shake from Rex! LewPa

Permalink Reply by mlb on February 20, 2015 at 2:37am

Just curious David, did your lease contain the market enhancement clause? 

Tks.

Permalink Reply by David on February 20, 2015 at 3:10am

it was and old 12.5% with deductions. However for this discussion it does not matter the 1.08 is the price paid for gas.   

Permalink Reply by mlb on February 20, 2015 at 3:39am

I see.  I have a neighbor, same kind of lease.  I think he was paid 2 and change back in those fall months..but I am over west in pa and it is Utica..perhaps it makes a diff.

I will get a 1st ck in oh...prob june or july I think so hopefully things go up a bit.  1 buck would not be good.

Tks.

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