docFinder alert PLS PLS
Week of August 5, 2013 Volume 3, No. 7

Marcellus Leaders

Continuing high growth and high returns


Cabot Oil & Gas

"Typical" 100% ROR at $3.50

May 15, 2013

Full Presentation


Range Resources

106% IRR at Strip Price

July 24, 2013

Full Presentation

Cabot Oil & Gas Corporation is the golden child of Marcellus leaders, having reached the 1 Bcf/d threshold back on December 19, 2012. The success continues as COG just reported YoY production increase of 52% AND some excellent IP's from its Zick area in Susquehanna County, NE Pennsylvania. Here, COG tested 51.2 MMcf/d from a 2 mile northern step-out, 2 well pad. The wells were frac'd with 37 stages and held up well with a 30-well IP of 43.6 MMcf/d.

This slide shows COG's Zick area where you can see these new results certainly exceed COG's "typical" 100% ROR shown in the slide above left. The "typical" COG well has an IP of 17.4 MMcf/d. The success COG is having in the Marcellus is spurring rapid growth and CEO Dan Dinges recently announced an acceleration of the program by bringing a sixth rig in early.

Shown above right is a slide from Range Resources, another Marcellus leader. The slide shows that Range's best area (the wet gas area of SW PA) is currently enjoying an impressive 106% IRR based on June 28 commodity prices. This slide shows the exact acreage position and wells behind this result. Overall, RRC just reported YoY quarterly production increase of 27% to 910 MMcfed, exceeding guidance. RRC's CEO Jeff Ventura is confident that the company will continue to see similar line of sight production growth of approximately 20-25% for the next few years.

For Marcellus watchers, RRC also announced other big news. Positive results from its 3-year pilot test on tighter spaced wells from 1,000 feet to 500 feet has resulted in the booking of another incremental 12 to 15 Tcfe of unproved resource potential. And if that is not good enough, RRC also announced a 38% increase in EUR's in the super-rich SW PA area to 10.9 Bcfe, a 41% increase in EUR's in its wet SW PA area to 12.3 Bcfe and a whopping 63% EUR increase in its SW PA dry gas area.

The table below shows Baker Hughes's well count and rig count numbers for the Marcellus. Impressively, these leaders in the Marcellus are rapidly improving the economics of the play by drilling wells using best practices and drilling more wells per rig deployed. While the rig count has dropped 41%, the number of wells drilled has dropped a slight 17%. This efficiency is driven in large part by pad drilling.

Well Count vs. Rig Count in the Marcellus

Quarter-YearWell CountRig CountLand Wells/ Rig
Q1- 2012 541 135 4.01
Q2- 2012 519 110 4.72
Q3- 2012 443 93 4.77
Q4- 2012 435 91 4.76
Q1- 2013 475 92 5.19
Q2- 2013 448 79 5.71
Source: Baker Hughes

More HOT slides and data mining thoughts below

Besides Cabot and Range, this docFinder alert highlights other companies flourishing in the Marcellus including: EQT, Chesapeake, Chevron, and Antero.

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featured slides from docFinder database

Slide Slide Slide Slide

EQT Corp.

15 Tcfe of 3P

July 25, 2013


Over 2 Bcfepd gross

July 1, 2013


8 Rigs Running

July 9 , 2013

Antero Resources

15 Rigs Running

July 2, 2013

EQT is an integrated energy company with a leading position in the Appalachian. The slide above shows the rapid growth of its Marcellus production - up 70% YoY. During Q2, EQT spud 41 Marcellus wells and is currently focused on development in three key areas: central PA, SW PA and Northern WV. Like some other leaders in the play, EQT increased EUR estimates with updated type curves based on 4,800 foot laterals. EURs are now 9.8 Bcfe in SW PA, 9.8 Bcfe in Northern WV, and 6.6 Bcfe in Central PA. In terms of 3-year F&D cost as well as operating costs, EQT ranks well with all 3 leaders being Marcellus focused..

Chesapeake is now operating 8 Marcellus rigs and producing over 2 Bcfepd gross. In Q1, CHK produced 710 MMcfepd net in its northern area (brought on 39 new wells at an average 8 MMcfed) plus 170 MMcfepd net in its southern wet gas area (brought on 13 wells at an average of 6.0 MMcfepd). This represents YoY production growth of 70% and 21%, respectively.

As with all resource plays, the industry is still identifying sweet spots. In CHK's case, the slide above shows economics in the "core of the core" area with ROR's based on 139 wells that exceed 100% at $4 gas and $80 oil. Viewed differently, these wells pay out in less than a year.

Chevron currently owns more than 700,000 acres in the Marcellus shale play--their largest single US unconventional play. CVX's results are nearing the high end of expectations and the company is currently running 8 rigs. CVX assembled its Marcellus position through two key acquistions - a $4.3 billion buy of Atlas Energy in late 2010 and a $1.6 billion buy from Chief/Tug Hill in May 2011. In the Atlas deal, Chevron received a drilling carry from Reliance Industries which was grandfathered from an original $1.7 billion Atlas/Reliance JV. Chevron's carry in the Marcellus is now down to $850 million.

Antero has transformed itself into a "pure play" Appalachian shale focused company and is now running 15 rigs and 3 frac crews in the Marcellus. YoY Appalachian growth has soared 114%. The slide above shows Antero's de-risked position across 320,000 net acres in the SW core of the play in northern WV plus industry wells and rigs. Antero produced 420 MMcfepd during H1 2013 and now has 171 wells online. This is a great regional map that shows Antero's Marcellus and Utica postion in relation to other industry leaders. In 2013, Antero has a $1.95 billion capital program (85% Marcellus) with plans to drill 135 wells - up from 83 wells in 2012.

Full Presentation

Full Presentation

Full Presentation

Full Presentation

featured transactions from PLS global M&A database

05/03/13 EQT acquires PA Marcellus Assets from CHK $113 MM
04/29/13 Southwestern buys 162,000 Marcellus acres from CHK and Statoil $93 MM
12/18/12 Statoil buys 70,000 Marcellus acreage and production in OH and WV $590 MM
08/18/11 Noble and Consol from Marcellus JV $3,419 MM

Source: PLS M&A Database