Appalachian Basin: Reservoirs, Rigs & Results
DUG-EAST | Pittsburgh, PA | 4 June 2014
Appalachian Basin: Reservoirs, Rigs & Results — Who, What & Where © 2014 Hart Energy. All rights reserved.
1
Forward Looking Information This presentation includes certain forward looking information to help current and potential investors understand management’s assessment of our future plans and financial outlook, and our future prospects overall. Statements that are forward-looking are based on certain assumptions and on what we know and expect today and generally include words like anticipate, expect, believe, may, will, should, estimate or other similar words. Forward-looking statements do not guarantee future performance. Actual events and results could be significantly different because of assumptions, risks or uncertainties related to our business or events that happen after the date of this presentation. Our forward-looking information is based on the following key assumptions: inflation rates, commodity prices and capacity prices, timing of debt issuances and hedging, regulatory decisions and outcomes, foreign exchange rates, interest rates, tax rates, planned and unplanned outages and the use of our pipeline and energy assets, integrity and reliability of our assets, access to capital markets, anticipated construction costs, schedules and completion dates, acquisitions and divestitures.
Our forward looking information is subject to risks and uncertainties, including but not limited to our ability to successfully implement our strategic initiatives and whether they will yield the expected benefits, the operating performance of our pipeline and energy assets, economic and competitive conditions in North America and globally, the availability and price of energy commodities, regulatory decisions and outcomes, outcomes of legal proceedings, including arbitration, changes in the political environment, changes in environmental and other laws and regulations, construction and completion of capital projects, labor, equipment and material costs, access to capital markets, interest and foreign exchange rates, weather, cyber security and technological developments. You can read more about these risks and others in reports we have filed with Canadian securities regulators and the U.S. Securities and Exchange Commission (SEC) and available at www.RC.HartEnergy.com
© 2014 Hart Energy. All rights reserved.
2
OUTLINE APPALACHIAN BASIN ROLL UP • WELL COUNT/RIG COUNT • TYPE CURVES/EURs • PRODUCTION FORECAST
REGIONAL DEVEOPMENTS • • • • •
MARCELLUS DRY GAS (PA) MARCELLUS WET GAS (PA, WV) VERTICAL DRILLING (PA) UTICA (OH) UTICA (PA)
COMPANY HIGHLIGHTS • CHESAPEAKE ENERGY | RANGE RESOURCES • SOUTHWESTERN ENERGY | ANTERO RESOURCES • GULFPORT ENERGY | RICE DRILLING © 2014 Hart Energy. All rights reserved.
3
APPALACHIAN BASIN ROLL-UP
© 2014 Hart Energy. All rights reserved.
4
ROLL-UP: WELLS & RIGS Appalachian Basin: Rising Well & Rig Counts Expected
Trends • Wet gas acreage is attracting CAPEX, which is benefitting SW PA and WV. • Dry gas acreage development is moving east in PA. • Shallow vertical drilling is being conducted in the NW PA, utilizing cable rigs. • Utica drilling in PA is still in the exploratory phase with no urgency for further development. • Utica drilling in OH is expanding in counties south of Carroll, “entering the starting blocks.” Source: Hart Energy Research & Consulting’ s Oil & Gas Service Platform © 2014 Hart Energy. All rights reserved.
5
ROLL-UP: TYPE CURVES & EURs
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s 6 Workbench
ROLL-UP: PRODUCTION FORECAST
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’s North 7 American Shale Quarterly (1Q2014)
Regional Developments
© 2014 Hart Energy. All rights reserved.
8
REGIONAL DEVELOPMENTS DRY GAS (PA, WV, MD) The NE PA dry gas part of the play is moving further east to Susquehanna and Wyoming counties. Counties west of Susquehanna County – Tioga & Bradford – have seen a noticeable drop in activity. Garret & Allegany counties, MD have registered activity south and east of the Accident gas storage field. Preston County, WV has had no drilling activity since 2012. Source: Hart Energy Research & Consulting’ s Oil & Gas Service Platform © 2014 Hart Energy. All rights reserved.
9
REGIONAL DEVELOPMENTS (con’t) WET GAS (PA, WV) The SWPA and NW WV wet gas part of the play have seen activity ramp up as infrastructure off-take increases. In SWPA, companies are refocusing CAPEX in Washington and Greene counties. The wet gas part of the play is expanding northward. In WV, the play has moved from its far southern counties in 2005 to the NW border into the “WV neck” between PA and OH, post recession. Source: Hart Energy Research & Consulting’ s Oil & Gas Service Platform © 2014 Hart Energy. All rights reserved.
10
REGIONAL DEVELOPMENTS (con’t) NW PA (Vertical Drilling Area) Prior to the ramp in HZ drilling, high hydrocarbon prices support drilling in in naturally vertical fractured zones west of the Appalachians above the Marcellus profitable. HZ drilling displaced VT drilling in Washington & Greene counties. HZ drilling is moving northward displacing VT drilling in Westmoreland & Armstrong. Warren & McKean remain the VT drilling hotbed in PA. Source: Hart Energy Research & Consulting’ s Oil & Gas Service Platform © 2014 Hart Energy. All rights reserved.
11
REGIONAL DEVELOPMENTS (con’t)
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas 12 Service Platform
REGIONAL DEVELOPMENTS (con’t) UTICA - PA Drilling for the Utica in PA is mostly focused in Beaver, Lawrence & Mercer counties. The drilling is exploratory and not yet in delineation mode. These counties also have shallow vertical drilling locations that utilize cable rigs. Going forward, it will take years before Utica drilling in the PA takes off. Source: Hart Energy Research & Consulting’ s Oil & Gas Service Platform © 2014 Hart Energy. All rights reserved.
13
REGIONAL DEVELOPMENTS (con’t) UTICA - OH Carroll and Harrison counties continue to be the main focus of this play, albeit drilling is down slightly. The play is developing faster in counties south of the core: Belmont, Guernsey, & Monroe. Most of the Utica in Ohio has not been delineated and infrastructure off-take is still lacking. Although it is ramping up, the play is about to take off. Source: Hart Energy Research & Consulting’ s Oil & Gas Service Platform © 2014 Hart Energy. All rights reserved.
14
COMPANY HIGHLIGHTS
© 2014 Hart Energy. All rights reserved.
15
•
Range Resources has focused activity in the southern wet gas region within Washington county since the play’s inception.
•
RRC continues to ramp up activity in SWPA with approximately 561 producing wells.
•
RRC still has 397 existing permits in SW PA – Marcellus Wet Gas (Washington, Allegheny, Beaver)
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 16 Platform
•
Activity is mostly focused in WV.
•
Antero Resources (AR) has focused activity in Harrison and Doddridge counties, WV.
•
AR has 418 wells permitted for WV, but have to be drilled.
•
AR has completed 178 wells in WV wet gas region of the Marcellus.
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 17 Platform
•
Rice Energy, a recently publicly traded pure-play Appalachian Basin company, focuses assets in the Marcellus and the Utica.
•
Current drilling activity is focused in Washington and Greene counties, PA.
•
Rice currently has approximately 57 active permits mostly in Washington County.
•
The currently have 43 producing wells in the Wet Gas Marcellus
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 18 Platform
Strategic Insights Across The Energy Value Chain UPSTREAM | MIDSTREAM | PROCESSING | FUEL & TRANSPORT
1616 S. Voss Road | Suite 100 | Houston, TX | +1.713.260.6400
Bogotá | Brussels | Denver | Houston | London | Melbourne | Mexico City New Delhi | New York | San Diego | São Paulo | Singapore | Washington, DC © 2014 Hart Energy. All rights reserved.
19
•
Gulfport Energy currently operates approximately 147,350 net acres within the Utica Shale play.
•
Gulfport recently increased their acreage position in the play by 13,000 net acres.
•
During the first quarter of 2014, the company spud 9 wells and are currently running 7 rigs.
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 20 Platform
•
Chesapeake Energy has shifted focus to the northern dry gas area since 2008.
•
Bradford county is the main focus area followed by Susquehanna.
•
CHK has approximately 545 active wells in Bradford county and 104 in Sullivan county. Activity in Wyoming county has also been increasing.
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 21 Platform
•
Chesapeake Energy has focused on the southern wet gas region historically and is now shifting focus to northern dry gas area.
•
CHK has focused recent attention to Ohio and Brooke counties of WV.
•
In Brooke county, CHK has 27 permits and 48 permits in Ohio County.
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 22 Platform
•
Chesapeake has followed the industry push into the Utica beginning in 2010.
•
Ramp-up in activity was focused in Carroll county and is now pushing into Columbiana, Harrison, and Jefferson counties.
•
CHK has approximately 152 permitted wells in the Ohio Utica.
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 23 Platform
•
Southwestern Energy (SWN) remains focused in the northern dry gas region in Susquehanna and Bradford counties.
•
SWN’ has ramped up activity and is expected to continue this trend.
•
The company currently has approximately 116 active wells in Susquehanna and 59 wells in Bradford.
© 2014 Hart Energy. All rights reserved.
Check to see if this is net or gross acreages
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 24 Platform
•
Antero has moved into the Ohio Utica in 2010.
•
The company has focused on Noble and Monroe counties with 17 permitted wells in Noble and 2 in Monroe.
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 25 Platform
Appalachian Basin: Reservoirs, Rigs & Results — Who, What & Where © 2014 Hart Energy. All rights reserved.
1
Forward Looking Information This presentation includes certain forward looking information to help current and potential investors understand management’s assessment of our future plans and financial outlook, and our future prospects overall. Statements that are forward-looking are based on certain assumptions and on what we know and expect today and generally include words like anticipate, expect, believe, may, will, should, estimate or other similar words. Forward-looking statements do not guarantee future performance. Actual events and results could be significantly different because of assumptions, risks or uncertainties related to our business or events that happen after the date of this presentation. Our forward-looking information is based on the following key assumptions: inflation rates, commodity prices and capacity prices, timing of debt issuances and hedging, regulatory decisions and outcomes, foreign exchange rates, interest rates, tax rates, planned and unplanned outages and the use of our pipeline and energy assets, integrity and reliability of our assets, access to capital markets, anticipated construction costs, schedules and completion dates, acquisitions and divestitures.
Our forward looking information is subject to risks and uncertainties, including but not limited to our ability to successfully implement our strategic initiatives and whether they will yield the expected benefits, the operating performance of our pipeline and energy assets, economic and competitive conditions in North America and globally, the availability and price of energy commodities, regulatory decisions and outcomes, outcomes of legal proceedings, including arbitration, changes in the political environment, changes in environmental and other laws and regulations, construction and completion of capital projects, labor, equipment and material costs, access to capital markets, interest and foreign exchange rates, weather, cyber security and technological developments. You can read more about these risks and others in reports we have filed with Canadian securities regulators and the U.S. Securities and Exchange Commission (SEC) and available at www.RC.HartEnergy.com
© 2014 Hart Energy. All rights reserved.
2
OUTLINE APPALACHIAN BASIN ROLL UP • WELL COUNT/RIG COUNT • TYPE CURVES/EURs • PRODUCTION FORECAST
REGIONAL DEVEOPMENTS • • • • •
MARCELLUS DRY GAS (PA) MARCELLUS WET GAS (PA, WV) VERTICAL DRILLING (PA) UTICA (OH) UTICA (PA)
COMPANY HIGHLIGHTS • CHESAPEAKE ENERGY | RANGE RESOURCES • SOUTHWESTERN ENERGY | ANTERO RESOURCES • GULFPORT ENERGY | RICE DRILLING © 2014 Hart Energy. All rights reserved.
3
APPALACHIAN BASIN ROLL-UP
© 2014 Hart Energy. All rights reserved.
4
ROLL-UP: WELLS & RIGS Appalachian Basin: Rising Well & Rig Counts Expected
Trends • Wet gas acreage is attracting CAPEX, which is benefitting SW PA and WV. • Dry gas acreage development is moving east in PA. • Shallow vertical drilling is being conducted in the NW PA, utilizing cable rigs. • Utica drilling in PA is still in the exploratory phase with no urgency for further development. • Utica drilling in OH is expanding in counties south of Carroll, “entering the starting blocks.” Source: Hart Energy Research & Consulting’ s Oil & Gas Service Platform © 2014 Hart Energy. All rights reserved.
5
ROLL-UP: TYPE CURVES & EURs
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s 6 Workbench
ROLL-UP: PRODUCTION FORECAST
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’s North 7 American Shale Quarterly (1Q2014)
Regional Developments
© 2014 Hart Energy. All rights reserved.
8
REGIONAL DEVELOPMENTS DRY GAS (PA, WV, MD) The NE PA dry gas part of the play is moving further east to Susquehanna and Wyoming counties. Counties west of Susquehanna County – Tioga & Bradford – have seen a noticeable drop in activity. Garret & Allegany counties, MD have registered activity south and east of the Accident gas storage field. Preston County, WV has had no drilling activity since 2012. Source: Hart Energy Research & Consulting’ s Oil & Gas Service Platform © 2014 Hart Energy. All rights reserved.
9
REGIONAL DEVELOPMENTS (con’t) WET GAS (PA, WV) The SWPA and NW WV wet gas part of the play have seen activity ramp up as infrastructure off-take increases. In SWPA, companies are refocusing CAPEX in Washington and Greene counties. The wet gas part of the play is expanding northward. In WV, the play has moved from its far southern counties in 2005 to the NW border into the “WV neck” between PA and OH, post recession. Source: Hart Energy Research & Consulting’ s Oil & Gas Service Platform © 2014 Hart Energy. All rights reserved.
10
REGIONAL DEVELOPMENTS (con’t) NW PA (Vertical Drilling Area) Prior to the ramp in HZ drilling, high hydrocarbon prices support drilling in in naturally vertical fractured zones west of the Appalachians above the Marcellus profitable. HZ drilling displaced VT drilling in Washington & Greene counties. HZ drilling is moving northward displacing VT drilling in Westmoreland & Armstrong. Warren & McKean remain the VT drilling hotbed in PA. Source: Hart Energy Research & Consulting’ s Oil & Gas Service Platform © 2014 Hart Energy. All rights reserved.
11
REGIONAL DEVELOPMENTS (con’t)
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas 12 Service Platform
REGIONAL DEVELOPMENTS (con’t) UTICA - PA Drilling for the Utica in PA is mostly focused in Beaver, Lawrence & Mercer counties. The drilling is exploratory and not yet in delineation mode. These counties also have shallow vertical drilling locations that utilize cable rigs. Going forward, it will take years before Utica drilling in the PA takes off. Source: Hart Energy Research & Consulting’ s Oil & Gas Service Platform © 2014 Hart Energy. All rights reserved.
13
REGIONAL DEVELOPMENTS (con’t) UTICA - OH Carroll and Harrison counties continue to be the main focus of this play, albeit drilling is down slightly. The play is developing faster in counties south of the core: Belmont, Guernsey, & Monroe. Most of the Utica in Ohio has not been delineated and infrastructure off-take is still lacking. Although it is ramping up, the play is about to take off. Source: Hart Energy Research & Consulting’ s Oil & Gas Service Platform © 2014 Hart Energy. All rights reserved.
14
COMPANY HIGHLIGHTS
© 2014 Hart Energy. All rights reserved.
15
•
Range Resources has focused activity in the southern wet gas region within Washington county since the play’s inception.
•
RRC continues to ramp up activity in SWPA with approximately 561 producing wells.
•
RRC still has 397 existing permits in SW PA – Marcellus Wet Gas (Washington, Allegheny, Beaver)
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 16 Platform
•
Activity is mostly focused in WV.
•
Antero Resources (AR) has focused activity in Harrison and Doddridge counties, WV.
•
AR has 418 wells permitted for WV, but have to be drilled.
•
AR has completed 178 wells in WV wet gas region of the Marcellus.
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 17 Platform
•
Rice Energy, a recently publicly traded pure-play Appalachian Basin company, focuses assets in the Marcellus and the Utica.
•
Current drilling activity is focused in Washington and Greene counties, PA.
•
Rice currently has approximately 57 active permits mostly in Washington County.
•
The currently have 43 producing wells in the Wet Gas Marcellus
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 18 Platform
Strategic Insights Across The Energy Value Chain UPSTREAM | MIDSTREAM | PROCESSING | FUEL & TRANSPORT
1616 S. Voss Road | Suite 100 | Houston, TX | +1.713.260.6400
Bogotá | Brussels | Denver | Houston | London | Melbourne | Mexico City New Delhi | New York | San Diego | São Paulo | Singapore | Washington, DC © 2014 Hart Energy. All rights reserved.
19
•
Gulfport Energy currently operates approximately 147,350 net acres within the Utica Shale play.
•
Gulfport recently increased their acreage position in the play by 13,000 net acres.
•
During the first quarter of 2014, the company spud 9 wells and are currently running 7 rigs.
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 20 Platform
•
Chesapeake Energy has shifted focus to the northern dry gas area since 2008.
•
Bradford county is the main focus area followed by Susquehanna.
•
CHK has approximately 545 active wells in Bradford county and 104 in Sullivan county. Activity in Wyoming county has also been increasing.
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 21 Platform
•
Chesapeake Energy has focused on the southern wet gas region historically and is now shifting focus to northern dry gas area.
•
CHK has focused recent attention to Ohio and Brooke counties of WV.
•
In Brooke county, CHK has 27 permits and 48 permits in Ohio County.
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 22 Platform
•
Chesapeake has followed the industry push into the Utica beginning in 2010.
•
Ramp-up in activity was focused in Carroll county and is now pushing into Columbiana, Harrison, and Jefferson counties.
•
CHK has approximately 152 permitted wells in the Ohio Utica.
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 23 Platform
•
Southwestern Energy (SWN) remains focused in the northern dry gas region in Susquehanna and Bradford counties.
•
SWN’ has ramped up activity and is expected to continue this trend.
•
The company currently has approximately 116 active wells in Susquehanna and 59 wells in Bradford.
© 2014 Hart Energy. All rights reserved.
Check to see if this is net or gross acreages
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 24 Platform
•
Antero has moved into the Ohio Utica in 2010.
•
The company has focused on Noble and Monroe counties with 17 permitted wells in Noble and 2 in Monroe.
© 2014 Hart Energy. All rights reserved.
Source: Hart Energy Research & Consulting’ s Oil & Gas Service 25 Platform
