Statoil Sells Marcellus Holdings to EQT for $407 Million

by Duane Nichols on May 19, 2016

EQT Paying $407 Million For Acreage in Wetzel, Tyler Counties

From an Article by Casey Junkins, Wheeling Intelligencer, May 17, 2016

Pittsburgh-based EQT Corp. will pay Norwegian company Statoil $407 million to acquire 62,500 West Virginia Marcellus Shale acres in Wetzel, Tyler and Harrison counties.

The deal, with an average acre price of $6,512, also includes drilling rights on an estimated 53,000 undeveloped acres for the deeper Utica Shale. The acreage now produces about 50 million cubic feet of natural gas per day, while much of it is contiguous to EQT’s operational area.

According to the company’s 2016 operational forecast, EQT plans to drill 72 Marcellus wells with an average lateral length of 7,000 feet – and an overall capital expenditure plan of $1 billion – this year at a time when many producers are not planning nearly as much because of the challenging price environment.

In addition to the Marcellus wells, the company plans to drill five deep Utica wells with an average lateral length of 5,200 feet; and based on results, may drill up to an additional five wells. EQT owns approximately 400,000 net acres that the company believes to be prospective for the deeper Utica.

In the first three months of this year, EQT pumped nearly 180 billion cubic feet of natural gas, reflecting a 24 percent increase from the same period in 2015.

EQT is also majority owner in a joint venture of the proposed Mountain Valley Pipeline, which will transport natural gas southward from the MarkWest Energy Mobley complex in Wetzel County. Maintaining active Marcellus Shale drilling operations in Wetzel County, EQT ships its gas to the MarkWest Mobley facility so the dry methane can be separated from the natural gas liquids.

The new pipeline would allow EQT and other producers agreeing to use it to ship up to 2 billion cubic feet of natural gas per day from areas of northern West Virginia and southwestern Pennsylvania to southern Virginia.

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CERA Week March 7, 2017 at 8:52 pm

Statoil sees U.S. shale profitable within two years at $50 oil

By Ernest Scheyder, Reuters News Service (Houston), March 6, 2017

Norwegian oil producer Statoil ASA expects its U.S. shale operations to be profitable within two years at crude prices of $50 per barrel, an improvement helped by simplifying operations, technological improvements and cost cuts.

Torgrim Reitan, Statoil’s head of United States operations, said in an interview that the company’s push for the lower break-even price is largely due to internal improvements that should stick regardless of any price hikes from service providers.

“Our business clearly makes sense in a $50 (per barrel) environment,” Reitan said Monday on the sidelines of the CERAWeek conference, the world’s largest gathering of energy executives. “It is remarkable to see how the whole industry has responded positively to the new price reality.”

Statoil, which produces shale oil and natural gas in North Dakota’s Bakken, the Eagle Ford of Texas and the Marcellus of Pennsylvania, moved its U.S. operational staff to Austin, Texas, last year, a step Reitan said has helped push down costs.

The company’s U.S. shale oil break-even price stood at $66 per barrel at the end of 2016, a 35 percent improvement from the prior year. That should drop to $50 by 2018, he said.

“That is clearly coming from us taking away complexity from development,” he said, adding Statoil’s process to approve new projects has become far more stringent since oil prices started to plunge two years ago.

The moves come as Statoil sees U.S. shale as one of three regions vital to its long-term growth potential, alongside Norway and Brazilian offshore.

U.S. shale “clearly makes sense in the current environment,” Reitan said. “It has a lot to offer moving forward.”

Statoil expects service costs in the United States to rise 20 percent “within a few years,” Reitan said, though he said he didn’t expect any increases to hinder its 2018 break-even goal.

The company has spoken little on OPEC policy and doesn’t forecast what the cartel could do at its next meeting in May, Reitan said.

“We need to be prepared for volatility, no matter what,” he said.

Reitan declined to comment on whether Statoil was interested in acquiring acreage in the Permian, the one bright spot in the U.S. shale industry today due in part to its relatively low cost of operations.

In the Bakken, one of the company’s largest areas of operations, Statoil plans to add a drilling rig this year and “slowly grow” output through the end of the decade, Reitan said.

Statoil supported the development of the controversial Dakota Access Pipeline, seeing pipe as the safest way to transport crude, even though the company did not contract for transport on the line, Reitan said.



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