TheTimesTribune.com | Natural Gas Drilling Blog: 10/01/2008

Thursday, October 30, 2008

A committee, Cabot earnings

The Pennsylvania Oil and Gas Association and the Independent Oil and Gas Association of Pennsylvania have formed a joint Marcellus Shale Committee to represent the natural gas industry as it develops the Marcellus play.

Other Subject: Cabot Oil and Gas Corp. has reported its 3rd quarter earnings. A replay of a conference call that discussed the earning's report will be available through Saturday. The replay is accessible at, 800-642-1687 or, passcode 66519033.

At the end of the 3rd quarter, Cabot reported a net income of $67 million. Last year, the company reported a third-quarter net income of $35.5 million.

Cash flow from operations were at $148.3 million, compared with $86.8 million in last year's third quarter.
Discretionary cash flow totaled $161.0 million versus $121.7 million in last year's third quarter.

Below are excerpts from a press release issued by Cabot about its 2009 operations:

"We have always exercised significant discipline in our capital spending, regardless of general market conditions," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "Over the last three years our investments have been around 120 percent of cash flow on average, working off an extremely low leverage ratio, and our 2008 organic effort will be consistent with our past discipline."

Marcellus Shale

Cabot's Marcellus play is focused in northeast Pennsylvania. During the second quarter call, the Company announced its first Marcellus production from a vertical well. Currently, Cabot has five producing wells (all vertical) with a combined average daily volume of 4-5 Mmcf per day. "Our goal was to be producing between 6-9 Mmcf per day by year-end. With the recent success of our wells, I now anticipate exceeding those early targets," commented Dinges.

The first horizontal well was completed with only three of six planned fracs. The well will be flowing to sales shortly. The Company plans to test the first three fracs and then proceed with the remaining three fracs in the next several weeks. "Right now we have two more horizontal wells cased and waiting for completion, along with five vertical wells in various stages of completion. We anticipate having all these wells flowing to sales by year- end," added Dinges.

The capital plan for 2009 is $600 million. "Much of this investment will be spent in East Texas and Pennsylvania," said Dinges. "Only nine percent of our planned expenditures is allocated to our other plays in the Company."

Dinges added, "We plan to allocate over 90 percent of our 2009 capital to the Marcellus and East Texas. In each area, we have received and continue to gather significant new data points. We have been delayed somewhat in our efforts with regulatory issues in Pennsylvania and limited quantities of frac material in East Texas. However, with that being said, we are very excited about the information we have gathered in each area and look forward to receiving test information from key wells that is imminent."

Tuesday, October 28, 2008

Citrus Energy

Profile of Citrus Energy from information gathered from company's Web site

Company Web site: http://www.citrusenergy.com

The company is private, not publicly traded. It has signed natural gas leases with the Wyoming County Landowners Group.

According to the company, operations in the Marcellus Shale will lead to an office opening in Pennsylvania. The company has offices in Castle Rock, Colo. and Plano, Tex.

Company owners are: Lance Peterson and David Oberbrockling. Oberbrockling is an engineer and Peterson, a geological engineer.

The company has operations in Oklahoma, Texas, Washington and Pennsylvania.

Oklahoma: The company says it has drilled and completed several wells.

Texas: The company says it has a significant presence in the Barnett Shale, holding in excess of 20,000 acres.

Washington: The company says it has acquired or has options to acquire 70,000 acres in the Vader Coal Bed Methane Project. The company says it expects to begin development of the project late in 2008.

Pennsylvania: The company says it now has leasing operations and has formed a partnership with a drilling company to drill.

The company says its partners include: Oklaco Holding, a geologic/land company; Clearwater Enterprises, a gas marketing and consulting company; and, Boom Drilling.

Tuesday, October 21, 2008

Times-Shamrock natural gas drilling story links

Friday, October 17, 2008

Susquehanna River Basin Commission upcoming meeting

SUSQUEHANNA RIVER BASIN COMMISSION

SRBC TO HOLD HEARINGS OCTOBER 21 AND 22 ON PROPOSED CHANGES
TO STREAMLINE REVIEW OF NATURAL GAS WELL DEVELOPMENT APPLICATIONS

WHAT: The Susquehanna River Basin Commission (SRBC) is holding two public hearings to receive comment on proposed regulatory revisions that will further protect the basin’s water resources and streamline the review of consumptive water uses by the natural gas industry. The proposed regulatory changes are available on SRBC’s web site www.srbc.net/programs/projreviewmarcellus.htm.

Hearing I:
Tuesday, October 21, 2008 7:00 p.m.

Where:
Lycoming College
Academic Center
Lecture Hall Room D001
Mulberry Street
Williamsport, PA

Hearing Chaired By:
Cathleen Curran Myers
SRBC Alt. PA Commissioner

Hearing II
Wednesday, October 22, 2008 7:00 p.m.

Binghamton University SUNY
Lecture Hall Complex
Lecture Hall 1
Route 434 (Vestal Parkway East)
Binghamton, N.Y.

Hearing Chaired By:
Kenneth Lynch
SRBC Alt. NY Commissioner

DIRECTIONS:
Lycoming College
http://www.lycoming.edu/admissions/OurCampus/CampusMap.html

Binghamton University SUNY
http://www2.binghamton.edu/about/visiting-campus/maps-and-directions.html

Tuesday, October 14, 2008

Chesapeake Energy

Here is information provided by Chesapeake Energy in an Oct. 10 press release. The company is planning to discuss the topics below at its 2008 Investor and Analyst Meeting on Oct. 15 and 16.

The investor and analyst meeting is scheduled to be Web cast live from 2:30-5:45 p.m. on Oct. 15. On Oct. 16, the meeting will be on the Web from 8:30 a.m. to 1 p.m.

Replay of the meeting will happen for 30 days on the Web. The Web cast can be accessed by going to Chesapeake's Web site and selecting the "News & Events" section.

A slide show presentation is also available on the company's Web site.

============================
A) Financial Topics --

a. Sale of Leasehold and Production Properties:

The company plans to generate cases proceeds of $2.5- $3 billion in the fourth quarter from the sale of: a 25 percent interest in the Marcellus Shale; leasehold and associated production in three other areas; and a fourth volumetric production payment.

"Raising additional funds from asset sales in this environment will provide the company with more financial flexibility and the ability to either reduce debt more than previously planned or to potentially repurchase common stock," Chesapeake states in the press release.

b. Capital Spending:

In response to lower natural gas prices, "the company intends to further reduce its capital expenditures budget by approximately $1.5 billion in 2009 and 2010 through a combination of reduced drilling and lower leasehold expenditures," the company states.

B) Operational Highlights

As of Sept. 30, the company had estimated proven reserves of 12.1 trillion cubic feet of natural gas equivalent.
Chesapeake now uses 145 drilling rigs. By year's end, the company expects to operate 135-140 rigs, "and expects to keep its rig count flat to down in 2009 and 2010," the company states.

Side note, as of 12:30 p.m., Chesapeake's stock was 2.07 higher, a gain of 10.25 percent.

The company's 52-week range is, 11.99 - 74.00.

On Oct. 13, Howard Weil downgraded Chesapeake's stock from Market Outperform to Market Perform.

Jefferies & Co. rates Chesapeake's stock at a buy rating and with a $54 price target.

Friday, October 10, 2008

New publication

Penn State has developed a new publication on natural gas leasing. The publication is titled, "Natural Gas Exploration: A Landowner's Guide to Leasing Land in Pennsylvania."

The guide describes lease components, including language, length, payments, surface/subsurface rights, storage, pipelines and parties involved.

The guide also contains a question/answer section.

At http://naturalgaslease.pbwiki.com/Publications, Penn State also provides a sample lease courtesy of the National Association of Royalty Owners.

According to the NARO Web site, the organization's mission is to, "Encourage and promote exploration and production of minerals in the United States while preserving, protecting, advancing and representing the interests and rights of mineral and royalty owners through education, advocacy and assistance to our members, to NARO chapter organizations, to government bodies and to the public."

NARO is located at, http://www.naro-us.org/index.cfm?pageID=1&rnm=0.689520675843

Wednesday, October 8, 2008

Natural gas permits issued in 2008

Natural gas permits issued in 2008 by county according to DEP

Allegheny - 2

Armstrong – 380

Bradford – 22

Butler – 46

Cambria – 25

Centre – 35

Clarion – 225

Clearfield – 178

Clinton – 31

Crawford – 48

Elk - 132

Erie – 20

Fayette – 189

Forest – 8

Greene – 250

Huntingdon – 1

India – 363

Jefferson – 326

Lycoming – 51

McKean – 33

Mercer – 49

Potter – 46

Susquehanna – 44

Tioga – 13

Venango – 69

Warren – 20

Washington – 257

Wayne – 2

Westmoreland – 433

Environmental impact forum Oct. 16.

On Oct. 16:

Forum on environmental impact of natural gas drilling follows viewing of film, ‘Land Out of Time,’ that discusses the impact of gas drilling on the Rocky Mountains, at 7 p.m., at the Montrose Theater in Susquehanna County. Donation $2-4. Sponsored by Citizen's Watch and the Green Party of Pennsylvania.

Tuesday, October 7, 2008

Cabot Oil and Gas Corp

Cabot is based in Houston. As of June 30, the company had 23.2 billion cubic feet equivalent in natural gas and oil production in the Gulf Coast, West, East and Canada.

Canadian operations are based in Calgary; Western, Denver; Gulf Coast, Houston; East, Charleston, W.Va.

The company was founded in 1989. Company executives and pay: Dan Dinges, chairman and chief executive officer, $1.19 million; Scott Schroeder, chief financial officer and vice president, $595,000; Michael Walen, chief operating officer and senior vice president, $760,000.

Cabot total assest as of June 30 in thousands was $2,718,432
Cabot net income as of June 30 in thousands was $54,625
Cabot net earning per share - basic as of June 30 was 55 cents

On the stock market, Cabot around 12:30 p.m. today traded between 27.30 and 29.30. The company's 52-week high is 72.92 and low, 24.07. That's a 66.991 percent difference between high and low. Year to date, Cabot's stock is down 30.25 percent.

Cabot has a market cap of $2.84 billion.

On Oct. 2, Cabot provided a presentation during a "Merrill Lynch Global Energy and Small Cap Conference."

The company reported that by year's end it will have 137,000 plus acres in the Marcellus Shale and 135,000 plus acres in the Haynesville Shale. The Haynesville Shale is located in parts of Texas, Louisiania and Arkansas. The Shales are described by Cabot as its core areas.

Update on Eastern Region (includes Marcellus Shale, Huron Shale and Tight Sands):
* 778 billion cubic feet equivalent, 48 percent of company
* 99 percent natural gas
* 32-year reserve life
* 3,178 gross wells
* 3,000 miles of pipeline
* Resource potential --- 4.5 to 6 trillion cubic feet equivalent for Marcellus resource

Update on Marcellus Shale:
* 4 rigs in operation
* 14 wells drilled
* 6 wells producing
* In 2009, expect to have 60-80 wells. Now 30

Total company resource: 10.5 to 16 trillion cubic feet equivalent

Linke to presentation: http://www.cabotog.com/pdf/Merrill_Lynch_08.pdf

Note: Information will be provided on other natural gas companies