Southwestern Energy Reaches Utica Shale in West Virginia
WHEELING –Despite reporting more than $2 billion in losses for 2016, Southwestern Energy Co. is so active that company officials sometimes hire off-duty West Virginia State Police troopers to navigate the rugged Northern Panhandle terrain when moving rigs between drilling sites.
Company officials believe Southwestern — which in 2014 paid Chesapeake Energy $5 billion to acquire its West Virginia assets — remains in a strong position as natural gas prices slowly recover, while the firm now has a successful Utica Shale operation in Marshall County.
Southwestern now controls virtually all Marcellus and Utica shale drilling and fracking in Ohio and Brooke counties, along with substantial acreage in both Marshall and Wetzel counties.
The Houston, Texas-based firm reported a $2.4 billion loss on drilling and fracking for 2016, but this is actually a significant improvement because its 2015 loss was $7.1 billion.
In 2015, Southwestern President and CEO Bill Way said the company planned to invest $24 billion to produce oil and natural gas in West Virginia over the next two decades. Company officials continue to renew the five-year leases they acquired from Chesapeake to an additional five-year period.
In the 2016 earnings statement this week, Way called the company’s moves during the year “bold and decisive.”
“The progress made in improving our financial strength and the operational excellence that facilitated our mid-year resumption of drilling and completion activities has the company positioned well to create long-term value for our shareholders,” he said.
Southwestern is one of the many oil and natural gas drillers increasing activity again as global prices slowly recover.
According to oilfield services giant Baker Hughes, the number of active rigs in West Virginia is now 10, which is up from just seven in August.
Among the rigs in use is the one Southwestern recently moved along Doolin Run Road in Wetzel County.
“We hired off-duty state troopers to assist with traffic matters, which significantly reduced the travel time and interruption to the normal flow of traffic. Southwestern Energy is committed to reducing the time and amount of equipment on the roads when we can to minimize the impact to residents,” company spokeswoman Maribeth Anderson said.
Southwestern is now producing from the Utica Shale in Marshall County, which is deeper in the earth than the Marcellus formation, so it requires more time, pipe, sand, water and chemicals. However, the company did cut overall production, due to low prices, in 2016 to 875 billion cubic feet, down from 976 Bcf in 2015.
The company that sold these assets to Southwestern, Chesapeake, continues its operations in Ohio. The Oklahoma City-based fracker posted an overall loss of $3.14 billion in 2016.
“During 2016, we made significant progress in improving our capital efficiency, decreasing cash costs and future midstream commitments while improving our liquidity and leverage profile, which resulted in a much stronger foundation for Chesapeake going forward,” Chesapeake CEO Doug Lawler said. “Our increase in activity over 2016 levels positions Chesapeake to deliver increased profitability and long-term value for our shareholders.”