Page 15 - NorthAmOil Week 31

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Range to exit Louisiana with sale to Castleton

LOUISIANA SHALE gas driller Range Resources has struck quarter of 2019, and put the properties up for
a deal to sell its Terryville gas assets in North- sale in February this year.
ern Louisiana to Castleton Resources – a joint According to Range’s website, the Northern
venture between Castleton Commodities Inter- Louisiana acreage contains gas potential in the
national and Tokyo Gas – for $245mn. The multiple zones, including Upper Red and Lower
completion of the deal, which is scheduled for Red in the overpressured Lower Cotton Valley
mid-August, will mark Range’s exit from the formation. But this formation is not as prolific as
region. the Haynesville shale gas play, for which Louisi-
Range acquired the assets in 2016 through ana is better known.
the takeover of tight gas producer Memorial Range said in its second-quarter results this
Resources in an all-stock transaction valued at week that the assets are producing roughly
around $4.2bn. Under the deal with Castleton, 160mn cubic feet (4.5mn cubic metres) per day
Range stands to receive up to an additional of gas equivalent, adding that it did not have any
$90mn in contingent payments that depend on drilling and completion activity planned for the
future commodity prices, bringing the potential region this year.
total value to $335mn. Once the acquisition is complete, Castleton
Nonetheless, this is still a fraction of the price will own over 315,000 net acres (1,275 square
at which Range acquired the assets, illustrating km) of leasehold in East Texas and Northern
how much value has been wiped out from oil Louisiana with total net production of nearly
and gas properties. Indeed, the company wrote 500 mmcf (14.2 mcm) per day of gas equivalent.
off $2.3bn in proven and unproven reserves When the acquisition closes, Tokyo Gas will
from the Louisiana assets, which comprise about also increase its stake in Castleton to around 70%
124,000 acres (502 square km), in the fourth from 46% currently.™

PERFORMANCE

Weekly rig count flat after

20 weeks of declines

US THE total US rig count stayed flat in the week
up to July 31, according to the latest data from
oilfield services firm Baker Hughes, having
declined for the previous 20 weeks. The loss of
one active oil rig was offset by the addition of a
gas rig. The rate of rig count declines has slowed
in recent weeks – indeed, in the week up to July
24, the oil rig count rose by one but a decline of
three active gas rigs more than cancelled out this
slight increase. (See NorthAmOil Week 30)
Now, the declines seem to be slowing further
still, but while market conditions are improv- The rig count is considered to be a major
ing, producers may be hesitant to ramp up new indication of near-term production. It typically
drilling too quickly. A period of relatively flat rig lags oil price trends by up to a quarter, and given
counts could thus be more likely than an imme- that US oil prices have held relatively steady
diate reversal of the previous decline trend. And above $40 per barrel since the start of July, it is
it is also worth noting that the total number of not surprising that the rig count also appears to
active rigs – 251 for the second week straight – is be stabilising.
still a record low. July marked the smallest rig count decline
In the week up to July 31, the oil rig count since February, according to Baker Hughes.
crept up in the Cana Woodford play and Wil- Meanwhile, energy data firm Enverus, which
liston Basin, but this was cancelled out by slight compiles its own rig count statistics, has said the
declines in other regions, including the Permian number of rigs actually rose by 2.5% in the past
Basin and Eagle Ford shale. The total weekly month. However, most producers are currently
count can be broken down into 180 oil-focused focused on bringing back output they previously
rigs and 69 that are targeting natural gas. curtailed rather than on new drilling.™

Week 31 06•August•2020 www. NEWSBASE .com P15