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Ohio Utica permits drop by one-third as focus stays on 3 dry gas counties

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Ohio Utica permits drop by one-third as focus stays on 3 dry gas counties

Permits for Utica Shale wells in Ohio in September dropped 37% compared to 2017 with drillers keeping their focus on the three dry gas counties along the state's Ohio River border with West Virginia.

Jefferson, Belmont and Monroe counties accounted for 27 of the 29 shale permits issued in Ohio in September, according to the Ohio Department of Natural Resources database Oct. 9.

The decline from 46 permits in September 2017 can be attributed to the absence of Gulfport Energy Corp., the state's second-leading producer, from the permit window. In September 2017, Gulfport pulled 10 permits, compared to none this September, according to the database. Gulfport has a backlog of drilled-but-uncompleted Utica wells and makes no secret of its plans to milk Ohio's cash flow positive operations to spend on new wells in Oklahoma's SCOOP play in the Anadarko Basin.

Also missing from the permit window were major producers such as Chesapeake Energy Corp., CNX Resources Corp. and Hess Corp., who have sold off their Utica holdings to Ascent Resources and other private-equity efforts.

Ascent pulled the most permits, 14, split between Jefferson and Belmont counties. Ascent is now the state's leading gas producer with 1.5 Bcf/d of production, according to the latest second-quarter figures from the agency.

Soon-to-merge Eclipse Resources Corp. and Blue Ridge Mountain Resources Inc. pulled seven permits combined in Monroe County. Eclipse bought Blue Ridge, the successor company to bankrupt Magnum Hunter Resources Inc., in August, adding more Utica Shale acreage to its Appalachian portfolio.

Taking over Blue Ridge's midstream contracts increases Eclipse's access to Midwest markets, Stifel Nicolaus & Co. shale oil and gas analyst Jane Trotsenko told her clients Aug. 30 after the merger was announced. "About 45% of gas sold by [Blue Ridge] during 2Q18 was sold via [Rockies Express Pipeline LLC] into the Lebanon and Shelby hubs. The remaining gas was sold in-basin at TETCO M2. The current [Blue Ridge] firm transportation portfolio consists of 50 MMBtu/d on [Equitrans Midstream Corp.] to local markets and 50 MMBtu/d on REX to the Midwest. The company will add another 50 MMBtu/d on REX in 4Q18. We estimate the new company will have about 30% exposure to TCO Pool, 25% to Midwest/Dawn, 15% to the Gulf Coast and the remaining 30% of natural gas production will be sold in-basin."

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