Supermajor ExxonMobil Corp., which controls a huge portfolio of unconventional oil, gas and liquids projects across North America, on Thursday disclosed that it has increased its leasehold in the Ohio portion of the promising Utica Shale.
Investor relations chief David Rosenthal helmed a conference call to discuss the company's third quarter earnings with investors and analysts. The Irving, TX-based producer reported double-digit profit gains in the latest quarter of $10.3 billion ($2.13/share), a 41% jump from year-ago earnings of $7.35 billion ($1.44).
During 3Q2011 ExxonMobil averaged 64-65 operating rigs in the U.S. onshore, Rosenthal said. Most of the rigs have been optimized in liquids-rich plays and the company is "totally flat on dry gas areas. In some new plays we're in, we're anxious to ramp-up drilling activity and in doing so, as expected, we'll be optimizing the rig count toward liquids-rich plays and other things we are working on."
The secretive ExxonMobil also increased its stake in the promising Utica Shale during the quarter, he disclosed. The company first gained entry to the play through its acquisition in early June of two related producers that were operating in the southwestern corner of Pennsylvania (see Shale Daily, June 10). The purchase of Phillips Resources Inc. and TWP Inc., both based in Warrendale, PA, added about 317,000 net acres to ExxonMobil's Marcellus portfolio, which at the time gave the supermajor an estimated 700,000 net acres in the play.
"Utica stems from our recently completed acquisition of Phillips, which provided incremental upside from the Marcellus," Rosenthal explained. In addition to the Marcellus Shale acreage, the Phillips transactions gave the company around 45,000 net acres in the Utica Shale. (The Phillips transaction included prospective property in Ohio, Michigan and West Virginia.) Since June, ExxonMobil has increased its Ohio leasehold to "over 75,000 net acres. We anticipate first Utica wells in early 2012," said Rosenthal.
He did not disclose who sold the additional leasehold to ExxonMobil. However, last month the company confirmed that landowners in Belmont County, OH, which is on the Pennsylvania border, were signing leases with subsidiary XTO Energy Inc. (see Shale Daily, Sept. 26). Belmont County primarily is Marcellus Shale acreage, surrounded by Utica and Marcellus targets, according to the Ohio Department of Natural Resources.
ExxonMobil also has stepped up liquids-rich production in the Woodford and Arkoma shales, and output continues to built at the Bakken Shale as well, Rosenthal said. The company to date this year has drilled 38 wells in the Bakken with 18 completed in the latest quarter. In addition the company is securing a diverse portfolio of unconventional plays outside the United States, including new plays with liquids potential in Germany and Argentina, he said. "We are in early stages on several new tight oil opportunities."
In addition the producer continues to work closely with Russia's state-owned oil company OAO Rosneft to complete some joint partnership agreements worldwide, including plans to develop projects in the deepwater GOM and in the U.S. onshore, said Rosenthal. The strategic partnership agreement was unveiled at the end of August (see Shale Daily, Aug. 31). The companies agreed to share technology, as well as jointly explore and develop projects in the United States and the GOM, as well as in Russia and other countries around the world.
Rosenthal was asked if "asset swaps" with Rosneft in North America had been finalized.
"We are working very closely with Rosneft" and "work is progressing on schedule," he said. "I can say, in particular on physical terms, that the Russian government recognizes the need for improvement in the offshore. We are working with them to define how that might end up at the end of the day. I can't give a specific timeframe other than to say that work is progressing.
"Second, I wouldn't refer to it as 'asset swaps,'" he said. "A better way to portray it is that Rosneft will be given the opportunity to participate in various properties in the United States. For example, in the deepwater Gulf of Mexico, they will have the opportunity to farm-in in 100%-owned blocks. We are looking at those opportunities."
Rosneft "also may take an interest in unconventional resources in the United States and we're looking at that as well and what those opportunities might be...There's also the potential for cooperation and joint partnerships overseas but those have yet to be finalized."
ExxonMobil is "looking forward to multiple joint ventures," which Rosenthal said would "strengthen the relationship between the two companies and provide valuable opportunities for staff...A number of things are going on...It's early days but things are on schedule."
ExxonMobil's exploration and production earnings rose 54% in the latest period, partly offset by a production decline of 4%. Liquids production totaled 2.25 million b/d, down 172,000 b/d year/year (y/y). Increased production in Iraq, Qatar and Russia "was more than offset by field decline," the producer said.
In the United States ExxonMobil produced 3.917 Bcf/d during the quarter, up from 3.726 Bcf/d in 3Q2010. Canadian and South American gas output dropped y/y to 381 MMcf/d from 550 MMcf/d. Global gas output was 12.2 Bcf/d, nearly flat from a year earlier. Domestic production of crude oil and natural gas liquids was 405,000 b/d net, down from 430,000 boe/d net in the year-ago period. Worldwide oil and gas production rose slightly y/y to 4.28 million boe/d from 4.45 million boe/d. Net production of crude oil and natural gas liquids worldwide totaled 2.25 million b/d.