CNX Resources has mentioned in the past few earnings calls that it sees great potential in the Deep Utica, expecting its production there to increase greatly in the coming years as Marcellus levels off. CEO Alan Shepard made the timeline of the company’s plans explicit in last week’s earnings call. CNX still has undeveloped Marcellus acreage in Southwest Pennsylvania that can be brought to market, and drilling in that region is “the most economic thing to do” for now. However, that acreage will be completely developed in the next “four to five years,” after which “the program shifts over to Central Pennsylvania Utica predominately” in the 2030s.
The company also discussed projections for in-basin gas demand in the overall Appalachian region, where it is “extremely bullish” long-term. However, contrasting with regional giant EQT, Shepard was reticent to put a number on the growth, stating “that there is a lot of uncertainty on the ultimate end-users” and that the expansion could be 2 Bcf/d or 20 Bcf/d. The company confirmed that they have been in talks to sell gas to long-term to specific end-users, but they will only sign up if they get a premium for fixed delivery. CNX views their role in the market as “maintenance of production” and will only act to grow production if the long-term forward strip encourages it. So despite their stated bullishness, the market will need to get more bullish before the company reacts.
