CNX Buys Appalachia Gas Acreage in Pennsylvania

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Among the largest natural gas companies in the United States, CNX Resources Corporation (NYSE:CNX) (Canonsburg, Pennsylvania) said it spent about a half-billion dollars to acquire some 36,000 net acres in the Appalachia Shale Basin.

Apex Energy II gets around $505 million for acreage that CNX said only adds to its footprint in the largest inland natural gas producer in the country.

"It underscores our confidence in the stacked pay development opportunities that have been unlocked from pioneering the deep Utica in this region," CNX President and Chief Executive Officer Nick Deiuliis said in a Thursday statement.

Two basins--Marcellus and Utica--compromise the broader Appalachia Basin that sits under much of West Virginia, Pennsylvania and New York. The acreage acquired by CNX sits entirely in Pennsylvania and includes 8,600 acres of undeveloped acreage in the Utica and another 12,600 undeveloped acres in the Marcellus.

CNX during the third quarter reported total average production of 1.46 billion cubic feet-equivalent of natural gas per day, a decline of about 0.7% from the same period last year. The company said it expects the acreage acquired from Apex II will add between 180 million and 190 million cubic feet-equivalent of natural gas per day to its overall production.

The company posted $65 million in revenue over the period, compared with a loss of around $18 million during the third quarter of 2023.

The deal follows the $900 million acquisition in the Eagle Ford play from Crescent Energy (NYSE:CRGY) (Houston, Texas). The company tied the knot this year with SilverBow resources, which built a portfolio of around 250,000 net acres in the basin in Texas. For more on that transaction, see May 16, 2024, article - Crescent Takes Eagle Ford Acreage with SilverBow Acquisition.

The Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, expects natural gas production to increase 1% from this year's average to reach 114 billion cubic feet per day (Bcf/d) in 2025. Much of that growth stems from the expected 5% increase in gas production from the Eagle Ford.

Declines, meanwhile, are expected in the Appalachia Basin. The EIA reported the reservoir yielded 35.9 Bcf/d in 2023, though that level should decline to 35.2 Bcf/d by next year.

The EIA explained that production in the Appalachia Basin is driven largely by natural gas prices, which hit a record low in early 2024 and remained sluggish through much of the year. By contrast, the natural gas in the Eagle Ford is associated with crude oil and is driven by actual crude oil production more so than market factors.

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