ENERGY FIRST Episode 9- Jon McEvers, Senior VP of Operations at Antero

Yeah, thank you, ladies. I feel a little casual this morning, though. You ladies are dressed fantastic. I worked a full day in the office in Denver yesterday and flew out, and I ended about midnight. Early morning, just running around Pittsburgh a little bit today in the field, so dressed a little more casually than you ladies. But we have it for you.

Yeah, no. Thanks for having me. If you need me to work the Kevin Engel angle, I can certainly reach out to him. And you too, yeah.

Sure, sure. Thank you. I'm at Antero Resources, Senior Vice President of Operations. I've been there about nine years, going on 10 years. Fantastic organization, great group. Very specific to this area—West Virginia is kind of the main operating area. We do operate in Ohio also, nothing in the state of Pennsylvania. Focused on developing unconventional natural gas, the Marcellus and Utica Shale specifically. So I oversee operations, drilling, completions, permitting, civil, regulatory, and a bit of the data analytics side too. So a great group of people that I get to work with every day. As far as how I got here, prior to Antero, probably 2007, 2008, I worked for a small consulting company really focused on developing the Bakken in North Dakota early. So 2003, 2004, I was working the Bakken Shale in Richland County, Montana—that was kind of the original Bakken, 20 years ago. Baker, Montana. Baker had a horizontal Red River water flood; that's what you think of with Baker, Montana. When the Bakken came over to North Dakota, Mountrail County specifically, EOG cracking that nut probably 2006, 2007, so in 2008 I jumped in on the consulting side working for small operators doing extended reach drilling and completions.

Both. I would work in the office in Denver or Billings, wherever clients needed my help, work in designs and development with them. And then I had probably 25 to 30 consultants sitting on rigs and frac crews in the fields. I would be in the field helping to execute the strategy we put in place. So it was really unique—I got to see both sides: the business side, the planning and development, and then the overall execution side, boots on the ground in the field. And then finding talented people to work with—overall, at Antero we call them AORs, or onsite reps. Being able to find those individuals. I did that for about eight or nine years, strictly working fairly new development in Colorado and up in Wyoming, but mainly the focus was the Bakken in North Dakota. Then in 2013, I kind of saw I wanted to change, get more involved on the corporate side—get more involved in a start-to-finish development, seeing the full development of a well from permitting to production. I made the decision to jump to Antero, which was certainly not in my wheelhouse working oil plays, but I had an interest in natural gas and seeing where that future development was going to go. So it was a bit of a gamble on my part, moving away from liquids because in 2013, oil was still strong and was still king, and natural gas was just the stepchild. And it's far away from home and everything.

That's a good question. The CEO, CFO, our senior leadership is all in Denver. At that time, for the last 15, 20 years, they've really focused on their team and their asset development. As a group, the organization wanted to stay in Denver. And now it's a little bit different as far as talent, but at one time it was difficult to find talent since 2006, 2007, 2008, 2009, 2010. You could attract talent like engineers and geologists to move to Denver versus, let's say, Pittsburgh.

Just taking a step back there, Pittsburgh is a fantastic city, but 15 years ago that wasn't necessarily the place that people thought of to move to for oil and gas. Of course, now it's much different; now Pittsburgh acquisition was a challenge. So that was certainly part of it. With your comment on how we're able to make that seamless—whether you talk to a VP in Denver or a superintendent in West Virginia, the message is very streamlined, very similar. That's a lot of communication. COVID probably solidified our communication as a company, meaning it forced us to work remote. We're in Denver with all the staff in West Virginia; you're always remote, you just physically can't be there as much as you want to be. But when COVID happened and everything went to WebEx or Teams—for Antero we chose WebEx, a great platform for communicating—it really formalized that we all need to get on the phone eight times a day, have these meetings, be in front of each other and communicate so we can all hear the same message instead of just one person picking up a phone and talking to another. It was everyone on the phone because you're working remote. It was a bit of a challenge initially, it's been much better now. But you have to turn your camera on if you're going to be working remote. I want to see your face, see your mannerisms because it's a challenge. Are you in your jammies?

No. What I will say is, it was a humbling experience for me, and I've done a lot of WebExes and things like that. I'll tell you quickly: I did the worst presentation in my entire life for Dominion. They changed the platform on me like 10 minutes before and said, 'Hey, we want to use this internal one,' and I wasn't familiar with it. I couldn't move between screens, I kept hitting mute, I said the F word like three times. I had 19 engineers on this call, and I was like, 'This is the worst presentation of my entire life. At least they will not forget Jen.' So I hang up the phone, I call the guy that facilitated it, I'm practically in tears, I'm like, 'I'm so sorry.' He's like, 'It's absolutely fine.' So we go back after COVID, and I actually replicated that in their offices. Every single person remembered me. They were like, 'You're that girl.' I'm like, 'Yeah, yeah, I am.' But I also think that going through that whole process really humanized us because you were seeing people in their homes, kids running around in the back, dogs barking. I had peacocks calling in the back—people would be like, 'What is that, Jen?' I'm like, 'It's just the peacocks. It sounds like a woman screaming, I'm sorry.' But you really got to know your coworkers at a different level going through that.

Yeah. And then what I worked on—I continued to travel in 2020, 2021, and 2022—really worked on pulling the teams together. Certainly not in the office in 2020, but in 2021 we were getting back in the office already. But I tried to, whether it was sitting down for a supper or somehow bring everyone to socialize. Yes, you're on camera together every day, you're seeing a 2D version of people. But then let's fly out here, pull everyone together once a month or once every two months, and really make sure we have that connection with each other because mental health also matters. People tend to take that for granted, that in-person connection. There's nothing more valuable than being able to sit with someone, visit with them, see their mannerisms, how they're responding to your message, how you're responding to their message. Overall communication can be taken for granted, and that's something I certainly value and have been able to push down—or I say 'push down,' but basically to mentor. Well, I say 'push' because working with engineers, they're not always the most social. So yeah, thinking about that communication strategy, the value in it, and trying to instill that with the team. That's just one arm or one leg of what we're doing and how we're doing it.

Yeah, I grew up in North Dakota. That means I'm certainly close to the land. I didn't grow up on the west side, which is the oil and gas side—Williston, Minot, Watford City. I grew up on the east side, called the Red River Valley—that's the agricultural side. So I say close to the ground, always appreciating our natural resources. Grandparents were farmers. My mom and dad had opportunities to farm, they chose not to, but I grew up with grandparents on each side farming, so I enjoyed that. I got my civil engineering degree from the University of North Dakota—not a petroleum engineering degree, but civil from the School of Mines at University of North Dakota.

Only 45 miles. Where I grew up is about an hour and a half north of Fargo—which people are much more familiar with—or about an hour and a half south of Winnipeg. Even though I've been in Denver for almost 20 years, most people think I'm from Canada, not American.

That's a good question. I would say getting a civil engineering degree, or any engineering degree, coming out of school shows that you have the commitment to stick to a very hard, challenging curriculum and graduate. But really, where all the learning happens is on the ground, on the job. I'm a perfect example: civil engineering degree but working petroleum for 25 years.

You think back to one of the original gas plays, the Barnett Shale—people sometimes forget about that. But right now, as far as energy independence in the United States, we're able to export natural gas through LNG. A lot of those plants were actually designed and built to import natural gas. We, as a country, were at a decline of abundant natural gas within the United States. Due to technology and how we were accessing it—or maybe I should say oil was more king, so companies were chasing oil, and natural gas was kind of outside the realm of what operators were searching for. Part of that was price driven. If the commodity price is low, there's not a lot of demand to chase that and drill and put up that large capital expenditure. So there had to be a price component too. But coming full circle, developing the Barnett Shale, we potentially had to import natural gas. Then when you think about 33 billion cubic feet a day of natural gas coming out strictly from the Marcellus and Utica formations today, that's a third of what this country consumes—or rather produces. The US produces about 98 or 99 billion cubic feet a day, so 33 from the Marcellus and Utica. Between the Haynesville and the Permian, that's another 33 Bcf. So two-thirds of all natural gas that provides all the things you talk about—from fertilizers to power generation. One thing people don't realize is that you need natural gas to make ammonia, and you need ammonia to produce an abundance of food. If we completely eradicated natural gas, our food production would be cut in half in the world.

Yes, it does. I have a unique exposure talking about clean energy and biofuels and crops. I grew up with biofuels that we all take for granted now because they've been forced on us, but ethanol. In the US, we choose to grow corn and process it to produce ethanol. It's blended about 10% in all the gas in our cars, whether you want it or not. If I could find a gas station with no ethanol, I'd go there, especially for small engines. The Btu content of ethanol is much lower than a gallon of gasoline. A gallon of ethanol might be 84,000 Btu versus a gallon of gasoline at 120,000 Btu. So when you break things down to actual energy content for a good comparison—apples to apples—how much energy will be created by burning one fuel over another. Just being around that and consuming billions of bushels of corn to produce ethanol, which is not the most energy-efficient biofuel out there—why not? It could be because, 20 or even 40 years ago, the amount of energy to produce that gallon of ethanol, with diesel tractors and fertilizers, is about 80,000 Btu to produce that 84,000 Btu. So it's almost a break-even. But it's interesting where the credits for ethanol are and what makes it more advantageous. This kind of blows my mind: in the ethanol producing process, they give a credit because it produces CO2, but they call it a credit. That's not anything you hear anyone else ever talk about. With fossil fuels, we create carbon dioxide, and that's not a credit to our environment—it's a detriment.

Sure. We talked about some fundamentals of communication, but risk taking is one. When drilling and completing horizontal wells, almost everything we do has risk involved. It's how you manage those risks and make those risk decisions for safety and for moving the company forward. So working with the team to say, 'Let's make decisions.' On the flip side, it seems like all we do every day is solve problems. We're drilling roughly 7,000 feet straight down and 15,000 to 17,000 feet sideways, so there are problems every day. I encourage the engineers, superintendents, geologists, landmen, and landwomen to be creative, stick your neck on the line, make a decision, and own it. And I'll have your back—I'm always going to be the backstop. I want teams to work within the freedom of their own abilities. As you're challenged, you take those fundamentals and further your understanding and develop your skills by solving problems and making decisions. Some will be right and some will be wrong; you're doing the best you can. By sticking your neck on the line, you'll put a lot more preparation and effort into it. Failure is a part of what we do. The oil and gas industry is very unique because the smartest people in oil and gas didn't go to Stanford or MIT. They got to be in an environment where they got to make mistakes, be boots on the ground in the field or in the office, and had the environment to quickly recover and react. It wasn't catastrophic, but they learned from it. Whereas in a lot of industries, you're expected to have that knowledge and education when you start. In oil and gas, like a doctor can't just say, 'Let's try removing the liver.' So some of the sharpest people I've worked with—superintendents—have had that exposure to failure. You only fail once in that realm; if you continue to fail in the same thing, that's a different story. But when you can be in that supportive environment with a mentor, you reach the ceiling of your understanding, have a failure, and then you go back and turn at a different decision point. You follow that path until you hit your ceiling again, and then you make a breakthrough because you failed. We all learn more from failure. That's how we evolve quickly. It's not something people are comfortable talking about because people just want to talk about success. But we all got here from success, but it's also having that attitude when you do fail—how do you learn from it?

You're not urging them to fail; you're encouraging them to take a risk-informed decision and be okay with the consequences. No one wants to fail, but I want to risk failure every time. I want to challenge my understanding, my knowledge, whether it's technical or social—like this podcast is my first, so I'm pushing myself to a limit that's not technical.

Absolutely. I remember having breakfast with John, and this stuck with me years ago. I can't even remember which operator we were talking about, but they had a new technology in completions that I was super interested in. I was telling John, and he said, 'I would love to talk to them about that.' It was so refreshing to have someone in a leadership position open to that kind of discussion. That's rare. I don't understand why we hold our successes and failures so close to our chest, allowing other operators to repeat mistakes or not utilize those technologies. And you've never been like that.

There are some things that are proprietary to Antero, things we've developed internally that have been our pathway to success. But yes, I'm always open for communication. That goes back to an earlier question you asked about why I came to the Northeast. It was truly a professional challenge on my part, a risk. I said, 'I've got my skills from working in other basins. Can I take that knowledge and apply it to an area I have no idea about?' You can learn about Marcellus and Utica from a book, or you can put your boots on the ground and do it. I'd never been east of the Mississippi until recently. I went to Chicago once as a young man, and to Florida, but that doesn't really count. So I had zero contacts, zero knowledge of the basin or the challenges. It was a risk, but a fantastic one. The other thing I say to engineers and geologists is, 'If you don't put anything into it, you'll never get anything out of it.' If you put 75% of your effort into something, you might get 90% back. If you put 110% into something, you'll get 200% back. If you apply yourself, stick your neck on the line, make decisions, and have that fundamental understanding, you'll get returns in spades.

I'm not an extrovert; I'm an engineer. But I was able to break through that. How did you learn that lesson, at what age? Making the transition from the service side at Schlumberger in the early 2000s to the operator side, there weren't a lot of opportunities for a civil engineer in the petroleum industry without operator experience. So I recognized in my mid-20s that having social currency—contacts, people who worked at higher levels, who knew who you were as a person—was important to get in the door for an interview. Making that transition meant I lived in Midland, Texas, in 2002, which wasn't the place it is now. But it was a fantastic place to live for me, growing up in North Dakota. You have to scratch deeper—Midland had a lot to offer. That's really where I spread my wings socially, getting away to an area I'd never been to. I recognized the value of personal connections. And also, learning the value of good technical people on the service side who you can trust and who will have your back. We all can't be successful on our own—there's always someone in the background. Family, parents, peers, mentors, service companies. For me, it's all of the above.

Everyone kind of groups them together, but there are fundamental differences. With completions, I think they're fairly the same as far as proppant intensity and water intensity on a frac. Drilling can be more challenging in either formation. In oil or liquids plays, if you're drilling and have an overpressured zone with a column of fluid pushing back, you've got 1,500 to 2,000 pounds of surface pressure. If you hit a large pocket and are underbalanced, that's a constant fluid push—a huge risk. With natural gas, it's dangerous because stuff shoots up out of the well. Good well control is required in both. In natural gas Shale plays, there's a large volume of gas, but it's very tight, so you can generally drill at a reasonable mud weight and control it. If you get gas at the surface, you can weight up quickly and kill it. I'm speaking more on the Marcellus. The Utica is a much different animal because it has a lot of oil in certain parts and is extremely overpressured. I consider the deep Utica to be similar to the Haynesville—challenging and interesting. Antero has operations in Ohio as well as West Virginia, so I had to experience both. In Ohio, it's the Utica. There's deep Utica in Pennsylvania and deep Utica in West Virginia, but the main play is the Marcellus, which is two or three thousand feet above the deep Utica. As far as fundamentally on the drilling side, those are some of the differences. Then it comes down to production. With pad development where most companies drill 12, 14, or 16 wells from a single pad—eight going north, eight going south—if you're drilling 16 wells from a 500-foot-by-500-foot location, you've got to have a lot of kick-out or step-out. You have to hold a high angle of 30 degrees, swing out 2,500 to 3,000 feet left or right, then turn horizontal. From a gas perspective, gas naturally flows for the first four to six years, then might go on plunger lift. There's no true artificial lift required for natural gas. But if you're talking oil, you need rod pumps or ESPs. All my experience at Schlumberger with ESPs was in North Dakota. When I moved here, that knowledge became relevant again.

That's going to be a challenge. When you think about putting things in very simple terms, you have to know someone who knows it very well. People tend to overcomplicate things and use big words. But it's much more difficult to simplify. That means you really have to know the technical piece. But I do think it's important. The whole purpose is to make everybody more comfortable with what we're doing. A lot of the misunderstanding comes from a lack of understanding about what we're actually doing. And we've been terrible about being transparent as an industry. We're providing energy for the independence of our nation. People don't always consider energy tying into our defense strategy, but it absolutely does.

It's been a challenge. I was able to tie it in with my travel schedule. Fantastic opportunity sitting down with you ladies—we appreciate it very much. If nothing else, get the message out about oil and gas, but also about leadership. Antero as a company, we've only scratched the surface. We have a fantastic website, Antero Resources. They give back to the community so much—that's one of the things they've always been strong with. I was telling Sarah about the dodgeball tournament, so I'm going to have to get her there.

Where we work and the folks we impact—we recognize it's a stress on the residents. Me growing up where I did and working everywhere I have, I've certainly recognized the pros and cons. There are pros and cons to everything—mining, farming, oil and gas, waste centers, recycling centers. I want to thank the residents that we impact for their patience and recognizing what we're able to do. The oil and gas industry is unique—true wealth comes from the ground, whether you sit on a gold mine or have minerals that produce oil and gas. The amount of money all operators, not just Antero, pay mineral owners for the opportunity to develop the resources is fantastic. It changes people's lives. I don't think there's enough communication on that.

It's a beautiful place. As far as the Northeast specifically, West Virginia is gorgeous. I've been all over the world, and West Virginia is beautiful. Sarah comes from West Virginia, and it is beautiful.

Thank you, ladies.