EQT Wins Bankruptcy Auction for 86K Stone Energy M-U Acres, $527M
Stalking horse
Stone Energy is an independent oil and natural gas exploration and production company (E&P) headquartered in Lafayette, Louisiana, drilling mainly in the Gulf of Mexico but also has a presence in the Marcellus/Utica Shale with 86,000 acres of leases. Stone quit actively drilling in the Marcellus in 2015, and filed for bankruptcy last October. As part of the bankruptcy filing, Stone signed a deal with Tug Hill (at one time closely associated with Chief Oil & Gas) to sell those 86,000 acres to Tug Hill for $350 million (see Stone Energy Enters Bankruptcy, Sells Marc/Utica Assets for $350M). The deal with Tug Hill is called a “stalking horse bid,” which means Tug Hill would get the deal if no one else came along and bid higher. Someone did come along and bid higher–EQT. Yesterday EQT it has won with the highest bid at $527 million ($6,128/acre) to take over all 86,000 of Stone’s Marcellus/Utica acres. The stalking horse is dead…
Continue reading
Forced pooling legislation in West Virginia has been put forward five times in the past seven years–and each time it has failed to win enough votes in the WV legislature. In its most recent incarnation (last year), forced pooling would allow drillers to form a “unit” for drilling (typically one square mile, or 640 acres) from a group of properties where at least 80% of the mineral rights owners have signed a lease (see 
One year ago (February 2016) MDN told you about an exciting new market for Marcellus and Utica Shale gas that may open up in the next 2-3 years in the Midwest (see 
In the midstream (i.e. pipeline) world, it seems like nobody owns 100% of anything. Big midstream companies like Williams and Kinder Morgan (and others) are composed of subsidiaries and (sometimes) MLPs–master limited partnerships. And beyond the companies within companies (like a Russian nesting doll), often pieces of pipeline systems are co-owned with other companies, even competitors! In 2014 Williams bought out Access Midstream, the renamed and former division of Chesapeake Energy called Chesapeake Midstream (see 
In August 2013 an extensive investigative article about a then-director for the Pennsylvania Game Commission, William A. Capouillez, appeared in the Philadelphia Inquirer (see 
Each month MDN tracks how many rigs oilfield services company Patterson-UTI Energy reports operating–as a proxy for when/if the drop in rig counts for the Marcellus/Utica will turn around. Patterson operates a number of rigs in the northeast, as well as other areas of the continental United States (and Canada). Patterson’s rig count kept sinking month by month until June 2016 when things turned around. Since last June, Patterson has reactived and began running new rigs (higher rig count) in each successive month. Just last week Patterson released their numbers for January and once again it was good news (see 
For those of us in a certain generation, you will recognize this: Fred, Daphne, Shaggy, Velma…and of course, Scooby-Doo! If you were raised watching cartoons on Saturday morning, and you watched Scooby-Doo, do you remember the name of the van they traveled around in? That’s right, the Mystery Machine! An image of the Mystery Machine is what floated through our brain as we read about the latest venture in researching air quality in Pennsylvania near drilling sites. Researchers from Drexel University (in Philadelphia) set out across Marcellus territory in “Drexel’s Mobile Laboratory, a Ford cargo van equipped with all the equipment necessary for measuring concentrations of chemicals and particles in the air at 1-10 second intervals while driving.” The Mystery Machine! And what, pray tell, did our intrepid Marcellus sleuths find be-bopping around the countryside? In the recently published study, “Analysis of local-scale background concentrations of methane and other gas-phase species in the Marcellus Shale” (full copy below), researchers say they found that even though the number of Marcellus wells being drilled has slowed quite a bit over the past few years, the amount of fugitive methane in the air has increased. And the increase can’t be explained by a general global increase in fugitive methane. The increase in fugitive methane in the Marcellus is due, our methane sleuths say, to the “increased production of natural gas from the region which has increased significantly over the 2012 to 2015 period.” The researchers conclude that “because everybody knows how evil and nasty fugitive methane is for global warming” (our words), this study is yet more evidence that Marcellus shale drilling (and pipelines, etc.) leak so much methane as to make any benefits we get from extracting and burning methane, over say coal, muted–even lost. Because we can’t put a cork in it, by extracting and using methane we’re making poor old Mom Earth even sicker. Which is, of course, total bunkum…
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Kasich’s severance tax hike a longshot; Lebanon, PA group plans to disrupt Atlantic Sunrise Pipeline construction; what happens to natgas royalties from PA state game lands; protesters fight Addison natgas pipeline; Virginia bill exempts some fracking chemicals from records requests; Georgia pipeline expansion; flowing Marcellus gas to Texas; biggest coal plant in the U.S. closing due to natgas; House Bill would completely defund EPA; and more!
Two days ago Eclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA that drills mostly in Ohio, released an update for fourth quarter and all of 2016. However, it was an operational and not financial update. Consider this the “good news” from 2016. Among the highlights: Production averaged 229 million cubic feet equivalent (MMcfe) per day, which was above their previous estimates of what it would be. Year-end proved reserves increased by 35% to 469 billion cubic feet equilvanet (Bcfe). Eclipse idled most of its drilling rigs in the first half of 2016 given the low price of gas, but they did drill one notable well early last year–the monster Purple Hayes well in the Ohio Utica–with a lateral (the horizontal part) that reached out 18,500 feet–an astonishing 3.5 miles (see 
It’s that time of year for energy companies to issue updates on just how much oil and gas they own in the ground, recoverable at current prices. Yesterday CONSOL Energy announced their total proved reserves had hit 6.3 trillion cubic feet equivalent (Tcfe), as of December 31, 2016. That number is an 11% increase compared to the previous year. The vast majority of CONSOL’s reserves (99%) are in the Marcellus and Utica Shale plays. Of the 6.3 Tcfe total proved reserves, some 423 billion cubic feet equivalent (Bcfe), or 6.8%, is in oil, condensate and other liquids. Meaning 93.2% of CONSOL’s reserves are in good ole natural gas (i.e. methane). As part of CONSOL’s update we get some interesting stats about the wells they drilled in 2016. In the Marcellus, CONSOL and its JV partner turned-in-line 47 wells with an average lateral (horizontal) length of 7,300 feet and expected ultimate recoveries (EUR) averaging 2.3 Bcfe per thousand feet. In the Utica Shale, CONSOL and their JV partner turned-in-line 15 wells with an average lateral of 8,000 feet and EURs up to 2.2 Bcfe per thousand feet. Here’s the update from CONSOL…
Little known fact: There is a Utica Shale layer in Canada–along the St. Lawrence River Valley–in the Province of Quebec. On and off over the years we’ve mentioned it, largely in connection with an ongoing moratorium on shale drilling in Quebec (
Elections have consequence–not only on the national level, but also on the state and even local levels. Case in point: Barack H. Obama blocked the Keystone XL Pipeline through most of his presidency, and he blocked the completion of the 97% finished Dakota Access Pipeline. Trump got elected over Obama clone Clinton, and that’s all now changed. The Dakota Access Pipeline has received its final clearance and will be done within a few months. Keystone is refiling their application and will get built within the next year or so. However, there is a flip side too. Even when pipeline projects are federally approved, like the Constitution Pipeline from northeast PA into New York, states can throw a monkey wrench into the works and screw it all up–as NY Gov. Andrew Cuomo has done (see 
Yesterday MDN brought you the disappointing news that Pennsylvania Gov. Tom Wolf, America’s most liberal governor, has once again introduced a 6.5% severance tax plan as part of his 2017 budget (see 
Major multinational bank Société Générale, headquartered in Paris but with major operations here in the U.S., has just issued a 37-page report on U.S. commodities. The theme of the report caught our attention: “Five facts about shale: it’s coming back, and coming back strong.” Analysts working for Société Générale asked themselves this question: Will the U.S. recovery in oil and gas production offset OPEC cuts? They review some of the key dynamics of U.S. shale production in their report. Specifically, they highlight five facts about U.S. shale production that all point to the same underlying trend: shale is coming back in a big way…
A group of RINO (Republican in Name Only) dinosaurs (i.e. RINOsaurs) have come out of retirement to lobby President Trump on the insane idea of a so-called “carbon tax.” Two of them were from the Ronald Reagan Administration–George Shultz and James Baker III. (As an aside, when Baker was Chief of Staff for Ronald Reagan, he was an arrogant ass–prancing around the West Wing. We can state this categorically from first-hand experience. MDN editor Jim Willis worked at the White House when Baker was there. Jim can also tell you Baker came from the Bush camp, which today we call the Washington establishment. There was a deep divide in the White House during the Reagan years between the “Bushies” who were establishment types, and true-conservative “Reaganites.” You know which camp Jim belonged to.) A carbon tax is nothing more than a way to slap a regressive tax on every citizen of the country–as if we aren’t already taxed enough. If you live in the great middle class of this country, you already pay close to 50% of your income in various federal, state, local, property, sales and other taxes. Add it up sometime–you’ll see we’re not exaggerating. A group of Republican “elder statesmen” (as fake news source CNN calls them) yesterday met with Team Trump at the White House to push this disastrous plan, calling it (be careful not to vomit), “conservative.” There’s nothing conservative about it…
