Driller Wins Right to Cancel Pipeline Contract via Bankruptcy
If an upstream (drilling) company with a long-term pipeline contract files for bankruptcy, does that give the company the right to break its pipeline contract? A major shipper on the Rockies Express (REX) pipeline, Ultra Resources, filed for bankruptcy with the express plan to skip out on its obligations to REX (see REX Pipe Asks FERC to Prevent Shipper from Breaking Contract). The Federal Energy Regulatory Commission (FERC) stepped in to say it (FERC) has jurisdiction to decide whether or not Ultra (and by extension, other companies) can wiggle out of their contracts via bankruptcy. The U.S. Court of Appeals for the Fifth Circuit recently ruled that FERC does not have the lead in such cases–that a decision about breaking a pipeline contract will be up to the bankruptcy court instead. This is bad news for pipeline builders.
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If an upstream (drilling) company with a long-term pipeline contract files for bankruptcy, does that give the company the right to break their pipeline contract? A major shipper on the Rockies Express (REX) pipeline, Ultra Resources, is expected to file for bankruptcy very soon. REX is concerned Ultra may claim its bankruptcy is a “get-out-of-the-contract free” card. REX has asked FERC to preemptively “assert its jurisdiction” as the arbiter of whether or not companies like Ultra can skip out of contracts.
For months MDN has brought you bits and pieces of news from individual drillers, detailing plans to cut back on spending for new drilling in the Marcellus/Utica in 2020. It’s not just happening in the M-U–it’s happening across the country. The experts at RBN Energy have a terrific new post that pulls information about major drillers scaling back into one place. They analyze spending by three different groups of drillers: oil-focused, diversified, and gas-focused drillers. In the third category, all but one of the gas-focused drillers have major operations in the M-U. The stats are sobering. As a collective group, M-U gas drillers have pledged to cut their 2020 budgets 25% from the already-lower spending that happened this year. Ouch.
The expert analysts at RBN Energy have just published their “fourth and final” in a series of posts looking in detail at E&Ps (exploration & production companies, or “drillers”). One of the groups of E&Ps they examine are “gas-weighted” E&Ps–or drillers who mostly extract natural gas. In looking through the list, you immediately realize every one of them has operations in the Marcellus and/or Utica Shale region. Yes, a few also have operations in other plays, but they all have at least some operations here. The real value in the article is an accompanying spreadsheet comparing various financial metrics (apples to apples)–things like total revenue, lifting costs, production costs, and “pre-tax income,” meaning profitability. How do our drillers compare with each other?
Ultra Petroleum, based in Houston, TX, is an independent exploration and production (E&P) company mainly focused on drilling in the Green River Basin of Wyoming. Ultra also drills for oil in the Uinta Basin/Three Rivers area in Utah. In addition, Ultra maintains a “non-operated” (someone else does the drilling) position in the Pennsylvania Marcellus shale with leases on 72,000 net acres–no small amount. As recently as May of this year Ultra CEO Michael Watford signaled that the Marcellus acreage is not a drain on their budget, so they would just hold on to it and see what happens (see 
Ultra Petroleum, based in Houston, TX, is an independent exploration and production (E&P) company mainly focused on drilling in the Green River Basin of Wyoming. Ultra also drills for oil in the Uinta Basin/Three Rivers area in Utah. In addition, Ultra maintains a “non-operated” (someone else does the drilling) position in the Pennsylvania Marcellus shale with leases on 72,000 net acres–no small amount. One year ago, in April 2016, Ultra filed for Chapter 11 bankruptcy (see 
Ultra Petroleum, based in Houston, TX, is an independent exploration and production (E&P) company mainly focused on drilling in the Green River Basin of Wyoming. Ultra also drills for oil in the Uinta Basin/Three Rivers area in Utah. In addition, Ultra maintains a “non-operated” (someone else does the drilling) position in the Pennsylvania Marcellus shale with leases on 72,000 net acres–no small amount. One year ago, in April 2016, Ultra filed for Chapter 11 bankruptcy (see 
Ultra Petroleum, based in Houston, TX, is an independent exploration and production (E&P) company mainly focused on drilling in the Green River Basin of Wyoming. Ultra also drills for oil in the Uinta Basin/Three Rivers area in Utah. In addition, Ultra maintains a position in the Pennsylvania Marcellus shale with leases on 184,000 gross (91,000 net) acres–no small amount. They aren’t currently drilling on their Marcellus acreage, but if prices change, they likely would. That is, if they make it through bankruptcy. At the end of April Ultra filed for Chapter 11 bankruptcy (see 
In November 2015 MDN brought you a list of 36 North America drillers that had, as of that time, declared bankruptcy (see 
Ultra Petroleum, based in Houston, TX, is an independent exploration and production (E&P) company mainly focused on drilling in the Green River Basin of Wyoming. Ultra also drills for oil in the Uinta Basin/Three Rivers area in Utah. In addition, Ultra maintains a position in the Pennsylvania Marcellus shale with leases on 184,000 gross (91,000 net) acres–no small amount. They aren’t currently drilling on their Marcellus acreage, but if prices change, they likely would. That is, if they make it through bankruptcy. At the end of April Ultra filed for Chapter 11 bankruptcy (see