Marcellus & Utica Shale Story Links: Mon, May 2, 2016

best of the restThe “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: NGL prices in Appalachia heading higher; inside the NY fracking decision; the corrupt Cuomo Constitution Pipeline decision; New England pipelines update; the important role of natgas in Virginia’s power plan; natgas imports lowest since 1986; $840B decline in o&g reserves; and more!
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Range Res. 1Q16: Still Running 3 Rigs, Drilled a Big Utica Well

Range ResourcesRange Resources, the very first driller to sink a hole in the Marcellus Shale back in 2004, issued their first quarter 2016 update yesterday. Range reports losing $92 million in 1Q16 after making $28 million in 1Q15 (not uncommon among drillers right now). The company cut production costs by 10%, always a good thing when every penny counts, and they secured a $3 billion borrowing base. During 1Q16 Range became the first U.S. driller to export ethane to Europe, a shipment that left from Marcus Hook near Philadelphia. Marcellus production was up 17% over 1Q15, and according to Range, they recently completed a new Utica well that “appears to be one of the best in the play” based on early results from the well. Range is currently operating three rigs in the Marcellus/Utica and plans to keep them busy for the rest of 2016. Here’s the full update from Range…
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NFG/Seneca Resources 1Q16: Big Paper Loss, Still Operating 1 Rig

Seneca ResourcesNational Fuel Gas Company (NFG), the utility giant headquartered in Buffalo, NY and parent of Marcellus driller Seneca Resources, issued what they call their second quarter 2016 update yesterday. NFG’s second quarter is everyone else’s first quarter–it covers January through March. Seneca was negatively impacted by low prices for the natural gas it drills for. NFG’s “upstream” unit (Seneca) lost $213 million in 1Q16, even though its hedging program got the company an average of $2.99 per thousand cubic feet (Mcf) for their gas–about $1.12/Mcf above the going Nymex rate. The loss was all a paper loss–not out of pocket money–due to a writedown of assets. If you take out the writedown, Seneca actually made $17 million in profit for the quarter. NFG’s other units fared better on paper. The midstream unit (pipelines and storage) made $21.2 million in profit for 1Q16; NFG’s utility division made $32 million for the quarter; and their energy marketing unit made $3.5 million. Seneca’s production was up nearly 10% from a year ago. They continue to operate a single rig in the Marcellus/Utica region. Here’s the NFG/Seneca update…
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EQT 1Q16: $5.6M Profit, Prod. Up 24%, Drilling ~80 Wells in ’16

EQT logoBucking the trend of other drillers, EQT Corporation, a major Marcellus/Utica drillers, posted a $5.6 million profit for first quarter 2016. Also of interest in EQT’s latest quarterly update: Production volume was 24% higher than last year this time, the price they got for natural gas was 35% lower than last year, and they still have a $1.5 billion line of credit with the bank–so far undrawn. EQT plans to drill 72 Marcellus wells in 2016, and 5-10 Utica wells. Here’s the update…
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REX Buying Back Another 25% of Pipeline from Sempra

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REX Pipeline map – click for larger version

Tallgrass Energy, builder and operator of the mighty Rockies Express (REX) Pipeline issued their first quarter 2016 update yesterday. Among the interesting bits of news in the update is that Tallgrass is buying out Sempra Power & Gas’ 25% ownership interest in REX. Sempra Power & Gas is a subsidiary/division of Sempra Energy. Just last month Tallgrass bought out Sempra Energy’s existing ownership stake in REX for $440 million (see Tallgrass Buys Out Sempra’s Portion of REX Pipeline for $440M). Apparently a division of Sempra still owned a large stake in the pipeline, and now Tallgrass is buying out that interest as well. REX is a 1,712-mile pipeline which runs from Colorado and Wyoming to Ohio, originally built to flow western natural gas to the Midwest and East. But then the Marcellus/Utica took off like a rocket and all of a sudden there was no market for western gas in our neighborhood. So Tallgrass reversed the flow for part of the REX (see Rockies Express Pipeline Reverses Flow from Utica to Midwest). Tallgrass turned what could have been a company-killing decision into the crown jewel asset of the company, simply by reversing the flow. Here’s the 1Q16 update from Tallgrass…
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Patterson-UTI 1Q16: $70M Loss, Rig Counts Down, Still Bleeding

Patterson-UTI logoEach month MDN tracks the number of active rigs deployed by oilfield services drilling company Patterson-UTI Energy (see our Patterson-UTI stories here). Patterson deploys a number of rigs in the Marcellus/Utica, so we use them as a proxy for trends in rig counts in our region. The news has not been good for Patterson. The most recent monthly count, for March, was it’s lowest yet (see How Low Can it Go? Patterson-UTI Rig Count Plunges to 64 in March). Yesterday Patterson issued its first quarter 2016 update, and the news was, well, not very good. The company lost $70.5 million in 1Q16, compared with making $9.1 million in 1Q15. Revenues were WAY down–from $658 million in 1Q15 to $269 million in 1Q16. Ouch. Management expects to see a further 20% decline in the second quarter. Here’s the full, sad story…
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Problem: EV Energy Partners Quits Paying Unit Holders

EVEP logoAs we reported in March, EV Energy Partners (EVEP)–an upstream master limited partnership (MLP) created by EnerVest that holds enormous acreage in the Ohio Utica Shale play–is in survival mode (see EV Energy Partners: No New Utica Wells in 2016, in Survival Mode). EVEP has no plans to drill new Utica wells in 2016. Earlier this month EVEP announced they have had to decrease their borrowing base from $625 million to $450 million (see EV Energy Partners Lowers Borrowing Base by 28%). A company’s borrowing base is the value of its assets–in this case the value of the leases and oil/gas wells EVEP owns. Those assets are used as collateral to back up loans and IOUs. A lower borrowing base means a) they can borrow less money, and b) they will pay more in interest for the money they do borrow. The company continues in survival mode: They’ve just announced they are suspending cash payments to unit holders (think dividend payments to stockholders)…
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CARBO Ceramics 1Q16: $25M Loss, Drillers Not Completing Wells

CARBO logoIn addition to watching companies that operate drilling rigs, like Patterson-UTI Energy (see today’s companion story) for indications of how well (or not) the drilling industry is doing, another type of company to watch is a proppant company–the companies that supply sand and ceramic beads used in fracking. CARBO Ceramics is one of the premier such companies. Yesterday CARBO issued their first quarter 2016 update. Like Patterson, the news wasn’t so good. CARBO lost $25 million in 1Q16. In some cases E&Ps (exploration and production companies, or “drillers” here on MDN) are electing to complete previously drilled wells–and that’s good for CARBO. But in many cases drillers are electing to leave already-drilled wells uncompleted, i.e. not fracked, and that’s bad for CARBO. Here’s more of the good, the bad and ugly for CARBO Ceramics in 1Q16…
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NY Antis Hope Gov. Cuomo Will Halt Pilgrim Pipeline’s Progress

Pilgrim Pipeline logoIn November, MDN told you about Pilgrim Pipeline Holdings, developing an East Coast pipeline to carry refined petroleum products such as gasoline, diesel, heating oil, and jet and aviation fuel northbound from Linden, New Jersey to Albany, New York (178 miles). In addition, a second Pilgrim pipeline will carry crude oil from Albany south to NJ and other locations. Two pipelines, side by side, liquids flowing through them in different directions (see Will Pilgrim Pipeline be Allowed to Settle in the NY World?). Earlier this month we told you about a strategy by New York anti-fossil fuel freakers to stop Pilgrim’s progress by using local town bans (see NY Antis Attempt to Stop Pilgrim Pipelines with Local Bans). But maybe such a town by town strategy won’t be necessary after all. The freakers are now buoyed by NY Gov. Cuomo’s decision to stop the Constitution Pipeline–a natural gas pipeline. The freakers think maybe Cuomo will halt Pilgrim’s progress too…
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Resources for Landowners Faced with Pipeline Easements

OSU Extension logoIn MDN’s daily trawl of the news, we came across a resource for landowners from Ohio State University (OSU), a program called “Pipeline Easement and Right-of-Way Agreements.” Apparently OSU’s Extension service conducts workshops on occasion for landowners and other interested parties. We don’t have a list of the workshops, but we do have copies of the resources they hand out–very useful resources, including four different fact sheets that we think landowners in any state will benefit from…
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MDN Calls on Mamma Teresa Heinz Kerry to Divest from Fossil Fuels

Teresa Heinz KerryTeresa Heinz-Kerry, affectionately known on MDN as Mamma Teresa, is a well-known anti-fracker. In 2013 Mamma Teresa fired the head of the Heinz Endowments, Bobby Vagt, after he had the temerity to support the Center for Sustainable Shale (see Bobby Vagt Out as Pres of Heinz Endowments – Fracking Connection? and She Speaks! Teresa Heinz Kerry Talks re Endowments Firings, CSSD). Working with evil, vile, filthy carbon polluters like oil and gas drillers is a no-no for Mamma Teresa. And yet, according to an analysis of the Heinz Family Trust, Mamma Teresa and the Heinz kids are invested in some of the biggest fossil fuel companies on the planet–invested up to their eyeballs. We have the full list below–you won’t believe how long it is! Mamma Teresa even invests in Cabot Oil & Gas, of Dimock fame. (Don’t tell Josh Fox!) You already know what rank hypocrites liberals like Heinz-Kerry are. But still, MDN is today officially calling on Mamma Teresa (and her husband John Kerry, currently Obama’s Secretary of State) to act responsibly and immediately divest all of their holdings from fossil fuel companies–the same companies she vilifies every chance she gets…
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Marcellus & Utica Shale Story Links: Fri, Apr 29, 2016

best of the restThe “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Cuomo’s righteous regulators nix pipelines; NY state bans stymie prosperity; OH o&g expo draws thousands; horizontal drilling advances in the PA Marcellus – “mile a day” wells; antis pressure MI over NEXUS pipeline; pipelines next to feel the bust; dire news for Canada’s o&g industry; and more!
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More Evidence that the Shell Ethane Cracker Plant in PA is a Go

PREITWe have more evidence that Shell’s Monaca (Beaver County), PA cracker plant is now a go. MDN previously told you that Shell has already spent upward of half a billion dollars out of the projected $2-$3 billion it will take to build the project (see Shell has Spent “Half a Billion Dollars” on PA Cracker Already!). Now comes word from an area mall owner that Shell has purchased more land near the proposed plant and has leased part of the mall’s parking lot “for a significant sum of money”…
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PA DEP Investigates Hilcorp Fracking in Earthquake Nobody Felt

earthquake.jpgYou can count on one hand the number of cases where fracking a shale well over top an active underground fault (never a good idea) has caused a detectable earthquake. Can we now add one more case in western PA? Officials from the PA Dept. of Environmental Protection are investigating whether or not fracking by Hilcorp in well in Lawrence County, PA caused two 1.9 earthquakes in the area on Monday. Just so you know, you can’t feel a 1.9 earthquake on the surface. The only way you know of such an earthquake is through special monitors maintained by the U.S. Geological Survey (USGS). A football stadium full of fans stomping their feet at the same time can (and has) caused earthquakes greater than 1.0 (see ODNR Temporarily Shuts Down Injection Wells After Low-Level Quake). You don’t even feel earthquakes on the surface until they hit around magnitude 4.0 and above. Still, with so little drilling happening in the state these days, chasing fracking earthquakes gives DEP investigators something to do, we suppose…
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IFO: PA Gov. Wolf Proposes Highest Severance Tax in Nation

IFO logoNot only is PA’s Gov. Wolf stubborn, he’s stupid too. Dangerously so. Wolf and those he has surrounded himself with are hellbent on enacting a severance tax on the Marcellus industry in the state, as a way of paying back teachers’ unions for their support of him in the last election. Wolf, with the aid of willing liars in mainstream media, continuously repeat the same lie: PA is the only oil and gas state without a severance tax. They intentionally ignore the impact fee and corporate income tax on drillers in PA that together adds up to about the same rate of taxation as a severance tax in states like Texas and Louisiana. For the second year running Wolf has proposed a severance tax–this time RAISING it to a supposed rate of 6.5%. Yes, the new tax would allow drillers to deduct whatever impact fees they would still have to pay. The state’s Independent Fiscal Office (IFO) has run the numbers and compared Wolf’s proposal to other states. You know what they found? Wolf’s proposed severance tax would have an effective rate of 8.5%, not 6.5%. It would be the highest such severance tax in the country! Some 54% higher than the effective severance tax rate in either Texas or Louisiana. So tell us, how many drillers will stick around PA and continue to drill with a tax like that? Can you say “ghost town”?…
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Baker Hughes: Rig Counts Will Slide Another 30% in 2Q16

trending-down.jpgYesterday Baker Hughes released its first quarter 2016 update. According to BH CEO Martin Craighead, “the industry faced another precipitous decline in activity” in 1Q16, which means it wasn’t good for BH. The company reported that revenues were down 42% year over year during the first quarter. Ouch. The company list $981 million for the quarter, nearly $1 billion! Double ouch. The company, which maintains THE rig count everyone watches, said rig counts will stabilize in the second half of the year, but the company expects 2Q16 rig count numbers to slide another 30%, to all-time historic lows. Triple ouch. What about the Halliburton buyout of BH? The deal expires in two days on April 30. BH says beyond that date the merger agreement does not automatically terminate–they may decide to continue riding the merger horse. Time will tell. Here’s the BH update from yesterday…
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