More Troubling Remarks by Wolf’s Acting DEP Sec. John Quigley

PA Gov. Tom Wolf’s Acting Secretary of the Dept. of Environmental Protection (DEP), John Quigley, is increasingly bold in his pronouncements about the Marcellus industry, which is deeply troubling. He did, after all, once work for and advocate for the anti-drilling PennFuture (see Ripping the Mask off PennFuture & It’s Former Employees). In reading an article where Quigley is quoted, we’re somewhat alarmed at his increasing boldness in trash-talking the Marcellus industry…
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Anadarko Latest Marcellus Driller to Cut 2015 Budget – Down 33%

Anadarko Petroleum has been an active driller in the Pennsylvania Marcellus Shale over the past couple of years. They’re also a big company with operations in other shale plays and in offshore drilling as well. Yesterday the company announced they are trimming back their 2015 capital budget for drilling by about 1/3–to $5.4 to $5.8 billion. Anadarko is just one of a parade of companies doing the same thing (see Dramatic Budget Cutbacks in Marcellus Budgets for 2015). We have no specific comments or numbers about how Anadarko’s cuts will impact the Marcellus, but Anadarko did say they are reducing onshore rig activity by 40% and deferring 125 onshore well completions. Marcellus is part of onshore, so you do the math. Here’s what we do know about Anadarko’s pull back in 2015…
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Warren Resources Proved Reserves Up 209% Due to Marcellus

Warren Resources is an exploration and production company (E&P) that’s drilled just a handful of wells in the Marcellus, but according to their latest announcement, their proved reserves for natural gas in 2014 jumped 209% “primarily” because of their Marcellus Shale acreage. Perhaps that bodes well for more drilling by Warren? We’ll see. According to the Marcellus and Utica Shale Databook, Vol. 3 (recently published), Warren received permits to drill 4 Marcellus wells in Pennsylvania during the last four months of 2014…
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Seventy Seven Energy 2014: Revenue Down 5%, Losing Money

Seventy Seven Energy, with major operations in the northeast, is the old Chesapeake Oilfield Operating division of Chesapeake–spun off into its own company on July 1, 2014 (see Long Labor & Delivery: Seventy Seven Energy Born Yesterday). On Monday the company released their 2014 full year and fourth quarter update. The company’s revenue was down 5% in 2014 compared with 2013, and they lost money ($8 million, or 17 cents per share). Company CEO Jerry Winchester says the company is in a good position to “weather the storm the industry is currently experiencing and take advantage of the opportunities that will arise from it.” Below is the update…
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Sen. Joe Scarnati Admits Impact Fee is Really a Tax

In all of the coverage of PA Gov. Wolf’s ill-fated budget–the highest ever for the state of Pennsylvania–we spotted one comment that validates what we’ve been saying for more than two years: The Act 13 “impact fee” is really just a tax. In fairness, it’s 60% fee and 40% tax because 60% of it stays in the communities where drilling happens to reimburse them for things like improving roads, extra law enforcement personnel and beefing up local fire departments. The 40% portion disappears into the black hole of Harrisburg–into greasy politicians’ fingers. In February 2012 MDN pointed out the so-called impact fee is really just a tax (see PA’s New Tax on Drilling (er Sorry, Impact Fee)). The chief architect of the impact fee, State Sen. Joe Scarnati (Republican from Jefferson) finally admitted it yesterday. He blamed Gov. Tom Corbett for not wanting to call the impact fee what it really is–a tax–and he said so to the Philadelphia Inquirer
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Antero Shops for $1.25B Cash from IOUs, Wants to Pay Down Old Debt

Seems that everyone (upstream and midstream) companies is in the market looking for cash in return for IOUs, otherwise known as “unsecured notes”. Today we reported that two midstream companies, MarkWest and Williams, have successfully landed $650 million and $3 billion in cash from IOUs, respectively. Now it’s Marcellus/Utica driller Antero Resources’ turn. Yesterday Antero issued two press releases announcing what appears to be two different tranches of notes–one from $750 million and the other for $500 million. Will cash-for-IOUs lightening strike a third time?…
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MarkWest Hauls in $650M Cash from New IOUs, Paying Down Old Debt

Last week MDN highlighted the latest round of debt financing being offered by MarkWest Energy (see MarkWest Floats Notes Seeking $650M…or $500M…or $1.15B – Which?). We noted two announcements about debt financing–one offering $650 million in IOUs (otherwise called notes) and one for $500 million. Seems the $500 million announcement was a restatement or reiteration of a round of financing from 2014. How do we know? MarkWest yesterday said it had successfully completed closed it’s offering of $650 million…
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Williams Hauls in $1B Cash from New IOUs, Paying Down Old Debt

Not to be outdone by MarkWest that just raised $650 million in cash from new IOUs–MDN noted last week that Williams had gone shopping for several multiples of that amount (see Williams Goes Shopping for $3B, Floating Notes to Pay Down Debt). Williams reported yesterday they were successful in raising all $3 billion, some of which they’ll use to pay down older debt…
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Leatherstocking Moves Forward with Pipeline System in Windsor, NY

By Andy Leahy (see MDN note at end)

exclusiveNew applications filed Feb. 20 and 27 with the New York State Public Service Commission show that built-up areas of Windsor, NY (Broome County) are in line to be the first in a sequence of small town conversions to natural gas previously announced by Leatherstocking Gas Company, LLC. Assuming the Windsor application doesn’t hit any hitches with the state, Leatherstocking’s target date for installation is Fall 2015, according to Town Supervisor Carolyn Price. “It’s one of the most frequently asked questions I get,” Price told MDN Monday morning. “When am I going to get natural gas?” Price also said a number of Windsor residents, while they wait, have needed to replace furnaces, and they’ve been installing propane-fueled burners–because those are reported to be more easily switched over to natural gas, down the road…
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Magnum Hunter Drills 53 NE Wells in 2014, Plans Just 5 in 2015

Magnum Hunter Resources (MHR) released its full year and fourth quarter 2014 update yesterday (selected portions below). MHR is a small-to-medium sized, but growing, driller focused almost totally on the Marcellus and Utica Shale. They own 80,000 net acres in the Marcellus and 120,000 net acres in the Utica. In 2014, the company drilled a combined 53 wells and achieved an average daily production of 101.3 million cubic feet equivalent. However, 2015 is a different matter. They plan to drill just 5 wells (and maybe not even those). They’re actively seeking joint venture partners who will give them a total of $500 million to drill in the Utica. The chief problem that we see is that MHR is swimming in debt…
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Magnum Hunter Investor Call Transcript + Slide Deck

In addition to releasing their 2014 update yesterday, Magnum Hunter Resources also held an analyst/investor conference call including CEO Gary Evans and other top MHR managers. Below we’ve included a transcript of the prepared remarks on that call (with highlighted passages of interest to MDN readers). We’ve also included their brand new PowerPoint presentation. We indicate our favorite slides from the new presentation…
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Prejudice in Washington, PA – Judge Says No Marcellus Boarding House

Discrimination and prejudice have finally won in Washington, PA–and a dilapidated eyesore will continue to exist because of it. We’re speaking about plans to renovate a former, run-down convent into a boarding house for Marcellus Shale workers in Washington, PA. We’ve previously chronicled City Council’s opposition to the project (see Washington, PA Votes to Reject Marcellus Boarding House). We’ve also chronicled the shameful opposition of Rev. William Feeney and the Immaculate Conception church across the street from their denomination’s abandoned convent–opposed to the plan because it might attract “transients” to the neighborhood (see Marcellus Prejudice on Display at Washington, PA Church). The reverend and parishioners may want to re-read Matthew 25:31-40. The developer looking to create Marcellus housing at the old convent, Robert Starr, took the matter to court. Yesterday he lost…
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Dr. Terry Engelder Says Utica the Best Bet in Potter County, PA

At a recent meeting in Coudersport (Potter County), PA, Dr. Terry Engelder of the Dept. of Geosciences at Penn State University and one of the leading experts on the Marcellus spoke to a packed room of more than 100 people about the Marcellus, the Utica, and the prospects for drilling in Potter County. Engelder said Potter County’s best bet is likely the Utica Shale layer…
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WPX Energy Axes 8% of Its Workforce, Consolidates Offices in Tulsa

axedAs we’ve previously mentioned, WPX Energy is now largely out of the Marcellus and Utica region. They sold off their most developed leased acreage–46,700 acres and 63 operational wells–to Southwestern Energy earlier this year (see WPX Finalizes Sale of NEPA Marcellus Leases/Wells to Southwestern). WPX still has some acreage in southwest PA they’re looking to unload–but they’ve mostly exited stage left. We’ve also previously mentioned the company has rotten luck–they decided they didn’t like the low price of natural gas in the northeast and so they retooled the company to drill for oil instead–just in time for the price of oil to tank (see WPX CEO Riffs on Company Strategy Change from Gas to Oil Drilling). WPX’s CEO, Rick Muncrief, was installed by a corporate raider. You know what that means. When times get tough, the little guys get axed from the payroll. And that’s just what’s happened. Yesterday WPX announced they’re “trimming” (that’s what firing is called these days) 8% of the workforce…
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Dramatic Budget Cutbacks in Marcellus Budgets for 2015

It’s not an understatement to say that drillers in Pennsylvania are in a fight for their very existence. Socialist Gov. Tom Wolf has convinced a great many PA residents in the state that it’s perfectly fine to steal money from drillers and landowners and redistribute it to Big Education. What Wolf and those who blindly follow him don’t realize is that Wolf’s nosebleed severance tax is the equivalent of a butcher knife to the neck of the goose laying Marcellus golden eggs–those eggs being jobs and current tax revenue. If Wolf & company pull the trigger on the tax, it will be catastrophic for the drilling industry in the state. Drilling is already decreasing–by huge numbers. Capital budgets for 2015 have been slashed–typically in one-third to one-half of 2014 levels. New drilling may all but stop with such a new tax–denying the tax and spend Democrats the revenue they seek “for the children.” What will they do then? The Marcellus Shale Coalition is blowing the trumpet to warn people of the coming train wreck that is Tom Wolf’s severance tax. One of the ways they are doing it is with an emailed newsletter called Marcellus Moments. Yesterday’s edition contains an excellent table showing Marcellus drillers and how much they’ve announced they are cutting back on their capital budgets for 2015. When you see it table form (below), it’s rather shocking. Do the Dems really think drillers will just keep on drilling when their already-squeezed profits disappear into a socialist tax black hole? Although the Marcellus is the biggest, it’s not the only shale play around. Rigs can be moved…
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Beaver County Officials Don’t Think Wolf’s Tax Will Kill Shell Cracker

Let’s do some simple arithmetic and use some basic logic. If you drill less Marcellus and Utica Shale wells, you get less natural gas and gas liquids–like ethane. If you have less ethane, and if there’s already several pipelines flowing that lesser amount of ethane out of the region, you don’t have much left over to feed a big ethane cracker plant–like the one Shell is considering for Beaver County, PA. Make sense? It does to PA’s new Senate Majority Leader, Jake Corman, who said a proposed severance tax–that would cause drilling to drastically be scaled back–may kill the Shell project (see New PA Senate Leader Says Severance Tax Could Kill Cracker Plant). Although Democrats like PA Gov. Tom Wolf don’t like the fact that actions (and not good intentions) have consequences, they do. And a severance tax will drastically reduce the number of new Marcellus wells drilled in the state, and cause a decrease in the amount of ethane being extracted. Local business and political leaders in Beaver County don’t quite see it that way though…
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