Statoil Reduces Marcellus Holdings in $394M Deal with Southwestern

follow the bouncing ballTime to follow the bouncing ball–this is a tad complicated, but we’ll do our best to explain it. In 2008, Chesapeake Energy (under then-CEO Aubrey McClendon) took on a “silent” investing partner for 600,000 net acres in the Marcellus of West Virginia and southwest Pennsylvania. The non-operating partner for the acreage was Norwegian company Statoil, with a 32.5% interest in the acreage. Statoil put up buckets of money and Chessy did the drilling. Fast forward to October of this year. Chesapeake cut a deal to sell most of that acreage–some 413,000 acres with 435 drilled wells (see Chesapeake Sells Close to 25% of Marcellus/Utica Operation). The buyer is Southwestern Energy. In order for the deal to close, Statoil has to sign on. Today, Statoil announced they have cut a deal with Southwestern to reduce Statoil’s now 29% interest in the acreage down to a 23% interest, in return for a $394 million check from Southwestern…
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XTO Paying $5.3M for Violating Federal Clean Water Act in WV

Mother May IPushing dirt around on drill pads can get very expensive if you don’t have a signed piece of paper in your hand that says, “Mother May I?” XTO Energy, the shale-drilling subsidiary of ExxonMobil, has just learned that the hard way. The federal Environmental Protection Agency (EPA) along with the U.S. Dept. of Justice announced a settlement yesterday with XTO–fining the company $2.3 million because “fill material” (i.e. dirt and rocks) got into nearby streams and swamps in several West Virginia counties when XTO pushed that dirt and rocks around to construct roads and well pads. Oh, and XTO has to “undo” the damage, spending another $3 million or so. Total price tag of $5.3 million for violating the “Mother May I?” Clean Water Act. If XTO had had the proper paperwork, they wouldn’t have been fined. The jack boots of the feds come down again…
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Vantage Energy Fined $1M for Multiple Errors at Greene County Site

The Pennsylvania Dept. of Environmental Protection has just slapped Vantage Energy with a $1 million fine for “more than a dozen violations of environmental regulations stemming from a landslide and illegal waste disposal at their Porter Street well pad in Franklin Township, Greene County, earlier this year.” The landslide at the well pad covered over portions of two nearby creeks. Then, to add insult to injury, about six months later two truckloads of frack wastewater got dumped on the landslide area being repaired. The wastewater ended up in the streams. But wait, there’s more! Vantage constructed a new access road next to the streams adversely affected–but Vantage didn’t have a permit to construct the road. Oy vey! Did they do anything right? According to the DEP, Vantage, “to its credit,” is making improvements in their procedures to prevent a future comedy of errors…
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Tenn. Gas Pipeline Fined $800K for Violations, Illegal Dump Sites

Seems that the Pennsylvania Dept. of Environmental Protection (DEP) has been busy clearing up outstanding cases of violations by both drillers and pipeline companies. In addition to a stiff $1 million fine against Vantage Energy yesterday (see our companion story), the DEP fined the Tennessee Gas Pipeline (TGP) $800,000 for violations in four different counties during pipeline construction for the 300 Line Project. TGP will pay a penalty of $210,000 and will fund a $540,000 clean-up program of illegal dumpsites in Pike, Potter, Susquehanna and Wayne counties. The details…
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Do “Takings” Lawsuits Stand a Chance for NY Landowners?

Last week MDN posed the question, In Light of NY Frack Ban, What Happens to Signed Leases? In that article, we also began to address the topic of lawsuits based on “takings”–the fact that New York has stripped away the right of a landowner to profit and use his or her land as he or she sees fit–including fracking under it–and those landowners are owed just compensation. Today we pick up that thread. What recourse do New York landowners have at this juncture, and what actions can they take next? Would a takings lawsuit have a prayer of a chance?…
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Chesapeake Using $1B from Southwestern Deal to Buy Back Stock

A press release issued yesterday by Chesapeake Energy caught our interest. Chessy announced the closing of the deal we first announced back in October–a deal to sell some 413,000 Marcellus/Utica acres plus 435 already-drilled wells on that acreage to Southwestern Energy for $5.375 billion (see Chesapeake Sells Close to 25% of Marcellus/Utica Operation). Yesterday’s announcement says the deal is now done (see our related story today about Southwestern and Statoil), and that Chessy will use some of that money to buy back $1 billion worth of common stock, an effort to boost the company’s stock price. What’s interesting to us, aside from trying to make Carl Icahn’s stocks worth more, is how the details of the deal with Southwestern changed from October to now…
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Potential New OH Utica Driller First Drills Conventional Oil Well

A very small independent oil and gas company headquartered in Denver, CO, Hinto Energy (market cap of $5.4 million), issued a press release today to say they’ve drilled a shallow, conventional oil well in the Berea Sandstone of Ohio. A conventional driller targeting shallow rock layers is typically not something that catches our attention. The thing that does catch our attention is that Hinto is also eyeing other rock layers for the leases they own in Ohio–including the Utica Shale. Hinto has not previously drilled any horizontal shale wells, from what we can tell. It appears they didn’t even drill this conventional Ohio Berea well as their announcement states they will maintain a “75% non-operated interest” (i.e. ownership) in the well. Non-operated means they didn’t do the drilling. While this isn’t big news by any stretch, it is notable that yet another E&P is sniffing around the Ohio Utica…
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UGI Pre-Files with FERC for New Marcellus Pipeline in Central PA

Another new pipeline on the way from Pennsylvania utility company UGI. This one will run from Lycoming County in north-central PA to Snyder County in central PA and bring abundant, cheap, clean-burning Marcellus Shale gas from NEPA to a site where a company is converting a former coal-burning electric generating plant into a natural gas electric plant, near the Shamokin Dam in Snyder County. UGI has submitted a pre-filing request to the Federal Energy Regulatory Commission (FERC) for the 35-mile pipeline–a project that will cost $150 million to build. Starting next month UGI will conduct an open season to sign up more customers for cheap Marcellus Shale gas. Here’s the details…
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Why Did Maryland Decide to Allow Fracking but New York Didn’t?

How could two liberal, eastern states review the science of fracking and make opposite decisions about whether or not to proceed? That question has been rolling around our heads since last week. MDN even mentioned it in passing–that just a few weeks ago outgoing liberal Democrat Gov. Martin O’Malley (Maryland) has given fracking the green light in his state (see Maryland Gets Ready to Frack! Gov O’Malley Files New Regulations). But last week, liberal Democrat Gov. Andrew Cuomo (New York) put the brakes on fracking in his state (see After 6+ Years, Andrew Cuomo Bans Fracking in New York). Two different states, same “science” reviewed–why the difference? A (surprisingly) well-written article in the Washington Post tackles and answers that question…
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Lancaster Congressional Staffer Calls Anti-Pipeliners – Big Mistake

Some anti-drilling, anti-pipeline folks who live in Lancaster County, PA complained to their Congressman, U.S. Rep. Joe Pitts, about the proposed Williams pipeline project Atlantic Sunrise that will come through their area. Following the November election in which Pitts was re-elected, a Pitts staffer responded to several of them, calling them up to discuss the project and tell them why they ought to allow Williams to survey their property. NEVER talk common sense to an anti-driller. So the anti-drillers conscripted the local newspaper to turn the story around and make it seem like the Pitts staffer is engaged in illegal lobbying for Williams…
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