Range Cuts 2015 Drilling Budget 33%; Mariner East Up & Running!

Big NewsIn addition to release good news yesterday about record high proved reserves (see today’s companion story), Range Resources issued a second press release yesterday to say they’re scaling back the drilling budget (capital expenditures, or capex) for 2015. Originally they set out to spend $1.3 billion on drilling projects in 2015. They’ve just trimmed it back by 33% to $870 million. They’re scaling back because of the low commodity price of natural gas, plain and simple. That’s the bad news. The good news is that 95% of that money will be spent in the Marcellus Shale. The further good news (why the deuce do we always have to hear these things from Range instead of Sunoco Logistics?!) is that the Mariner East pipeline is now up and running, flowing propane from western PA to storage caverns currently–not all the way to Philadelphia just yet…
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Antero Resources 4Q14: Just Paid $20K/Acre for More Utica Leases

Antero Resources, one of the biggest Marcellus/Utica Shale drillers, issued their fourth quarter operations and hedging report on Wednesday. The report includes a lot of 2014 summary information. It’s an important update with a lot of juicy information contained in it. Perhaps the juiciest is buried near the end: Antero closed on a deal to pick up another 12,000 Utica acres, most of it located in Monroe County, OH, from an undisclosed third party. Antero paid an eye-popping $240 million–or $20,000 per acre! The land does have five producing shale wells and an 8-mile pipeline. Figure the wells are worth $8M each (the cost to drill them) and the pipeline is worth $1M per mile, another $8M (this is very rough, back of the envelope stuff). Deducting that from the price you still get $16,000 per acre for the undeveloped land. Yikes. Here’s the other things that caught our eye about the update…
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PA DEP Completes Fracking Radiation Study, Concludes “Little Harm”

We love it when we get to close a loop–especially this one. Exactly two years ago the Pennsylvania Dept. of Environmental Protection, under then Secretary Mike Krancer, embarked on what would become a two-year, top to bottom, “thorough and rigorous” study of radiation in shale drilling (see PA DEP Announces New Study of Radiation in Shale Drilling). That is, they would use real science to figure out whether we will all, as the anti-drillers claim, begin to glow in the dark from exposure to radiation in wastewater, radiation in drill cuttings and radiation in “fracked gas” as they frequently prattle on about. The 200-page study is complete and we have a copy (below). What did the DEP conclude in their “peer reviewed” study? “There is little potential for harm to workers or the public from radiation exposure due to oil and gas development.” That is, the DEP says all of these wild-eyed claims of radiation poisoning are false…
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Schlumberger Firing 9,000 to Reduce Head Count, “Low Oil Prices”

Wow…is about all we can say. Yesterday Schlumberger (pronounced Shlum-Bur-Zhay), the world’s (and the U.S.’s) largest oilfield services company, issued its fourth quarter 2014 and full-year 2014 operating results. Although revenues in 4Q14 rose 6.2 percent to $12.6 billion, earnings, what they pay investors, decreased by 82%–to $302 million for the quarter, largely because of “one-time charges.” The radical drop in oil prices has deeply affected Schlumberger. However, it wasn’t their financial results but this short mention in yesterday’s update that caught everyone’s attention: “In response to lower commodity pricing and anticipated lower exploration and production spending in 2015, Schlumberger decided to reduce its overall headcount to better align with anticipated activity levels for 2015. Schlumberger recorded a $296 million charge associated with a headcount reduction of approximately 9,000.” Ouch. It makes Doug “the ax” Lawler over at Chesapeake look like a junior achiever by comparison. Schlumberger employs about 120,000 worldwide, so 9,000 represents 7.5% of their workforce. Gone…
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Range Hits Record High 10.3 Tcfe Proved Reserves in 2014

A high level report wrapping up stellar results for 2014 was issued by Range Resources yesterday. Among the things Range is justifiably crowing about: Their proved reserves have increased by 26% to 10.3 trillion cubic feet equivalent (Tcfe). In 2014, it cost Range an average of $0.64 per million cubic feet (Mcf) to find and develop their Marcellus Shale acreage–get it ready to drill. And in 2014, it cost them an average $0.55/Mcf to drill and develop their acreage. That’s a combined $1.19 per Mcf cost to Range to find, drill and product, so you can see they’re still making money on dry gas that sells for less than $3/Mcf (plus they’ve hedged, meaning they get even more for their gas than the going spot price). There’s plenty of other goodies in yesterday’s announcement…
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Indians on the War Path Against Pipeline in Lancaster County, PA

A “native American” (i.e. Indian) tribe in Lancaster County, PA doesn’t want the Williams Atlantic Sunrise Pipeline to traverse “sacred” land, and they’re willing to “make noise, protest and rally, block bulldozers” to stop it, according to Chief Carlos Whitewolf. The good Chief Whitewolf is from the Northern Arawak Tribal Nation of Pennsylvania, which arrived in PA in 1898, long after PA was already part of the United States of America. But it gets stranger. There is no Arawak land in Lancaster County. However, there is Conestoga land, belonging to a different tribe. But the Conestoga tribe was “wiped out,” so there are no Conestoga Indians in Lancaster County either. But the good Chief Whitewolf feels an obligation to stick up for them, even though they are no more…
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PA Gov Wolf Defends Anti-Drilling Choices for DEP, DCNR

Pennsylvania Gov.-Elect Tom Wolf is already playing defense about his pick of two people–John Quigley and Cindy Dunn, both of whom have worked for the anti-drilling PennFuture organization–to run the Dept. of Environmental Protection and the Dept. of Conservation and Natural Resources, respectively (see Wolf Officially Announces Quigley to Head DEP, Dunn to Head DCNR). He’s also pretty thin-skinned about the valid observation that he seems to using a lot of Rendell retreads in his administration–both Quigley and Dunn, as well as others, worked for former Gov. Ed “Fast Eddie” Rendell. Seems that Wolf’s “outsider” facade is being ripped right off his face. Wolf’s team is composed of consummate Harrisburg insiders. Here’s what Wolf snipped to reporters yesterday when asked about it…
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Brainwashing NJ Students Against the PennEast Pipeline

brain washThere’s plenty of brainwashing of children going on in New Jersey. The brain washers include the Delaware Riverkeeper and the NJ Sierra Clubbers. Like good little mind-numbed robots, the members of the environmental club at Delaware Valley Regional High School in Hunterdon County, NJ invited Riverkeeper and the Sierra Club to present their dog and pony show bashing away at the PennEast pipeline–and apparently they lapped it right up. Note that no one from PennEast was invited to present the other side of the issue. It’s really important that children be brainwashed early on and not be exposed to opposing arguments (i.e. the truth)–so they can enjoy a lifetime of never having to think for themselves…
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Pittsburgh Oilfield Services Co Expands with Local Investment

Three Pittsburgh-area oilfield services companies–White’s Equipment Rental, Crossfire Production Services, and White’s Welding–are collectively owned by a single company, White’s Holdings. Owner Calvin White started White’s Welding first, in Oklahoma, and grew the enterprise from there, eventually expanding into the northeast. White’s move to the northeast was prescient. The Marcellus/Utica has supercharged his businesses in the region. It was time to grow, and is often the case, small businesses growing into medium-sized businesses need cash to do so. Enter another Pittsburgh-area company, F.N.B. Capital Partners (FNBCP), a private equity firm. FNBCP has just announced they’ve made an investment in White’s Holdings so the company can expand. That is, White has traded away some ownership (retaining majority ownership) in return for cash to expand the three businesses that serve the drilling industry in the northeast. Another jobs and economic miracle courtesy of fracking…
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