Post-Gazette: Wolf Budget with Severance Tax “a Miss…Utter Folly”

Swing and a MissUsing the same class warfare language all Democrats resort to when they want to justify their enormous appetite for taxing and spending, yesterday Pennsylvania Gov. Tom Wolf introduced the highest-ever budget in PA and attempted to lay a huge theft, in the form of a so-called severance tax, on the Marcellus industry by saying, “We deserve to be fairly compensated for the use of our resources.” Just one problem Tom: IT’S NOT YOUR RESOURCES! The resources in question belong to private landowners and your proposal to steal their money, along with the money of the drillers who risk a lot of capital to drill, is abhorrent. The justification is that the money stolen will be given “to the children”–by which he means given to teachers’ unions who turned out the vote for him. The Wolf budget landed yesterday–with a thud–and it calls for $1 billion in taxes on the Marcellus industry. Wolf thinks he can get buy-in by ensuring $225 million of that amount will be kept local, like the old “impact fee.” That’s the payoff to try and get support for this Marcellus-killing budget. He plans to fork over the rest of it to Big Education as their reward for voting for him. Even the Pittsburgh Post-Gazette calls his budget “a miss” and “utter folly.” Can you believe that? It’s so bad even the anti-drilling editors at the Post-Gazette don’t like it…
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McClendon Looking to Sell 29K Utica Shale Acres in Ohio

Hats off to Columbus Business First and intrepid reporter Tom Knox for unearthing what we consider to be some pretty big news: Aubrey McClendon and his American Energy Partners are shopping 29,000 acres of Utica Shale leases in Ohio. At last count, McClendon has raised over $10 billion, much of it used to purchase land deals in the Utica and Marcellus (see Aubrey McClendon Raises Huge $8.7B for Shale Drilling…So Far and Aubrey Goes Shopping Again, Wants Another $2 Billion for Drilling). He’s amassed around 250,000 acres in the Ohio Utica Shale. Now he’s beginning to sell some of it. Where? We have the answer…
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Bankrupt Waterless Fracking Co GASFRAC Sold to “Third Party”

It’s either a sad ending, or a happy new beginning–we’re not sure which. For some time MDN has chronicled the ups and mostly downs of Canadian company GASFRAC, a pioneer and perhaps best shot (so far) in providing a waterless alternative to fracking shale wells. The company ran an experimental frack job on a Utica Shale well for EV Energy Partners last year (see Details on GASFRAC’s Waterless Frack Test in OH Utica). EV has not released any details about that frack job, good or bad–so far. GASFRAC has been in financial trouble for a few years now and we reported earlier this year the company filed for bankruptcy protection and put themselves and/or any of their assets up for sale (see Fire Sale for GASFRAC Waterless Fracking Co, Interim CEO Resigns). The sale has happened…
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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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