Rice Energy 1Q15 Earnings Call: 100% Focused on 3 Counties

laser focusedLast Friday MDN brought you the Rice Energy first quarter 2015 update (see Rice Energy Doubles Production 1Q15; Utica Flows; Ekes Out a Profit). On Friday, Rice’s upper management held an earnings call with analysts and as always, quite a bit more comes out in the call than in the official press release. Below is Rice Energy CEO Dan Rice’s prepared remarks on that call with some interesting details on both their Marcellus and Utica operations. Among the interesting comments: Rice is 100% focused on just three counties in the Marcellus/Utica…
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Rex Energy to Sell Acreage in OH & PA, Focus on 3 Counties

Last week MDN brought you the first quarter 2015 update for State College, PA-based Rex Energy (see Rex Energy 1Q15: Production Up 61%, Revenue Down 33%, Gulf Coast Deal). Rex’s management held an earnings call later that day, and as is typical, a some important news was revealed on that call that was not included in the press release update. Namely, Rex is looking to sell it’s leased Utica Shale property in Belmont, Guernsey and Noble counties in Ohio. They also plan to sell leases in Westmoreland, Clearfield, and Centre counties in PA. When it’s all over and done, Rex will be concentrating on just three counties…
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Another Belmont County Landowner Threatened with Forced Pooling

In April MDN told you about a landowner in Belmont County, OH who had questions and objections to phrasing in a proposed lease agreement from XTO Energy that talks about “nuisance oil” (see XTO Threatens Belmont County, OH Landowner with Forced Pooling). NEVER sign a lease without running it by a competent oil & gas attorney, and ALWAYS get the sometimes obscure terminology in a lease explained before you sign it. That’s our advice. We have another story along the same lines as the “nuisance oil” story–language that energy companies can’t or won’t explain to landowners. This one also comes from Belmont County, OH–perhaps the hottest of the hot places for drilling right now in the Utica Shale. A landowner from Martins Ferry, OH says XTO offered him an eye-popping $8,000 per acre signing bonus with 20% royalties, and Aubrey McClendon’s American Energy Partners offered $6,000 per acre with 20% royalties. Both have a “market enhancement clause” in the lease. The landowner didn’t like the clause, fearing it would reduce his royalties. The landowner was told by either XTO or AEP or both (we’re not sure), that they would force pool him if he didn’t sign. By force pooling him he would not get a signing bonus at all and only a 12.5% royalty. These kinds of strong-arm tactics give the industry a black eye in our opinion…
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Magnum Hunter 1Q15: Prod. Up 66%, Financials Worse Than Expected

Magnum Hunter Resources, now a pure play company focused on the Marcellus and Utica Shale region, released their first quarter 2015 update this morning. On the positive side we learn that production as up a healthy 66% in 1Q15 vs 1Q14. Production costs–how much it costs to produce the natural gas/oil/liquids, went down a big 36% year over year. And Magnum Hunter now owns ~80,000 net acres located in the Marcellus Shale and ~130,000 net acres located in the Utica Shale. Eureka Hunter, the company’s pipeline subsidiary, had new record high throughput volumes. But on the downside the company lost $0.57 per share. The “consensus” estimate was that they would lose $0.32 per share, so the performance of the company financially, if you want to think of it this way, was roughly twice as bad as Wall Street watchers thought it would be. Look for the stock price, which (before the opening) was trading at $1.86 per share–well off the typical $8 per share or so over the past year–to take a further beating…
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More Marcellus Gas for Philly: Texas Eastern Pipeline Expansion

A new pipeline expansion project that will bring more cheap, abundant and wholesomely fracked Marcellus Shale gas to the Philadelphia, PA area was announced late last year by Spectra Energy–and somehow it escaped our notice! The Greater Philadelphia Expansion Project will not involve building any new greenfield pipeline but rather will expand (using larger diameter pipes and looping new pipes next to existing pipes) for the Texas Eastern pipeline that already serves the Philly area. Currently, the Texas Eastern pipeline delivers 550,000 dekatherms per day (Dth/d) of natural gas into the greater Philadelphia region (roughly 550 million cubic feet per day). The expansion will add an additional 475,000 Dth/d (or 475 Mmcf/d)–nearly doubling capacity. The open season–the time when customers can officially sign contracts to reserve capacity–ended last Friday. No word yet on how that went. According to Spectra Energy, this is very early days yet in the life of this proposed project. Below we have more details about the project along with a map…
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Washington Gas $126M Deal to Bring Marcellus Gas to DC Suburbs

Washington Gas, a natural gas utility serving customers in Washington, DC, Maryland and Virginia, announced a deal last week to purchase Marcellus Shale natural gas directly from 22 producing wells in Pennsylvania to be used to sell to Washington Gas’ customers in Virginia. Yes, some of that cheap, abundant and wholesomely fracked Marcellus Shale gas will be going to the Washington, DC suburbs. The deal is with Energy Corporation of America (ECA) for $126 million and runs for 20 years. It is the first such deal under a new 2014 Virginia law that allows such investments. Here’s the details…
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Shell to Close on PA Cracker Plant Property in “Next Few Months”

Last week we told you a positive sign that the proposed $2-$3 billion ethane cracker plant to be built by Shell in Monaca (Beaver County), PA was the joint information session recently held by the Dept. of Environmental Protection and Shell to discuss an air quality permit the DEP will issue for the project (see Progress: DEP & Shell Hold Info Session on PA Cracker Plant). Here’s yet another very encouraging sign: Horsehead Corporation, which still owns the site Shell would use to build the plant, said in their first quarter update that they expect to close on a sale of the property to Shell “within the next few months”…
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Virginia AG Says Localities Can “Regulate” & “Prohibit” Fracking

Apparently Virginia’s Attorney General, Mark Herring, believes every county and town in the Old Dominion is populated with oil and gas experts. How else could he issue an advisory opinion that, in his opinion, every municipality in the state has the authority to regulate and/or prohibit fracking within its jurisdiction? Every other oil and gas producing state, save a bad decision made by New York’s highest court, says oil and gas regulation is solely under the purview of the state–and for good reason. The state employs oil and gas experts who know what they’re doing–what’s safe and what isn’t. How the process works. What pollutes and what doesn’t pollute. But AG Herring has thrown that out the window in Virginia…
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The Fight to Build the PennEast Pipeline: Arguments For & Against

About a month ago MDN editor Jim Willis granted an interview with Kevin Mooney, on assignment writing for The Daily Signal, a publication of arguably the top conservative think tank in the country–the Heritage Foundation. Kevin wanted to talk about the PennEast Pipeline and the controversy surrounding what should be a straightforward and non-controversial project. These days anything to do with fossil fuels is being opposed by the likes of the Sierra Club and (in the case of the PennEast), regional anti-drilling groups like THE Delaware Riverkeeper–a group now being investigated by pro-drillers for possible violations of ethics laws in their dealings with the Delaware River Basin Commission. Kevin not only talked with MDN, he also spoke to Tom Shepstone of the always excellent Natural Gas Now, and Nicole Jacobs from the excellent Energy in Depth–both good friends of MDN’s Jim Willis. Kevin got the other side of the story too–from none other than Maya van Rossum, who is THE Delaware Riverkeeper herself (see Delaware Riverkeeper Gets a French Kiss from Phila. Inquirer). Kevin turns in a well-balanced and useful overview of the fight to build the PennEast. What are the arguments for it, and against it? We bring you Kevin’s article here…
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Ohio Univ to Get New Natgas Pipeline from Columbia Gas This Year

Here’s a fact: So-called “sustainable” forms of energy like solar, wind and geothermal cannot, by themselves, provide all of the electric needs for a huge university like Ohio University, situated on an 1,850 acre campus in Athens, OH. Right now OU uses coal to meet its electric generating needs. They want to replace it with natural gas. But get this, ninny nanny “environmentalists” don’t like that idea. They’d rather have OU continue to burn dirty coal rather than build a pipeline to the campus and have the campus change over to natural gas. Which perfectly illustrates another fact: “environmentalist” opposition to natural gas springs from a twisted ideology and irrational hatred of fossil fuels, rather than concern for the environment or concern for the air people breathe…
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