MarkWest Energy Investors/Unitholders Approve Merger with Marathon

At a special meeting yesterday, the unitholders (i.e. shareholders) of MarkWest Energy voted to approve the merger/buyout offer from Marathon Petroleum. MarkWest will, by Friday of this week, become a wholly-owned subsidiary of Ohio-based Marathon. The approval comes after both co-founders of the company, John Fox and Brian O’Neill, came out strongly against the deal (see Both MarkWest Co-Founders Strongly Against Sale to Marathon). One of their criticisms is that current MarkWest management gets a “golden parachute” from the deal–they personally make boatloads of money for selling the company. But that didn’t seem to bother investors/unitholders who obviously think MarkWest combined with Marathon is better than MarkWest on its own. Here’s the official MarkWest announcement following the vote…
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Shell Closing Pittsburgh Office, Moving 180 People to Houston, TX

Shell is closing its Pittsburgh-area office and moving “most of” the 180 workers who worked there to its U.S. HQ in Houston, Texas–so says a Shell spokesperson. A few workers may remain and redeploy to various field offices that Shell intends to keep open–including a field office in Tioga County, PA where they have an active drilling program. Shell drilled just eight wells in PA this year, compared to 17 last year and 31 the year before that. Notice a pattern? Perhaps most importantly Shell stresses the office closure has nothing to do with the work on a proposed ethane cracker plant in Beaver County…
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Bombshell Revelation: Cuomo was on Cusp of Lifting Frack Ban

An interesting update on what is now ancient history in New York State with regard to Andrew Cuomo and his ban on fracking. According to secretly recorded wiretaps of conversations of the son of former NY Senate Majority Leader Dean Skelos, a Cuomo official made the rounds to several prominent Senate Republicans to ask if there would be any “blowback” when (not if) Cuomo lifted a ban on fracking. If true, the revelation is a bombshell–that Cuomo had intended to lift the moratorium but changed his mind at the last minute. The problem with the recorded conversations is that Skelos’ son Adam, in talking with three different lobbyists, attributes the conversation to different Cuomo Administration sources. That is, he changes his story, making his story less credible. Both father Dean and son Adam Skelos are on trial in Manhattan for corruption. Dean tried to help his son get work with sweetheart deals–something that happens every day in New York with both Republicans and Democrats. We’re not excusing corruption–just pointing out the context and circumstances…
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Reuters Says Marcellus “Finally Succumbs” to Production Downturn

The Reuters news service is, somewhat gleefully, reporting that America’s biggest gas field–the Mighty Marcellus–“finally succumbs to downturn.” The article in which they announce this “fact” breathlessly reports preliminary (i.e. not yet solid, as in draft) figures from DrillingInfo are at odds with projections from the U.S. Energy Information Administration (EIA). According to Reuters, the EIA’s numbers are too rosy, showing a year-over-year decrease in Marcellus production won’t happen until 2019. DrillingInfo, according to Reuters, indicates a year-over-year decline will come next year, in 2016. Who’s right?…
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Kinder Morgan Steps Up Marcellus/Utica Investment with NGPL Buyout

On Monday the largest pipeline company in the United States, Kinder Morgan, and their partner Brookfield Infrastructure Partners, announced a deal to buy out a third partner in the Natural Gas Pipeline Company of America (NGPL). When the deal is done, both Kinder Morgan and Brookfield will each own 50% of NGPL, although Kinder is the pipeline operator. NGPL, in case you haven’t heard of it, is a huge interstate pipeline system located in the Midwest and southwest. (See a copy of Kinder Morgan’s pipeline systems map below. The dark green lines represent NGPL.) So why is the NGPL buyout in the Midwest/southwest a Marcellus/Utica story? Because NGPL is currently building an expansion in the Chicago area, appropriately called the Chicago Market Expansion Project. That expansion will carry gas coming into the NGPL pipeline where it intersects with the Rockies Express (REX) pipeline in in Moultrie County, Illinois northward into the Chicago area. REX recently reversed its flow and now carries Marcellus/Utica gas to Moultrie—meaning more Marcellus/Utica gas will be flowing to the Chicago area starting in 2016 when the Expansion Project is put into service (see 1.8 Bcf/d of Marcellus/Utica Gas Heads West on REX Starting Aug 1). A little over two months ago Kinder Morgan announced they would reverse the flow for part of NGPL and begin sending northeast gas south, to the Gulf Coast (see Marcellus/Utica Gas Heading to TX LNG Export Plant…in 2018), meaning gas arriving at Moultrie will not only go north, it eventually will go south too. So the NGPL purchase is very much about the Marcellus/Utica…
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Columbia Pipeline Group Floats 51M Shares of New Stock

Columbia Pipeline Group, a major player in the Marcellus/Utica midstream, was spun out into its own company in July from parent NiSource (see NiSource/Columbia Pipeline Divorce is Final). The new company has made a number of investments in major projects, including $1.2 billion worth of investments in pipelines for the northeast in 2015 (see Columbia Pipeline 2Q15: Investing $1.2B in NE Projects This Year). With prices plummeting and investments increasing, how does a company like Columbia get more money to keep operating and expanding? One way is to sell debt (bonds and IOUs). Another way, the preferred way in our book, is to sell equity, or stocks. Right on cue Columbia announced yesterday they are floating 51 million shares of new stock in an effort raise money. The company doesn’t say how much they want to raise, but if you do some simple math and multiply this morning’s share price of $19.03 by 51 million you get a whopping $970.5 million–nearly $1 billion! They likely won’t get a full $19.03 per share, but hey, if even if they only get $15 per share that’s still $765M big ones. Here’s the announcement offering new stock in Columbia Pipeline…
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PDC Energy’s CFO Gysle Shellum Sells $297K Worth of Co Stock

PDC Energy is primarily focused on drilling new shale wells in Colorado’s Wattenberg Field. However, they do have a small operation in the Ohio Utica Shale as well. At last check-in PDC was contemplating whether or not to restart their paused Utica drilling program (see PDC May Un-pause OH Utica Shale Drilling Earlier than Expected). We believe they have reactivated their Utica program based on the fact they received permits to drill four wells from May through August 2015, according to the latest volume of the 2015 Marcellus and Utica Shale Databook. Today we told you in a related story that Toby Rice, President & COO of Rice Energy, recently purchased $100,000 worth of his own company’s stock. PDC Energy’s Chief Financial Officer, Gysle Shellum, has just sold $297,000 worth of his company’s stock…
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Rice Energy President Toby Rice Buys $100K Worth of Co Stock

From time to time (not all of the time) when we notice a drilling or midstream company executive buying or selling company stock–called insider buying or insider selling–we bring you that news. We always take it as a good sign when those responsible for a company–either senior management or the board of directors–buys stock in the company they manage. For us, it’s evidence of confidence in the direction of the company. “Eating your own dog food.” Such is the case with one of our favorite Marcellus/Utica drillers–Rice Energy. Rice is a young company led by three young brothers–Dan (CEO), Toby (President & COO) and Derek (EVP). Toby has just purchased 7,500 shares of Rice Energy for $99,750…
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Marcellus & Utica Shale Story Links: Wed, Dec 2, 2015

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: it’s getting brutal out there; Oberlin, OH hires attorney to oppose NEXUS pipeline; Cabot O&G – a 2018 story; the shale gas revolution ain’t over yet; converting to propane; National Grid lowers gas prices; wacko Bernie Sanders opposes NED pipeline; Schlumberger axing more jobs; Chesapeake’s Doug Lawler blames Aubrey McClendon for his own failures; and more!
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