Eclipse Resources Drilling 1 Well in 2016, Restricting Production

Eclipse_logo_hiresEclipse Resources issued their fourth quarter 2015 operational update yesterday, along with publishing an updated investor’s PowerPoint. We have both below. Eclipse is a smaller but important Marcellus/Utica driller with its headquarters in State College, PA–although they do almost all of their drilling in Ohio’s Utica Shale. In November word leaked out that Eclipse is shopping the company (see Marcellus/Utica Driller Eclipse Resources Looking for a Buyer). There was no overt or implied reference to that in yesterday’s update. What the update did say, however, is that save a single well they plan to drill in the first quarter of this year, Eclipse is not planning to do any more drilling until the price of natgas increases. They also said that although previously drilled wells going online have the potential to boost Eclipse’s production in 2016, they plan to reign in the flow rates to keep them at 2015 levels–again, until the price of natgas goes up. Nobody is predicting an increase in natgas prices any time soon (at least not in 2016), but it appears Eclipse is buckling in for a long ride through low-price valley…
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How Antero Resources Converted an Ugly Duckling into a SWAN

Antero Resources is perhaps the largest driller completely focused on the Marcellus/Utica (by acreage). They are certainly one of the most important drillers in the northeast. And bucking the trend of almost all of their competitors, they somehow manage to operate in the black (see Antero Resources 3Q15: Bucks the Trend, $237M in the Black!). What’s Antero’s secret to making money in arguably the worst time for our industry in a generation? In a word, it’s hedging. Somehow Antero crafts financial deals a year or more in advance to sell whatever gas they produce for prices much higher than others–at prices that mean the company continues to make a profit. Most energy companies these days are keeping the people who run those companies, AND their investors, up at night. A company like Antero comes as close to any as a SWAN–a “Sleep Well At Night” energy company. An interesting article on the Seeking Alpha website gives us background and clues as to how Antero has been able to convert itself from an ugly duckling into a SWAN…
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How to Successfully Negotiate a Pipeline Easement & How Not To

This is the story of two landowners in Berks County, PA whose property Sunoco Logistics needs to cross/use for the Mariner 2 set of pipelines. One landowner, on whose property Sunoco not only wants to install the pipeline but also wants to install a big valve in his front yard, successfully negotiated with Sunoco and got his price. The other landowner, who owns a dog park where Sunoco wants to put a pipeline, hasn’t negotiated and is trying to stop the pipeline from coming through his property. Guess which landowner will be the biggest loser? Here’s the story of how to craft a pipeline deal, and how not to, if you are a landowner faced with the threat of eminent domain…
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Intervenor Contagion Catching on with Radical Green Groups in NE

Like a contagion moving through the small-but-dedicated anti-fossil fuel movement in the northeast, the strategy of filing as an “intervenor” in pipeline permitting is catching on. MDN first alerted you to this sleazy tactic being used by THE Delaware Riverkeeper back in October 2015 (see Delaware Riverkeeper Scams FERC in Review of PennEast Pipeline). In short, the Federal Energy Regulatory Commission (FERC) has a process known as a motion to intervene. Individuals, towns and organizations with a vested, *legitimate* interest can file to “intervene” in a pipeline project application, which gives them special standing to receive updates from FERC and to ensure their views are fully considered by FERC. THE Delaware Riverkeeper and others began registering everyone–including their own children–as “intervenors” which essentially overloads FERC’s system and greatly slows down the permitting process (ses FERC Confirms “Intervenors” Slowing Down Pipeline Approvals). It is an abuse of the system–but then anti groups are no strangers to violating the rules, or laws. They revel in “catch me if you can” behavior. Intervenor abuse is catching in Massachusetts where radical greens are trying the same tactic to slow down approvals for the Tennessee Gas Pipeline’s Northeast Energy Direct (NED) project. Radical greens in Ohio are also using the tactic to try and slow down approvals for the NEXUS pipeline there. The intervenor contagion has now spread from PA to MA to OH, with no end in sight…
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Greene County, PA Electric Plant May Reopen Using Marcellus Gas

Ohio-based utility FirstEnergy Corp. shuttered a huge coal-powered electric plant in Greene County, PA in 2013–a move that surprised many. FirstEnergy is making plans to reopen the 1,700 megawatt plant–but this time it will not only burn coal, but yummy, cheap, clean-burning Marcellus Shale gas too…
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Mass. Green Radicals Plan 3-Day, 34-Mile Pipeline Walk-a-Thon

About 20 radical green protesters in Massachusetts who oppose a pipeline in the ground because it will flow a fossil fuel–natural gas–are planning a 3-day, 34-mile walk-a-thon along a small portion of the pipeline’s pathway. And it’s big news for newspapers in that part of the country. Go figure. We suppose when you get a bunch of kooks and crackpots together it may sell a few more newspapers than reporting on the happenings at the local town board meeting (snore). So why not? The Greenfield, MA Recorder is reporting that monks from the Leverett Peace Pagoda (local Buddhist shrine) will lead a 3-day walk to oppose the Tennessee Gas Pipeline Northeast Energy Direct (NED) project that would deliver abundant, cheap, clean-burning Marcellus Shale gas to New England, ultimately leading to not only lower natgas prices but lower electricity prices. New England pays four times the rate for their electric that other parts of the country pay. Apparently the protesters want to keep it that way permanently. The monks and other green radicals planning the walk will do so in the name of the great Martin Luther King, because (they claim) King was a green radical like they are…
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57% of Pennsylvania’s CPAs Favor a Marcellus Tax – Surprised?

Each year the Pennsylvania Institute of Certified Public Accountants (PICPA) conducts a poll of its membership. Last year PA accounts answered the question “How should PA close the state budget gap?” by indicating the state should privatize liquor sales – 69%, by instituting a Marcellus Shale severance tax – 67%, and by legalizing pot smoking – 27% (see PA Accountants Love Marcellus Severance Tax (and Smoking Pot)). This year’s PICPA poll results have just been published. Perhaps it was our criticism and poking fun at the absurdity of the question last year–but this year the question changed. This is the question they asked this year of PA accountants: “Pennsylvania faces a structural budget deficit estimated at nearly $2 billion. Which of the following should the state use to close the deficit?” The #1 preferred solution for PA’s accountants? A Marcellus Shale severance tax–57% favor it. As we said last year, does anyone else find it suspicious that the people who would have to manage and file reams of tax forms on a severance tax (generating lots of billable hours) are in favor of such a tax? Can anyone say, conflict of interest? Why do we care a wit about what CPAs think about taxes and budget deficits? They’re the ones who helped create it!…
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Industry Navel Gazing – Survey, Opinions of What’s Ahead in 2016

MDN spotted a couple of “what’s coming in 2016” reports. One report shares conclusions from a survey of 100 oil and gas company CFOs (Chief Financial Officers, or “the money guys”) conducted in September/November last year. What do industry money people say is coming in 2016? Read it below. The second report was just issued by Moody’s Investors Service. Several Moody’s analysts offer their predictions about what lies ahead for the oil and gas industry this year. We call these kinds of reports “industry naval gazing” as they tend to be focused on our specific piece of the energy industry (oil and gas) to the exclusion of the complex world that exists outside of our own industry. Still, such reports have their place and can often shed light on what may lay ahead on the road we will all travel on the way to 2017…
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Enterprise Prod. Raises $100M via Unit Sale, Plans Another $200M

Enterprise Products Partners is a big (really big) midstream/pipeline company. Enterprise built and operates the 1,230-mile ATEX (Appalachia-to-Texas Express) ethane pipeline runs from four fractionation plants in the Marcellus/Utica Shale region all the way to Mount Belvieu, TX. As we noted in an article yesterday, Enterprise has just completed and brought online a new pipeline that will potentially flow some of that Marcellus/Utica ethane all the way to Louisiana (see Marcellus/Utica Ethane can Now Hitch a Ride to LA via Aegis Pipe). As all companies in our sector attempt to not only expand, but simply survive, they use different methods. In some cases they sell debt in the form of IOUs (i.e. notes) or bonds, and in other cases they sell pieces of the company, typically stocks. Or in the case of master limited partnerships (MLPs), they sell “units” which are the equivalent of stocks. Enterprise is an MLP and has just sold $100 million worth of units with plans to sell another $200 million worth of units in the first quarter of this year, for a total of $300 million in cold, hard cash they can put to work in the company…
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Marcellus & Utica Shale Story Links: Tue, Jan 5, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Marcellus/Utica rig counts way down; Maryland county ponders drilling restrictions in state where there is no drilling; OH Supremes to hear arguments in 2 important o&g cases; unintended consequences with ending crude ban; Raymond James says natgas prices “seemingly hopeless”; RBN makes predictions for 2016; big oil cutting investments in 2016; and much more!
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