Cuomo Needs to “Snap on a Pair” and Approve the Constitution Pipe

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Constitution Pipeline Meeting in Afton – click picture for larger version

“What do we want? Pipeline! When do we want it? Now!” It was a raucous crowd who gathered last Saturday in the tiny village of Afton, New York to show support for the Williams Constitution Pipeline project. The River Club in Afton was jammed with people–by our estimation some 250-300 people. The meeting was organized and hosted by the Joint Landowners Coalition of New York (JLCNY). The JLCNY’s attorney, Scott Kurkoski (from Levene Gouldin & Thompson LLP) began the meeting with a full-throated yell: “New York Can’t Wait!” That simple sentence summed up the focus of the rally. The Constitution Pipeline is fully permitted by the Federal Energy Regulatory Commission (FERC). The only thing holding up construction of the pipeline is a stream-crossing permit from New York State. The tail is wagging the dog. Speaker after speaker (politicians, business people, labor reps) outlined the reasons why New York State can no longer wait for Gov. Cuomo to continue his waffling on this project. The frustration with Cuomo and the DEC was palpable in the audience. Whenever Cuomo’s name was mentioned there were cat calls and boos. Perhaps the best line of the day, from all of the speeches, was uttered by Assemblyman Clifford Crouch. Cliff mentioned he had called the Dept. of Environmental Conservation (DEC) just a few days prior to ask about the status of the permits. Without saying so, the DEC rep indicated the delay is not due to the agency itself. The implication was clear: Cuomo is holding it up. Crouch then said this: “We need to contact Snap-on Tools and get the governor a pair to snap on!” The crowd roared. They loved it!…
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Halliburton’s Ugly 4Q15: Fired Another 4,000, Lost $28M

Oilfield services giant Halliburton, with major operations in the Marcellus/Utica, released their fourth quarter and full year 2015 update yesterday. It wasn’t pretty. For the last three months of 2014, Halliburton made $901 million in net income. For the last three months of 2015, that number went to minus $28 million. There are a number of reasons for the big swing. The price of oil (and gas) tanked in 2015, and with it, drillers laid down rigs operated by Halliburton. Top line revenue–how much revenue came in–tanked in 4Q15. In 4Q14 Halliburton’s total revenue was $8.77 billion, and in 4Q15 the number was $5.08 billion. Add in higher impairment costs (a permanent devaluing of a company’s assets on paper), costs related to laying off another 4,000 workers in 4Q15, costs related to buying Baker Hughes, etc., and the numbers for Halliburton are ugly. Total revenue for full year 2015 was $23.6 billion, a decrease of $9.2 billion, or 28%, from 2014. Reported operating loss for 2015 was $165 million, compared to reported operating income of $5.1 billion for 2014. Even so, Halliburton’s president Jeff Miller puts a happy face on and says the company is doing better than its peers…
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Schlumberger’s Ugly 4Q15: Fired Another 10,000, Lost $1B

Schlumberger, the world’s largest oilfield services company, released its full year and fourth quarter 2015 update last week. Like Halliburton, which we also report on today, Schlumberger was hit hard in 2015 with the slowdown in drilling. Revenue in 4Q14 for Schlumberger was $12.6 billion. In 4Q15 their revenue was $7.7 billion. Ouch. Schlumberger had a net income loss for 4Q15 of $1 billion, whereas they made $302 million of profit in 4Q14. While Halliburton laid of 4,000 people in 4Q15, Schlumberger laid of another 10,000 people. So that’s a cumulative 14,000 people out of jobs in the last three months of last year–from just two companies. With all of the bad news, Schlumberger, unlike Halliburton, did turn a profit last year. When you look at all of 2015, Schlumberger made just over $2 billion in profit, whereas Halliburton lost $165 million for the year…
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The Rise and Fall of Utica Drilling – In One Graph

MDN spotted a nifty listing of how many Utica wells have been drilled in Ohio, by quarter, since 2011 when the Utica revolution in the Buckeye State was just getting started. We decided instead of just showing a list of disembodied numbers, we would graph it out for you. The graph (below) tells the story of the rise, and now fall, of Utica drilling…
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Value of Eclipse Resources’ Ohio Assets Drop by $750-$850M

Last week Eclipse Resources, a pure play driller focused on the Marcellus/Utica (headquartered in State College, PA) announced that the value of its proved reserves (what it can prove is in the ground, waiting to be extracted) is going down 58% over what it was at the end of 2014. Not because there’s now somehow less in the ground waiting to be extracted, but because of the price they can get for what they could extract. The company also announced it will take an “impairment” charge of $750-$850 million for 2015. An impairment is a permanent, irreversible devaluing of the company’s assets (see A Basic Guide to Understanding “Impairments” for Marcellus/Utica). We doubt Eclipse will be the last to make such announcements about year-end 2015 numbers. Here’s the announcement from Eclipse explaining the latest…
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Williams Slashing 2016 Capital Budget by $1B

While Marcellus/Utica midstream giant Williams won’t release a full financial and operating update until Feb. 17, yesterday the company did release the outlines of spending plans for 2016 yesterday. The big news from that announcement is this: Williams will spend $1 billion less on capital projects in 2016 than it did in 2015–a 32% decrease. In 2015 Williams spent, in round numbers, $3 billion on capital projects. In 2016 that number will be $2 billion. The reason? The slowdown in drilling. Here’s yesterday’s announcement…
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EIA’s NatGas Price Predictions for 2016/2017 – The How & Why

Hang around gas guys and gals long enough and you come to understand the perennial parlor game played is to guess what the price of natural gas is going to do in the next week, month, year, two years, etc. It’s always about the price. The U.S. Energy Information Administration (EIA) released their Short Term Energy Outlook a few weeks ago and predicted the average price of natural gas as traded at the Henry Hub delivery point would rise to $2.65 per million British thermal units (MMBtu) this year, and go up a bit more in 2017–to an average of $3.22/MMBtu (see EIA’s STEO Predicts NatGas Price Constant This Year, Up Next Year). In a post on their Today in Energy publication yesterday, the EIA further elucidated what factors are taken into consideration when making their predictions about natgas prices for 2016 and 2017. It’s instructive…
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Cheniere Energy Hires 13 Banks to Refinance Debt for LNG Facility

Cheniere Energy’s Sabine Pass Liquefaction Project (LNG export plant) in remote Louisiana is currently liquefying natural gas and loading it on a ship for export. The first tanker was supposed to set sail in January, but now appears delayed due to some technical issues. We’ve followed the Cheniere LNG export story for some time because there is a Marcellus/Utica connection (see How a Louisiana LNG Export Facility is Connected to the Marcellus/Utica). In December, corporate raider Carl Icahn, who has his hooks in Cheniere, ousted the company’s co-founder and CEO, Charif Souki (see Evil Corporate Raider Carl Icahn Claims Another CEO Scalp). Since the Cheniere LNG plant in Sabine Pass is tied to our region, we’re interested in what happens to the company. Which is why we were interested when we noticed Cheniere has hired 13 banks to help refinance $2.8 billion worth of debt, all of it directly or indirectly tied to the Sabine Pass facility…
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Seneca Resources President Retiring; NFG Musical Chairs

Seneca Resources is the wholly-owned drilling subsidiary of National Fuel Gas Company, headquartered in Buffalo, NY. Seneca has a large and active shale drilling program–all of it in Pennsylvania. The current president of Seneca, Matt Cabell, has decided to get out while the gettin’ is good. Cabell will retire in May, even though he’s only in his late 50s. John McGinnis, currently Seneca’s Chief Operating Officer, will succeed Cabell as president of Seneca. It seems Cabell’s departure ignited a number of changes, with people either changing roles or adding new roles at either Seneca or the mother ship National Fuel Gas. Here’s the announcement about Cabell, McGinnis, and people playing musical chairs at Seneca and NFG…
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Who Else is Waiting in the Wings to Buy Failing Shale Cos?

Just last week MDN told you about Chief Oil & Gas’ billionaire founder Trevor Rees-Jones who is ready, willing and able to buy distressed assets from shale companies in trouble (see Chief O&G Founder “Licking His Chops” to Buy Distressed Assets). However, Rees-Jones isn’t the only interested party sitting on the sidelines eager to start buying shale companies. Investment firms including KKR, Warburg Pincus, and Apollo (among others) with an estimated $60 billion of cash are also in the hunt…
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Marcellus & Utica Shale Story Links: Tue, Jan 26, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Dominion defends FERC’s Cove Point review; OH fracking rules still missing; can’t find missing oil/gas heirs in PA; energy M&A appetite still limited; presidential candidates’ positions on energy; why Chesapeake isn’t coming back; LNG policy upgrade overdue; and more!
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