Cabot O&G 2015 Update; Cutting 2016 Drilling Budget 58%

cabot-logo-siteCabot Oil & Gas, one of the premier drillers in the Marcellus Shale (operates totally within Susquehanna County, PA) released their fourth quarter and full year 2015 operational update this morning. The highlights: Cabot ended up spending $774 million on capital expenditures (mostly drilling) in 2015, down a bit from the previous estimate of $850 million. It’s down because they scaled back activity during 4Q15. They also had to write down the value for some of their non-core holdings by $73 million–what’s called an impairment charge. Looking ahead, Cabot plans to spend $615 million on capital expenditures (i.e. drilling) in 2016, which is down 58% from 2015. They will drill approximately 30 new wells, 25 of them in the Marcellus and 5 in the Texas Eagle Ford Shale. Here’s the update…
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Warren Resources Misses $7.5M Debt Payment, 30-Day Clock Ticking

Warren Resources, a small, independent exploration and production company with an ongoing drilling programs in California, Wyoming, and in the northeast Pennsylvania Marcellus Shale, announced yesterday they won’t (for now) make a $7.5 million in payments due on IOUs (i.e. notes) that are due to be made this month. Even though they claim to have enough money in the bank. Big red flag. Instead, Warren has hired investment bank Jeffries LLC to help the company with “potential restructuring of its balance sheet” and the company has “initiated restructuring discussions with representatives of the creditors under its first and second lien credit facilities.” Restructuring is a cheaper and (if you can swing it) better alternative than bankruptcy. The question is, will Warren’s restructuring be enough to keep the company out of bankruptcy proceedings? The terms of missing the payment allow a 30-day grace period before bad stuff begins to happen. The clock is ticking…
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2015 PA Impact Fee Goes Down for Drillers, Towns Get Less Too

Pennsylvania’s impact fee–their version of a severance tax–was crafted and became law in February 2012 as part of the Act 13 law. Since that time the impact fee has generated $854 million in revenue, with 60% of that revenue going to the local municipalities (towns and counties) where drilling actually happens, and the other 40% going to the black hole of politicians’ sticky fingers in Harrisburg for pork barrel projects. The 40% portion is the shakedown required to get the law passed in the first place. Disgusting, we know. The impact fee itself is a somewhat complex calculation with the highest fee paid during the first year and going down from there (see below). The fees across all years are based on the average price of natural gas sold at the Henry Hub for the previous year. Because the price of natgas tanked in 2015, impact fees paid by drillers will be lower than in previous years when the average price was higher. PA drillers will save $5,000 per well drilled for the first year, $5,000 per well in the second year, and so on…
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More People Pile on Antero, Seek to Join Mass “Nuisance” Lawsuit

Last September MDN told you about the troubling news that more than 200 residents in WV (likely those who don’t own the mineral rights under their land) began filing “scores” of “nuisance” lawsuits over the past couple of years against Antero Resources and Hall Drilling, in places like Doddridge County (see Scores of “Nuisance” Lawsuits Against WV Drillers Combined). The lawsuits claim excessive traffic, odors and noise from nearby drilling make it “impossible” for them to enjoy their homes. The troubling development was that all of these lawsuits (dozens? hundreds?) had been rolled up into one mega lawsuit that sits before the WV Mass Litigation Panel. In other words a class action lawsuit. Since then we’d not heard anything, until we read about two more such lawsuits filed in Kanawha County. The lawyers want to add the two to the existing mass litigation case…
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Dominion Resources Makes Play for Western NatGas Company Questar

In what is being called a “cheap” deal, midstream and local utility Dominion, with a major presence in the Marcellus/Utica region, has floated a takover offer to Questar Corporation, offering to buy the company for $4.4 billion. Questar is a Rockies-based integrated natural gas company operating through three principal subsidiaries: Questar Gas provides retail natural gas distribution in Utah, Wyoming and Idaho; Wexpro develops and produces natural gas on behalf of Questar Gas; and Questar Pipeline operates interstate natural gas pipelines and storage facilities in the Western U.S. The deal is an attempt by Dominion to diversify out of the northeast/Mid-Atlantic region. It’s also a deal to bump up Dominion’s natural gas footprint, lessening the company’s reliance on electric power generation which is not growing. The reason this is MDN news is because…
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Federal Judge Tosses Anti Lawsuit Against MWCD re OH Lease Deals

In some older news (but good news) that has until now escaped our notice, late last year a federal judge dismissed a lawsuit we first told you about in October 2013 (see Muskingum Watershed Taken to Court by Anti-Frackers (Yawn)). Lea Harper and her husband Steve filed a lawsuit challenging the right of the Muskingum Watershed Conservancy District to enter into lease agreements with drillers to allow shale drilling on Conservancy-owned land. The Harpers were assisted in this lawsuit by the radical and odious Food & Water Watch. Judge Sara Lioi of the U.S. District Court for the Northern District of Ohio found the lawsuit lacking in merit and tossed it. The Harpers and their Big Green backers have appealed the decision…
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Instead of Selling, ECP Increases Ownership of Summit Midstream

In November MDN told you that the majority owner of Summit Midstream, private equity firm Energy Capital Partners (ECP) was looking to sell some or all of their units (i.e. shares) in the company (see Summit Midstream 3Q15: Current Owner ECP Looking to Sell). At the time ECP owned 43.8% of the company. Looks like that plan didn’t work out so well–at least so far. In a recent Securities and Exchange Commission filing, Summit reveals that ECP now owns 47.1% of the company…
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Survey: O&G Workers Love the Industry, but Not Their Company

We spotted some interesting survey results from a survey conducted by the UK-based recruiting firm Petroplan. The survey polled more than 1,500 oil and gas professionals asking them about their attitudes toward our beloved industry. Respondents came from 107 countries and territories worldwide. Over 60% of those surveyed said they would be “very” or “extremely” likely to recommend a career in the oil and gas industry to others. However, their commitment to the particular company they work for, i.e. “company loyalty,” is low. Some 56% said they’d change jobs “given the right circumstances.” Here’s a high level overview of the survey results…
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4 People Win GE/Statoil Contest to Reduce Water Used in Shale

GE and Norwegian oil giant Statoil today announced four winners of their Open Innovation Challenge, a contest designed to use crowd sourcing to find solutions that reduce fresh water use in shale oil and gas production. There of the winners are in the United States, and one is from Australia. Each winner gets a cash prize of $25,000 with the promise of future funding for their technology. Here’s the cool new technologies that won this year’s contest…
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Will NatGas Price Drop to 20-Year Low in February? Quite Possibly

A somewhat depressing article on MarketWatch says we are potentially heading for natural gas prices (at the Henry Hub) of $1.50 or lower. If the price hits those levels, it will be the lowest prices we’ve seen for natgas in the past 21 years. Even more ominous was a comment by oil and gas industry titan T. Boone Pickens. In a recent CNBC interview Boone said this: “I don’t think we’ll ever see $3 natural gas again.” Ouch. If that’s true, the question becomes, how can companies make a profit at these super low prices? Here’s more on what may lie ahead for natgas prices this month and this year…
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Gastar’s Mike McCown Retires; Peg Heeg Joins Columbia Pipeline Bd

From time to time we mention people coming and going at various drilling and midstream companies. The reason we mention it is because when there are changes at the top of an organization, it has the potential to affect the future actions of that organization. We have two such moves to report. The first is that Mike McCown, senior vice president and chief operating officer for driller Gastar is retiring. We’ve quoted Mike a number of times over the years–he’s an important cog in the Gastar wheel. The second bit of news is that Peggy Heeg has joined the board of directors at midstream giant Columbia Pipeline. Peggy is an attorney and former general counsel at El Paso Corporation…
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Marcellus & Utica Shale Story Links: Tue, Feb 2, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Marcellus rig count lowest since 2010; why Marcellus may spell the end for Canadian natgas; Marcellus/Utica “overpiped”?; more proppant = more production in NE; FERC destroys opposition to Constitution Pipeline; BP cutting jobs; Harold Hamm says $60 oil this year; and more!
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