Dimock Lawyers Admit Frack Fluid Didn’t Contaminate Well Water

court-gavel.jpgYesterday saw opening arguments in the case of two Dimock, PA families who are suing Cabot Oil & Gas with a claim that Cabot’s drilling “contaminated” their well water supplies (see Dimock Trial Starts Today – 2 Families Try to Shake Down Cabot). MDN friend and top film documentary maker Phelim McAleer–creator of the excellent FrackNation documentary–noticed a very important admission by the attorneys for the plaintiffs. In their opening arguments, the attorneys for the landowners admit that there is “no scientific proof” that fracking fluid ever reached or contaminated the plaintiffs’ water wells. We’ve known that and have trumpeted that for years. This case has always been about methane (natural gas itself) “migrating” through the ground into the water wells as a result of Cabot’s drilling program. That’s what is at issue: Did Cabot’s drilling cause methane migration? But the general public, because of propaganda films like Gasland and Gasland II, believe fracking chemicals had somehow seeped into the water wells in Dimock. Not true–and now it’s on the record for all, including Josh Fox, to see. The stunning admission by the landowners’ own lawyers that fracking fluid did not contaminate the wells in Dimock totally refutes false claims by Fox and Hollywood stars like Mark Ruffalo who have tried to use Dimock as a rallying cry…
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Chesapeake Trades Future Royalties on 8,500 Wells for Lump Sum Now

Haymaker Resources has just signed a deal with Chesapeake Energy to give Chessy $128 million in return for ownership of mineral and royalty interests in 8,500+ wells across 24 states and 324 counties, including wells in the Marcellus/Utica. The mineral/royalty interests Chesapeake is selling are considered “non-core” for the company. These are wells in which Chessy owns an interest, but they didn’t drill it and don’t manage it. They’re a partner in the well. What this deal means is that any royalties generated from those wells will now go to Haymaker instead of Chesapeake. Sort of like those deals we’ve highlighted in the past where a company pays a landowner a lump sum now and then receives all future royalty payments (see Company Targets OH Landowners – Buy Future Royalties for Cash Now). Think of it this way: You win the lottery, $1,000 a week for life. You’re 50 years old and think you’ll live another 30 years, at least. That would be $1.56 million total, IF you live that long. A company comes along and offers you $750,000, right now, in return for taking over the annuity of $1,000 per week (such companies do exist). That’s how we think of this deal. Chesapeake needs money now, to keep from going bankrupt, and they have these assets that bring in money, but in dribs and drabs and it’s not at the center of what they do. So they cash it in and get a chunk of money now instead of waiting for it later. Here’s the Haymaker announcement…
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Shock: Judge May Allow Drillers to Cancel Gathering Pipeline Deals

There is a situation brewing that has the potential to upend the midstream (pipelines & processing plants) market–here in the Marcellus/Utica and across the country. This is one of those complex issues that takes time to understand, but please stick with us. This is important. There are currently two court cases–one in New York and the other in Delaware–in which producers (i.e. drillers) who are in bankruptcy are arguing that they should be allowed to dissolve contracts they previously signed with pipeline gathering companies. In the New York case, the judge is signaling that she leans toward allowing the driller (Sabine Oil & Gas) to do just that. The pipeline company (Cheniere’s Nordheim Eagle Ford Gathering) spent $84 million building a gathering system for Sabine’s wells. Until now, midstream companies have taken solace that if a driller goes bankrupt, whoever buys the assets, if it comes to that, would also inherit the existing, long-term deal to use their pipelines. This case, if it goes against the midstream company, threatens to undo that. That’s sending shock waves through the midstream industry…
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THE Delaware Riverkeeper Hosts Class to Stop PennEast Pipeline

THE Delaware Riverkeeper, Maya van Rossum, has staked much of her credibility on stopping the PennEast Pipeline. The PennEast, as you may recall, is a $1.2 billion, 114-mile, 36-inch diameter pipeline that will deliver approximately 1 billion cubic feet of natural gas per day from the Marcellus gas fields of northeastern PA to locations in southeastern PA and across the border to Trenton, NJ (see PennEast Pipeline Files Official Application with FERC, Antis Mad). It’s a pipeline, buried in the ground and after a few years no one even knows where it’s buried without calling 811. And yet van Rossum and her ilk vehemently (we’d say irrationally) oppose it for one reason: it flows a fossil fuel through it. And so she’s staked her own credibility, and the credibility of the organization she leads (with Big Green money backing it) by stopping the PennEast. One way she’s trying to slow it down is by registering children as “intervenors” with the Federal Energy Regulatory Commission (FERC), the organization charged with reviewing and approving the project (see Delaware Riverkeeper Scams FERC in Review of PennEast Pipeline). Her latest angle of attack? Conduct a 6-hour “workshop” to train people as “volunteer monitors” to “document natural features that would be in jeopardy” from the pipeline–whatever that means…
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Corporate Raider Carl Icahn Makes Cheniere, like Chesapeake, Worse

It befuddles us why anyone thinks Carl Icahn is such a genius. He invests just enough money in a company to get his own people elected to the board of directors, and then the board fires the CEO and fires thousands of people working at the company in hopes of boosting the stock price by making the company appear to be profitable on paper so Icahn can turn around and sell his stake in the company at a profit. We call it disgusting and immoral. Wall Street investors call it just another day at the office (never looking the people in the eye they’re responsible for screwing out of a job). But with Icahn and his investments, they often don’t go as planned. Instead of the stock price going up after he fires the CEO and a bunch of people–the stock price goes down instead. Icahn makes companies worse than before he started his meddling. It happened with Chesapeake–now a whisker away from bankruptcy. Now it’s happening with Cheniere Energy, the LNG export company located along the Gulf Coast…
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Revenge: Fired Cheniere CEO Starts Competing LNG Company

Martin_Houston_left_Charif_Souki_right_2016
Martin Houston (left) and Charif Souki

Several days ago Charif Souki, co-founder and former CEO of Cheniere Energy (forced out by Carl Icahn) announced he had resigned from the board of Cheniere. We now know why. Souki has formed a new LNG export company with former COO and executive director of BG Group, Martin Houston. Just like Aubrey McClendon started a new company to compete with Chesapeake (American Energy) after being forced out of Chesapeake Energy by Icahn, so too Souki has now formed a new company to compete with his old company. The new company is called Tellurian Investments and its mission is to offer “mid-scale natural gas liquefaction and export projects along the United States Gulf Coast.” No doubt those Gulf Coast export facilities will use at least some Marcellus/Utica shale gas to feed them. Here’s the details on Souki’s new “in your eye Carl Icahn” venture…
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Former Devon Energy CEO Buys Himself a Place in Rubio Campaign

With Jeb Bush out of the Republican presidential primary, the old-line Republican establishment has closed ranks behind Florida Senator Marco Rubio. Which is why we find him disgusting. We no longer vote for politicians that promise one thing and do another (ex: Bob Dole, John McCain, Mitt Romney, Mitch McConnell, Paul Ryan, Jeb Bush, John Kasich, Marco Rubio). That’s the definition of establishment. They view themselves as the ruling class–something we left behind 240 years ago when we formed this country to rid ourselves of such people. Those in the energy industry are not immune to the siren call of serving the establishment. The co-founder and former CEO of Devon Energy, Larry Nichols, has just become Rubio’s energy advisor in return for “hosting a fundraiser” for the Senator (translation: giving him big piles of money). We call that purchasing a seat at the table. Before you get too outraged, please know that this goes on ALL THE TIME in both parties. And has for years. MDN editor Jim Willis used to work in the Ronald Reagan White House, and we saw it there too. Big monied people donate, and when the candidate wins, those same people either get top posts in the administration, like Secretary of Energy, or they get cushy postings as an ambassador to some country like France, or Belize (in the tropics). We find it disheartening and distressing. But it is the way things are. Unless we change it. Below is the news about Nichols buying himself a place at the Rubio table…
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Carrizo O&G 2015: Loses $1.2B, Stops Drilling in Northeast

Carrizo Oil & Gas, a Houston-based driller, issued their fourth quarter and full year 2015 financial and operational update on Monday. Carrizo actively drills in the Eagle Ford Shale in South Texas, the Delaware Basin in West Texas, the Niobrara Formation in Colorado, and until mid-year in 2015, they did have an active drilling program in the Ohio Utica and Pennsylvania Marcellus. No more. They haven’t drilled in Appalachia since 3Q15, and according to Monday’s update, they won’t be drilling here in 2016. Not only that, they have curtained (shut-in) some of their Marcellus/Utica production, and they may shut-in even more in the coming months, if prices don’t recover. According to Carrizo’s financials, the company made $226 million in 2014. But in 2015 the company lost $1.2 billion. Here’s a portion of Monday’s update, which says they plan to focus on the Eagle Ford for the time being…
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Crestwood 2015: $2.3B Paper Loss, Marcellus Pipeline Volumes Up

Houston, TX-based Crestwood Midstream, which these days calls itself Crestwood Equity Partners, operates midstream businesses in multiple shale resource plays across the United States, including the Marcellus. Crestwood is engaged in gathering, processing, treating, compression, storage and transportation of natural gas, among many other activities. Crestwood owns the facility along the shore of Seneca Lake in New York where they want to convert a depleted underground salt cavern into a propane storage facility–something that protesters frequently get arrested for opposing (see Criminals Arrested Blocking Crestwood Seneca Lake Facility). Yesterday Crestwood issued their fourth quarter and full year 2015 update. The distressing news is that Crestwood lost $2.3 billion for the year. But let’s put that in context. Almost all of it was a paper loss. Of the $2.3 billion lost, $821 million was for depreciation of assets, and $1.4 billion was “goodwill impairment”–meaning the overall perception of the company’s value took a hit. In 2014 Crestwood lost just $10 million. We suspect the true money-out-of-pocket loss for Crestwood in 2015 was closer to $100 million, not nearly as bad as it seems at first. Below is a portion of the update, including a couple of Marcellus pipeline updates from the company…
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PDC Energy 2015: $68M Loss, Production Up 65% Y/Y

PDC Energy, a driller in the Wattenberg Field in Colorado and the Utica in Ohio, paused their Utica drilling program in 2015 (see PDC Energy Pushes Pause Button on OH Utica Drilling for 2015). In December the company announced they would restart Utica drilling in 2016 with plans to drill five wells (see PDC Energy to Restart OH Drilling in 2016, Drilling 5 Utica Wells). On Monday PDC released their fourth quarter and full year 2015 financial and operating results. PDC grew production in 2015, substantially, over 2014 (up 65%). Although the company lost money in 2015, as most drillers did, it wasn’t all that much compared to others. In 2014 PDC made $155 million in profit. In 2015, they lost $68 million. With others losing over $1 billion, $68 million is a comparative drop in the bucket. We spot no mention of when they will restart Utica drilling. Here’s the update from PDC…
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Maryland Law Firm Specializing in Bankruptcy Opens in Pittsburgh

This isn’t one of those “glad to see you moving in” stories. One of Maryland’s largest law firms, Whiteford, Taylor & Preston LLP, is opening a new branch office in Pittsburgh. The law firm has plans to hire five to ten lawyers to staff it–a pretty sizable operation given all of the paralegals and other support staff it will require. Why aren’t we rolling out the red carpet? Because Whiteford, Taylor & Preston is a top bankruptcy/restructuring firm, and they’re opening an office in Pittsburgh specifically to serve energy companies that need such services…
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Marcellus & Utica Shale Story Links: Wed, Feb 24, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: NYC considers banning all frack byproducts; OH has 1,236 producing Utica wells; OH sees 96% increase in o&g jobs; Range Resources cited for “dozens of violations”; propane exports up at Philly port; shale drilling in the Ohio Valley; Sixth Circuit retains WOTUS rule case; John Hess says don’t lose sight of long term; E&P bankruptcies may mean trouble for the midstream; OPEC seeks “unity” with U.S. shale drillers; and more!
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