Antero Resources 1Q16: Production Up 18%, Sells Gas for $4.54/Mcf

antero resourcesAntero Resources is one of the very few Marcellus/Utica drillers (actually drillers of any play) who is still making money in this severe downturn in prices (see Antero Resources Stands Above the Rest – Nets $941M in 2015). Yesterday Antero released their first quarter 2016 operational (not financial) update. Among the gems: Production continued to increase–to an average 1.758 billion cubic feet per day. That’s up 18% from 1Q15 and up 17% from 4Q15. The key to how they make their money was also revealed. Antero’s gas sold for $2.08 per thousand cubic feet (Mcf) BEFORE hedging. But Antero hedges most of its production, so the price they received AFTER hedging was $4.54/Mcf. The company says they sold 99% of their gas to “favorably priced markets.” They must have really good financial people at Antero! Other fascinating tidbits: Drilling and completion costs have sunk to under $1 million per 1,000 feet in the Marcellus, and $1.14 million per 1,000 feet in the Utica. Here’s the full update from yesterday with loads of useful details…
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Stone Energy 1Q16: Most Marcellus Production Still Closed Down

Stone EnergyStone Energy, an independent oil and natural gas exploration and production company (E&P) headquartered in Lafayette, Louisiana drills mainly in the Gulf of Mexico but also has a presence in the Marcellus/Utica Shale with 75,000 acres of leases. Last year Stone quit drilling in the northeast and actually shut-in part of their production due to low prices (see Stone Energy 3Q15: Shut Down 110 Mmcfe/d of Marcellus Production). Yesterday Stone issued an operational (not financial) update for first quarter 2016. According to the update, Stone continued to keep production from their “Mary field” shut in while other Marcellus production limped along at 23 million cubic feet per day (MMcf/d). Another salient fact to keep in mind: last year Stone lost more than $1 billion (see Stone Energy 2015: $1.1 Billion Loss, Quit Drilling in Marcellus). Here’s the latest from Stone Energy…
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Williams Update for 8 Key Transco Pipeline Expansion Projects

ngpts_transco2Last week MDN brought you the fantastic news that the Federal Energy Regulatory Commission (FERC) had approved Williams’ Transco Pipeline project called the Garden State Expansion–a pipeline project to connect gas that will come through the yet-to-be-built PennEast Pipeline to a yet-to-be-built pipeline in New Jersey called the Southern Reliability Link pipeline (see FERC Approves NJ Pipeline – More Marcellus Gas on the Way!). The Garden State Expansion is just one of eight major expansion projects for Transco–the nation’s largest interstate pipeline system running over 10,200 miles from the Gulf Coast to the Northeast. Yesterday Williams provided an update on all eight expansion projects planned for the mighty Transco–all of them tied directly or indirectly to moving Marcellus/Utica gas…
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3rd Time the Charm: OH Center Port Terminal Woos Manufacturers

CenterPortTerminal-header-smWe have an interesting update to share with you regarding the former Ormet Aluminum Plant site located on the shoreline of the Ohio River in Monroe County, OH. The plant closed its doors as an active aluminum plant in 2014 after Ohio regulators and Gov. John “foreigner hunter” Kasich failed to get high electric rates reduced for the plant, and refused to allow Ormet to burn coal to produce their own electricity until they could begin using natural gas to create electricity from gas wells drilled on the property (see Final Chapter of Ormet Plant Closing – Utica Could have Saved It). The new owner, Niagara Worldwide LLC, first tried to market the property, renamed Center Port Terminal, to Marcellus/Utica Shale drillers and oilfield services companies (see New Ormet Aluminum Plant Owner Shops Barge Facility to Shalers). Then the bottom kind of fell out with the natgas price crash. No drilling, no need for a facility like Center Port. In March of this year MDN told you the site was being marketed as a great location for natgas-fired electric generating power plants (see Old Ormet Site in Monroe, OH Shopped as Power Plant Location). We’re not sure, but we’re guessing they got no takers for that one either. Finally Niagara seems to have hit on the right use for the site–manufacturing plants that use large volumes of natural gas. The site has its own shale wells on the property, drilled by the now bankrupt Magnum Hunter Resources. So it makes sense for manufacturers to locate there to take advantage of a cheap source for natgas. And that’s just what is happening. Niagara reports recently signing their third large manufacturing tenant. The press release says manufacturers are “rushing the gate” to set up shop at the site…
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Dela. Court Grants Williams Request to Speed Up ETE Lawsuit

court-gavel.jpgA Delaware court has granted a motion by Williams to hurry-it-up with their recently filed lawsuit against Energy Transfer Equity (ETE)–the company trying to buy Williams. No, Williams is not trying to fend off the purchase. They’re trying to ensure Williams stockholders (and the managers of Williams) get the agreed-to price. Last week Williams sued ETE and its CEO Kelsy Warren for issuing private shares of stock to select investors to help finance the deal (see Merger Turns Sour: Williams Sues ETE/CEO Kelcy Warren). Williams believes the private stock offering is a sweetheart deal that in the end devalues or puts at a disadvantage Williams stockholders. The court has granted Williams request to speed things up. The Williams board still maintains they want the merger/buyout to go forward. Strange way to show you love your new owner–by suing him. But this isn’t about affection and getting along and kumbaya–it’s about money…
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Radical Enviro Groups File Appeal to Stop AIM Pipeline in NY/CT

AlgonquinPipeline_0
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A group of radical environmental groups including Riverkeeper Inc., Sierra Club and Food & Water Watch (Big Green groups) have joined a federal appeal (i.e. are suing) to stop Spectra Energy from building their Alogonquin Incremental Market (AIM) Project, a project to expand the capacity of the Algonquin Gas Transmission system to flow more Marcellus/Utica gas to northeast markets. Most of the project is 20 miles of new pipeline in the Hudson Valley area of New York. In March New York’s spineless Gov. Andrew Cuomo asked the Federal Energy Regulatory Commission (FERC) to stop work on AIM near a nuclear power plant (see Gov. Cuomo Asks FERC to Halt Algonquin Pipeline Near Nuke Plant). Within a few days FERC said NO (see FERC Denies NY Request to Stop Work on Pipeline Near Nuke Plant). That didn’t make the anti-fossil fuel nutters happy at all. They thought they had a real winner by painting nightmare scenarios of the AIM pipeline blowing up and taking a nuclear plant with it. Their scare tactics didn’t work–so they’ve fallen back to the tried and true: ask a liberal judge to stop it…
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EIA: Winter Ends with Record High NatGas Storage on Hand

EIAIn the natural gas world there are two seasons: winter (when you use natural gas) and summer (when you “inject” or store natural gas). The “winter strip” goes from November to March, and the “summer strip” runs from April through October. Storage levels are a key factor in the pricing of natural gas. Economics 101: the price for commodities like natgas is purely a function of supply and demand. If you have more supply than demand, the price goes down. In the northeast part of the country we just came through the mildest (temperature-wise) winter in a generation. We used a lot less natgas than we normally would. That means the gas sitting in storage didn’t get drawn down nearly as much as it usually does. That’s what you would expect, and the U.S. Energy Information Administration (EIA) has confirmed it. We ended the winter heating season at the end of March with “record high levels” of natgas sitting in storage. And now we begin the process of storing more. If all other factors remain equal–meaning there’s no new or sudden increase in demand this summer–it doesn’t take a genius to figure out how record high storage levels will affect the price. Here’s the EIA with their latest on storage…
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“Survival” – PIOGA Expands Membership to Industrial End Users

PIOGAThe sudden slowdown in drilling activity not only affects drillers, oilfield services companies, midstreamers and the many supply chain companies (restaurants, hotels, fencing, etc.) that service them–it also affects trade associations. Last November America’s Natural Gas Association merged with the more flush American Petroleum Institute (see Two Top O&G Trade Groups to Merge: ANGA & API). In January the Center for LNG announced it is merging with the Natural Gas Supply Association (see CLNG Merges with NGSA, Gets New Director from Former ANGA). Not every association is looking to merge in order to stay alive. The Pennsylvania Independent Oil & Gas Association (PIOGA), headed by the fearless Lou D’Amico, is hurting. Membership (and along with it, dues) is down 40% in the past two years. Ouch. But Lou isn’t looking to merge, instead, he’s looking to expand. That is, expand the types of members that belong to PIOGA. Traditionally small conventional drillers have been the bulk of PIOGA’s membership. Shale drillers, to some extent, have joined too. But with conventional drilling taking a nosedive, Lou needs to cast the net wider–so he’s now looking for industrial customers, manufacturers and the like, who are big users of natural gas, to join…
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PA Gov. Wolf Promotes New Budget with (Yes) Severance Tax

Randy Albright
Randy Albright

We just have to shake our heads. Did Pennsylvania Gov. Tom Wolf learn nothing in his first year in office? Does he not see that expanding taxes during the Obama recession is a recipe for disaster? Is cutting spending (for a Democrat like Wolf) congenitally impossible–like cutting off your own arm? Apparently all of the above is true. Even though we have the worst economy nationally (and in PA) in the past eight years, thanks to Obama and his policies; and even though the shale industry is still in free fall because of low prices (victims of our own success); and even though the default budget passed in PA without a huge increase in education spending for this past school year didn’t result in any “harm” being done to little kiddies; PA Gov. Tom Wolf and his budget lackey Randy Albright are once again out there promoting (i.e. demanding) huge tax increases in the budget due in June of this year. Wolf/Albright want to raise the personal income tax in PA, and (once again) take a run at instituting a Marcellus-killing severance tax, even though the state already has the FULL equivalent of a severance tax when you add corporate income taxes with the impact fee they now pay. Words escape us. It’s beyond insanity. Perhaps gross mismanagement and leadership malpractice?…
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Columbia Pipeline Offers to Swap Notes Worth $2.75B

Columbia Gas Transmission
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Columbia Pipeline Group is being pursued as a buyout target by TransCanada for $10 billion (see Rumor Comes True: TransCanada Buying Columbia Pipeline for C$13B). We don’t know if the proposed merger is the reason, but yesterday Columbia announced they want to swap IOUs, or “unsecured notes” worth $2.75 billion for new notes. Why? If you figure it out tell us, please! The old notes are “unregistered” and the new notes will be “registered”. Does that make them more valuable? Does it mean the noteholders get more favorable treatment in the unlikely event of a bankruptcy? No idea. Here’s the rather short statement from Columbia about swapping notes…
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Mr. Causer Goes to Washington – To Talk About PA Pipelines

Mr. Smith Goes to WashingtonPennsylvania State Rep. Martin Causer (R-Turtlepoint) testified before the U.S. House Committee on Agriculture in Washington, DC on Wednesday, April 13. Causer was there to tell the House Agriculture Committee that new pipelines are desperately needed in the farm country he represents. We have a copy of Rep. Causer’s masterful testimony below…
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Marcellus & Utica Shale Story Links: Fri, Apr 15, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Heinz Endowments tax-exempt scams; Mass. “climate change” panel to hold hearing on pipeline; Boston imports natgas while country awash in it; antis meet behind closed doors to push RICO investigation of Exxon; Carlyle wants Halliburton/BH assets; oil price recovery–we’re not there yet; and more!
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