Drama: Enterprise Bails on Williams Merger, No Longer Interested

As the World TurnsThe drama surrounding Williams and whether or not the company will sell itself continues. Energy Transfer Equity’s (ETE) billionaire CEO Kelsy Warren propositioned Williams for over six months before going public with his overtures last year (see Energy Transfer Makes “Indecent Proposal” to Buy Williams for $48B). Williams resisted, but eventually they caved and agreed to the deal, although the deal price went down by $10 billion (see Williams Accepts ETE’s “Indecent Proposal” – Price Went Down $10B). Warren claims he got snookered and got cold feet, eventually bailing (see Dead as a Doornail: ETE Terminates Merger with Williams). The ink on the flurry of lawsuits filed hadn’t even dried and Enterprise Products Partners, another huge midstream company, began making overtures to Williams (see Here We Go Again: Enterprise Products Wants to Buy Williams). That was last month. Yesterday Enterprise released a statement saying they’re finished with Williams, throwing in the towel, no longer interested. To which Williams (incredibly) replied they were “surprised” at the Enterprise announcement. Frankly, we’re surprised that Williams was surprised…
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Chesapeake Energy CFO Says Co. Will Mostly Ignore Utica in 2017

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Domenic Dell’Osso

Chesapeake Energy’s Chief Financial Officer, Domenic Dell’Osso, filled in for his boss CEO Doug “the ax” Lawler by addressing analysts at the Barclays 2016 Global CEO Energy-Power Conference held earlier this week in New York City. Dom, you may recall, was one of Aubrey McClendon’s closest allies at Chesapeake, someone who had no problem standing by while McClendon was unceremoniously fired from the company he founded by corporate raiders in 2013 (see McClendon Exits Chesapeake, Well-Bonused “Friends” Replace Him). Dell’Osso remains in his post to this day. He drew the short straw to take a short vacation in NYC and talk about Chesapeake at the Barclays event. Although Dom’s talk focused on how rosy the picture is for Chesapeake now that they’ve fired thousands and sold nearly everything but the kitchen sink, it was his off-hand comment about the Utica Shale that caught our attention. Chesapeake is the #1 driller and producer in the Ohio Utica Shale, having drilled 588 wells in 2015 and producing an average of 847 million cubic feet per day equivalent of natural gas (see Which 5 Drillers Dominate in the Utica Shale?). What did Dom say about the Utica in 2017?…
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Deep Dive: PA Royalties Civil War Between Landowners & Drillers

civil-warFor the past few days MDN has chronicled what we’ve named a royalties civil war happening between Pennsylvania landowners and the Marcellus drilling industry in the state–two groups usually on the same side. The war revolves around royalty checks–and how meager they are (see Righteous Royalty Anger: PA Town Votes to Block Gas Production and Civil War: Bradford PA Escalates Fight with MSC re Royalty Bill). As we’ve previously explained, an oversimplification is landowners maintain that a 1979 PA law guarantees landowners a 12.5% royalty regardless of expenses involved in extracting the gas, and drillers say no, landowners must abide by the contracts they’ve signed and if those contracts allow post-production costs to be deducted before calculating a royalty, the rate may go lower than 12.5%–sometimes to zero and below. Chesapeake Energy is the primary offender, according to landowners. The issue is complex, but at its core is (according to landowners) about fairness. We’ve located two excellent bits of information, one an article, another an email, that explains both sides. The article is from the Houston Harbaugh law firm and does a great job explaining the landowners’ view of the issue, and their desire to pass House Bill (HB) 1391. The email was from the Marcellus Shale Coalition to members of the PA legislature, sent to them last June to explain why, in the opinion of the drilling industry, HB 1391 is unconstitutional and a bad choice. These two views clearly lay out the issues involved so everyone can understand why we are facing a civil war among the ranks…
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Bradford Votes to Hire PR Firm, Targets PA Lawmakers re Royalties

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Doug McLinko – Bradford County Commissioner

As we predicted yesterday, Bradford County, PA commissioners have voted to hire a public relations firm to create a video to force the issue of passing House Bill (HB) 1391, a bill ensuring PA’s landowners will receive a 12.5% royalty check regardless of post-production costs (see Civil War: Bradford PA Escalates Fight with MSC re Royalty Bill). The commissioners did indeed vote yesterday, budgeting $15,000 for the project–money that will ironically come from royalty payments received by the town. The commissioners explained a bit more about their proposed publicity campaign to force Harrisburg to take notice of their plight…
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BH Rig Counts for August – US Count Up by 32, M/U Up by 2

celebrateTwo months ago when Baker Hughes released their venerable rig count numbers, we cracked a smile that things are beginning to turn around with an increase in U.S. rig counts (see US Rig Count Up by 9 in June, Marcellus/Utica Holds Even at 36). Last we had a full-on smile when the average number of rigs working in the U.S. in July was 449, up 32 from the 417 counted in June 2016 (see US Rig Count Up Against in July, Marc/Utica Steady for 3rd Month). This month we’re popping the champagne cork! For August, the BH average rig count in the U.S. was 481, up 32 from the 449 counted in July. The even better news comes in the Marcellus/Utica. Pennsylvania’s average rig count went up by 3, Ohio’s went up by 2, but West Virginia lost 3 rigs. Overall the combined Marcellus/Utica rig count, after being stead at 36 rigs for three months in a row, went up to 38 rigs in August…
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When Will More Oil Drilling Return to Eastern OH?

not if but whenDavid Hill is a geologist and a driller located in Ohio (David R. Hill Inc.). At a recent Coffee and Commerce meeting sponsored by the Cambridge Area Chamber of Commerce, Hill offered his insights into when oil drilling may return to Guernsey County and eastern Ohio. As MDN recently reported, much of the focus on drilling in the Utica has lately turned to dry gas, or methane only (see Why Utica Drillers are Moving from Wet Gas to Dry Gas). Oil drilling, which was the original focus of the Utica and why Aubrey McClendon was so excited with his discovery of the Utica, has never developed to the extent hoped for–largely because of low pressure to force the oil out of the ground. There is oil drilling and production in the Utica to be sure, but not nearly as much oil drilling as there is drilling for dry gas and NGLs (wet gas). Hill and others are working on new technologies to unlock the abundant oil supplies in the Utica. So when will oil drilling return to Guernsey and other locations? According to Hill, when oil prices hit $70-$80/barrel. He may be waiting a long time…
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CONSOL Energy Amasses Big Acreage in Both Marcellus & Utica

CONSOL EnergyCONSOL Energy, which was once upon a time a coal company, is thanking its lucky stars it transitioned to being a mostly-natural gas drilling company instead. Yesterday the company’s stock hit a 52-week high. The reason? Because of CONSOL’s Marcellus/Utica drilling program. In a Zacks analyst note (below), we get an update on the aggressive moves CONSOL has been making in leasing new acreage. The company has now amassed 436,000 acres in the Marcellus and a whopping 622,000 acres in the Utica Shale. Here’s that update…
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PDC Energy Floats New Stocks & Bonds to Help Pay for Acquisition

PDC Energy logoPDC 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). In early August, PDC released their second quarter 2016 update. There are a few mentions of the Utica in the update. It appears the Utica program is once again up and running. In fact, one of the Utica wells they’ve drilled, the PDC “Neff” well, has come online earlier than expected and began producing in 2Q16 (see PDC Energy 2Q16: Utica Program Active Again, Neff Well Online). However, another shale play has turned the head of PDC–the Delaware Basin in Texas. Later in August PDC announced it had purchased two drillers in the Delaware for $1.5 billion (see PDC Energy’s Head Turned by Another Pretty Shale Play). If you buy other companies, you need cash. Right on cue PDC has announced they are floating new shares of stocks and new bonds (debt) to help pay for the pretty new shale play that turned the company’s head…
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Marcellus & Utica Shale Story Links: Fri, Sep 9, 2016

best of the restThe “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Cuomo’s legacy: Upstate NY’s death rattle; Ohio rigs steady at 17; PA unaffected by Williams consolidation; what, exactly, IS a cracker?; Total takes full control of Barnett Shale in TX; Apache hits 3B barrel oil find in TX; US methanol projects in trouble from falling gas prices; Canada faces “worst year on record” for oil drilling; and more!
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