Divorce: CONSOL & Noble Dissolve M-U Joint Venture

divorce

Yesterday CONSOL Energy and Noble Energy issued a joint press release to announce they are “separating” their Marcellus/Utica joint venture. We view it more like a divorce. This isn’t a “maybe we’ll get back together at some point” kind of agreement. It is an agreement for CONSOL to take one child (acreage in Pennsylvania) and Noble to take the other child (acreage in West Virginia) and permanently go their separate ways. That’s a divorce. The two companies stressed that their third child together–CONE Midstream–would remain in joint custody for the duration. CONSOL gets 306,000 acres and Noble gets 363,000 acres. Why the break up? The two were joined at the hip and had to agree on spending money to drill on some 669,000 jv acres. CONSOL wants to drill more, Noble wants to drill less. The break up lets each of them do what they want to do. CONSOL has big plans to drill more Utica wells, and Noble has big plans to drill in other shale plays. The net net appears to be expect more CONSOL drilling in the Utica in both PA and WV (where it will retain Utica rights), and less Marcellus drilling by Noble in PA/WV…
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PA Landowners Win $1.1M Lawsuit Against ECA re Royalty Deductions

lawsuitOn Monday, October 24, 2016, the Third Circuit Court of Appeals (in Western Pennsylvania) ruled that Marcellus driller ECA (Energy Corporation of America) did not prove a need for a new trial in the case it previously lost. Pennsylvania landowners sued ECA in federal court beginning in 2010, saying their royalty checks were shorted because ECA was improperly deducting post-production costs. Sound familiar? In February 2013 a federal judge upheld a split decision that said most of what ECA was deducting was OK, but the one thing they can’t deduct from royalty checks are charges for interstate pipeline transmission (for the full story, read our post Federal Judge Upholds Split Decision in PA Royalty Case). More legal wrangling ensued after that decision and a jury trial convened in March 2015. The trial was to determine whether or not the landowners were shorted royalty payments because ECA was deducting charges for transportation and marketing. The jury found for the landowners and against ECA, awarding the landowners a $1.1 million judgment. ECA asked for a new trial and they have now been denied…
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Williams 3Q16: Pendulum Swings Half a Billion $, Now in the Black

Williams logoMidstream giant Williams issued their third quarter 2016 update yesterday. According to Williams, the company had “strong” financial results in 3Q16. Indeed they did. The company swung from losing $194 million in 3Q15 to making $326 million in 3Q16–a net change of over half a billion dollars. Impressive! In the Marcellus/Utica, what Williams calls its Northeast G&P division, the company had revenue of $208 million, up from $189 million last year this time. On an investors phone call yesterday, CEO Alan Armstrong said the low prices in the Marcellus/Utica compared with other parts of the country will work themselves out, in time. That is, when more pipeline projects (like Williams Atlantic Sunrise and Constitution) go online to move the gas to other regions, the prices that gas fetches will go up and eventually gas prices in the northeast will be closer to the benchmark Henry Hub. Here’s the Williams 3Q16 update…
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Dominion 3Q16: Profit Up 22% Y/Y; Cove Point LNG 75% Done

dominionDominion, a major pipeline and utility company operating in the Marcellus/Utica region, released its third quarter 2016 update yesterday. Like Williams, Dominion showed an impressive swing up in revenue. They made $728 million in 3Q16 vs. $599 million in 3Q15, a healthy 22% increase. Several items in the update caught our interest: CEO Thomas Farrell mentioned that construction has begun on the largest natural gas-fired electric generating plant in Virginia, the 1,588-megawatt Greensville County plant. He also said that the Cove Point LNG export facility in Maryland is now 75% complete and “the facility continues on time and on budget for a late 2017 in-service date.” Farrell also said the company is working hard on the Atlantic Coast Pipeline and the related Supply Header project. He expects both projects to be online in late 2019. Here’s the 3Q16 update for Dominion…
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Dominion Buys its Own Questar Pipeline in $1.7B ‘Dropdown’ Deal

pickpocket.jpgIn September midstream giant Dominion completed its $4.4 billion takeover of Questar Corporation (see $4.4B Dominion-Questar Merger Happens Tomorrow). Yesterday Dominion issued an announcement that the company is transferring the Questar Pipeline to its midstream subsidiary in a transaction worth $1.725 billion. It’s all complicated financial mumbo jumbo called a “dropdown” deal. Essentially Dominion will take money out of one of its pockets and put the money back in another pocket. There are (potentially) different groups of investors for each, so there is a real consequence. We mention the transaction because Questar is a Rockies-based integrated natural gas company operating through three principal subsidiaries. The Dominion deal to buy Questar is an attempt by Dominion to diversify out of the northeast/Mid-Atlantic region. In other words, this is all a big distraction (from our point of view) to the work that needs to get done here at home in the Marcellus/Utica…
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M&I Electric Supplying Power System for New England LNG Project

aetiWe spotted an announcement that American Electric Technologies, Inc. (AETI) has won a contract to “provide a turnkey power delivery solution for a new Liquefied Natural Gas (LNG) liquefaction plant under construction” in New England. Well that caught our attention. Where is this new LNG liquefaction plant located? The announcement does not say. However, we have a guess…
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Marcellus & Utica Shale Story Links: Tue, Nov 1, 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: Labor was sold out by Hillary Clinton in NED pipeline; Cabot waits for pipeline progress; Deepwater Horizon attorneys get $555 MILLION; Jeff Immelt’s Baker Hughes purchase; the long term outlook for natgas; and more!
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