Chesapeake Energy 3Q16: Revenue & Production Down, Lost $1.2B

Chesapeake EnergyChesapeake Energy released it’s third quarter 2016 update yesterday. Revenues were down 33% year over year. Production for all forms of hydrocarbons the company extracts–oil, natural gas and natural gas liquids, expressed as million barrels of oil equivalent or MMboe–was down 2 MMboe (around 3%). The company lost $1.2 billion in 3Q16–a marked improvement over losing $4.6 billion in 3Q15. Most of the loss was a paper loss (write-downs for impairments) and not out-of-pocket money. Chesapeake remains one of the largest producers in the Marcellus/Utica region, with a combined production in the two plays of 261 thousand barrels of oil equivalent (~1.5 million cubic feet per day of natural gas). One thing stands out in the 3Q16 update: Chesapeake’s renewed/big push in the Haynesville. The company operated an average of 11 rigs in 3Q16 (down from 18 in 3Q15), drilling 63 wells (down from 81 in 3Q15) and completing 80 wells (down from 84 in 3Q15). They connected 105 wells to pipelines for production in 3Q16 (down from 112 in 3Q15). All of those numbers are cumulative across all shale plays. Unfortunately Chesapeake doesn’t break out any of their numbers by individual shale play. They remain the biggest driller in the Ohio Utica. Here’s the update…
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Eclipse 3Q16: NatGas Production Up, Costs Coming Down

Eclipse_logo_hiresEclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA that drills mostly in Ohio, released their third quarter 2016 update yesterday. In 2Q16 Eclipse resumed drilling with one rig, allocated a drilling budget of $196 million, and began completing previously drilled but uncompleted (DUC) wells in their portfolio (see Eclipse Resources Loses $73M in 2Q16, Resumes Utica Drilling). How did that play out in 3Q16? Natural gas production was up year over year, from 13.4 billion cubic feet (Bcf) in 3Q15 to 15.4 Bcf in 3Q16. However, both natural gas liquids (NGL) and oil production slipped year over year. So when you combine all categories of hydrocarbons together, Eclipse’s production slipped just a bit. Frankly, Eclipse is still mostly in wait mode. So far in 2016 they’ve drilled 5 Utica wells, completing two of them, bringing 0 wells online into new production. They have, however, brought 14 condensate (very light oil) wells online in 2016 thus far. As for finances, the company lost $26.8 million in 3Q16, but that’s a big improvement over 3Q15 when they lost $81.5 million. Here’s the update from Eclipse, including details on the company’s first “super-lateral” well, the Purple Hayes…
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Gulfport 3Q16 Fin. Update: $157M Loss, 6 Utica Rigs Coming in 2017

Gulfport logIn mid-October Gulfport Energy was one of the first out of the gate with information on the third quarter (see Gulfport 3Q16 Operations Update: Production Up 13%, Prices Up Too). However, that was only an operational report, and not the fuller, financial report. On Wednesday Gulfport delivered the full package/update. As we previously noted, natural gas production was up nicely. But a fuller reading of the numbers in this report shows that, like other Utica/Marcellus producers, both oil and natural gas liquids (NGL) production was down year over year for Gulfport. This confirms media reports we’ve noticed over the past few months (see Shift in Utica Drilling – from Wet Gas to Dry Gas and Why Utica Drillers are Moving from Wet Gas to Dry Gas). One reason to separate operational from financial updates is because the news in the financial update is typically not so good, while operational news typically is good. Once again we see that pattern. Gulfport lost $157 million in 3Q16–but that’s a big improvement from the $388 million loss in 3Q15. Here’s the fuller, financial update from Gulfport, including the news that the company plans to begin 2017 by running six rigs in the dry gas Utica…
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Carrizo O&G 3Q16: Continues to Ignore Marcellus/Utica

Carrizo logoCarrizo Oil & Gas, a Houston-based driller, 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. According to Carrizo’s latest quarterly update for 3Q16, that (sad) state of affairs continues…
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Patterson-UTI Oct Rig Count, Up 5th Mo in a Row

Patterson-UTI logoAs we do every month, MDN tracks how many rigs oilfield services company Patterson-UTI Energy reports operating–as a proxy for when/if the drop in rig counts for the Marcellus/Utica will turn around. Patterson operates a number of rigs in the northeast, as well as other areas of the continental United States (and Canada). Month by month Paterson’s rig count has declined over the past year plus–until June (see Tide has Turned: Patterson-UTI June Rig Count Ticks Up by 2). June was the first time in over a year that Patterson’s rig count reversed and began to climb once again. Since June the count has steadily risen. The latest count, for October, once again shows an increase. It ain’t much–just a single rig–but hey, at least they’re still adding rigs!…
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Magnum Hunter Exec Team Continues to Change/Rebuild

mhrMagnum Hunter Resources Corporation (MHR), a driller 100% focused on the Marcellus/Utica emerged from bankruptcy in May, less than five months after filing (see Magnum Hunter Emerges from Bankruptcy with CEO Gary Evans Gone). In September the MHR board hired John K. Reinhart as the new CEO (see Magnum Hunter Finds New CEO to Replace Forced-Out Gary Evans). Last week the company announced a new CFO (see Magnum Hunter Rebuilds Executive Team, Gets New CFO). Reinhart continues to build his team. Yesterday MHR announced the hiring of a new VP for resource development, and a new manager of marketing and midstream…
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Atlas Energy Not Liable in PA Rig Worker’s Death

Gavel-falling.jpgThis is an important story for both drillers and rig workers, potentially answering the question of who can and can’t be sued if something goes wrong when drilling a well. In 2006 Atlas Resources leased land in Greene County, PA to drill shale wells. In 2007 Atlas hired Gene D. Yost & Son, Inc. to drill wells for Atlas, including on the land leased in Greene County. Yost was the subcontractor, employing people to do the work using Yost’s equipment. As workers were removing drill pipe, preparing to shut in the well, there was an accident which appears to be operator error. One man, Rock A. Doman, was killed. The Doman family later filed a wrongful death lawsuit against Atlas Energy for negligence. After years of litigation and court findings, an appeals court ruled last week that Atlas is, in fact, a “statutory employer” under PA law, meaning they are immune from such lawsuits. That is, because Atlas hired another company for that company’s services, they (Atlas) cannot be held responsible for what the company they hired theoretically did or did not do. In this case, Yost’s “negligence” (if indeed there was any negligence) is not transferable to Atlas…
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MarkWest Says Cracker Plants are “the End Game”

end-gameThis story reaches back just a bit, but we found it interesting and instructive. On Thursday, Sept. 29, MarkWest Energy gave a tour of its facilities in eastern Ohio. Ethane was one of the big topics of discussion. During that discussion, MarkWest’s vice president of operations, Dave Ledonne, said this about the announced Shell and hopefully soon-to-be announced PTT Global ethane cracker plants: “The cracker plants are the end game. They are what we really need.” What did he mean?…
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Expert Says OH DMA Decision “Significantly Changed” Mineral Rights

game-changer.jpgMDN has been reporting on the Ohio Dormant Minerals Act (DMA) for years. In a nutshell, there are two DMAs in Ohio–one passed in 1989 that went into effect in 1992, and another in 2006 which added certain additional procedural requirements to the 1989 version. The DMA in its various versions provides for mineral rights that had previously been separated from surface rights to transfer back to the surface owner under certain conditions. The problem, for drillers and for landowners in Ohio, is in knowing which set of DMA rules to use (1989 or 2006) in determining who owns the mineral rights. A number of DMA cases went before the Ohio Supreme Court. In May, Ohio attorney David Wigham (Roetzel & Andress law firm) said there are signs that the Supremes were about to release a massive, all-in-one-go ruling on the DMA (see OH Attorney Predicts DMA Ruling to Come Soon, Settle Now). He was right. In September they did rule in three cases, saying all of the other cases come under those three (see Important: OH Supreme Court Finally Rules on Dormant Mineral Act). Following that ruling, we brought you insights on what it all means from international law firm Jones Day (see One More Look at Important OH Supreme Court DMA Decision). Since the series of DMA decisions are so important to both drillers and landowners, we thought we would bring you follow up analysis from the lawyer who predicted it was coming–David Wigham. In speaking about the decision, Wigham says, “[T]he landscape regarding title and ownership to mineral interests in Ohio has significantly changed”…
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THE Delaware Riverkeeper to Convene Hearing on “FERC Abuse”

abuse-of-power.jpgThough often we’re irritated, sometimes we simply marvel at the arrogance of organizations like THE Delaware Riverkeeper. They honestly think they know better than you what kind of energy you should have the right to buy. The people who run the organization (Maya van Rossum, who is THE self-appointed keeper of the Delaware River Basin), irrationally hate all fossil fuels. Even though Maya & company use those fossil fuels every day of their lives. In fact, even though their lives DEPEND on fossil fuels. van Rossum and those who follow her philosophies have settled on a new strategy to try and defeat the use of fossil fuels: stop all new pipeline development. Period. The only way they can do that is to bully and intimidate federal and state agencies–like the Federal Energy Regulatory Commission (FERC) and the Pennsylvania Dept. of Environmental Protection (DEP). Currently it’s FERC in Maya’s cross-hairs. Maya and THE Delaware Riverkeeper are convening a meeting in Washington, D.C. at the National Press Club (nice place, we’ve eaten there) called “People’s Hearing Investigating FERC.” You read that right. In an attempt to bully and humiliate the hard-working people at FERC, Maya plans to initiate a media circus to pressure FERC into denying, among other projects, the PennEast Pipeline. She’s billing the event as a hearing for those who “have experienced abuse at the hands of FERC and the pipeline industry.” We’re mulling over the possibility of a hearing into those abused by Maya and THE Delaware Riverkeeper. We thing we’d have a pretty strong case…
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EIA Natural Gas Oct 2016 Monthly Report

EIAThis past Monday, Oct. 31, our favorite government agency (the U.S. Energy Information Administration) issued their Natural Gas Monthly report. The report covers data received up through August 2016. Even though the data is a couple of months old, it is instructive (and interesting). EIA says the month report, “highlights activities, events, and analyses of interest to public and private sector organizations associated with the natural gas industry. Volume and price data are presented each month for natural gas production, distribution, consumption, and interstate pipeline activities. Producer?related activities and underground storage data are also reported.” We found the report interesting as we scanned through it and thought you would too…
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Marcellus & Utica Shale Story Links: Fri, Nov 4, 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: Rex Zone 3 east-to-west on schedule for start-up; Murrysville, PA slates public hearing on new fracking rules; it’s getting harder to impress investors with shale; gas rigs go up again; gas keeps bumping nuclear out of the ring; and more!
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