Seventy Seven Energy Throws in the Towel, Sells to Paterson-UTI

Seventy Seven Energy (SSE) is the former Chesapeake Oilfield Operating company, the oilfield services subsidiary of Chesapeake Energy that Chessy spun out into its own company in July 2014 after it couldn’t find anyone to buy it (see Long Labor & Delivery: Seventy Seven Energy Born Yesterday). It was an ill-fated venture from the beginning. SSE never turned a profit after becoming its own company. In June of this year, SSE, which has major operations in the Marcellus/Utica, filed for bankruptcy, then emerged from bankruptcy two months later borrowing $100 million (see Seventy Seven Energy Pops Out of Chapter 11 Bankruptcy in 2 Mos.). In the third quarter of this year, the red ink continued to flow, with SSE losing $36.5 million. Patterson-UTI Energy, another oilfield services company with major operations in the northeast, is buying out and merging in SSE in an all-stock deal worth $1.76 billion…
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EQT 2017 Forecast: Drilling 119 Marcellus, 81 UD, 7 Utica Wells

EQT is feeling bullish about natural gas drilling in the northeast for 2017. The company has just released its 2017 operational forecast. What do we notice? First off, they plan to spend $1.5 billion next year, most of which ($1.3 billion) will be used to drill and complete new wells. That’s a whopping 50% increase from spending $1 billion this year. The next thing we notice is what type of wells they intend to drill: 119 Marcellus wells (76 in PA and 43 in WV); 81 Upper Devonian wells, which will be drilled on the same pads as deeper Marcellus wells, but only in PA; and 7 “deep Utica” exploratory wells. EQT also reworked a midstream deal with Williams in the Ohio Valley. Below are the exciting details of what’s ahead for EQT in 2017, including a second announcement from EQT Midstream about what’s ahead for the pipeline subsidiary, including details on how much they plan to spend on the Mountain Valley pipeline project in the coming year…
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EIA Dec Drilling Rpt: Marcellus Production Continues Rocket Ride

Yesterday MDN’s favorite government agency, the U.S. Energy Information Administration (EIA), issued our favorite monthly report–the Drilling Productivity Report (DPR). The DPR is the EIA’s best guess, based on expert data crunchers, as to how much each of the U.S.’s seven major shale plays will produce for both oil and natural gas in the coming month. For the past two reports, estimating production for November and December, Marcellus natgas has increased. The trend continues in this latest report, which forecasts production for the coming month of January. The October report predicted Marcellus production would increase in November by 73 million cubic feet per day (MMcf/d). The November report predicted Marcellus production would increase in December by 130 MMcf/d. The current December report predicts Marcellus production will go up by another 160 MMcf/d in January. Yikes! Another trend observed: four of the seven shale plays will increase production in January, one (the Utica) will produce about the same in January, and only two will produce less gas in January than they did in December. Translation: shale gas production is once again on the rise–which breaks a five month record of month over month declines across all seven plays. It seems we’ve turned a corner…
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10-Yr Wait is Over, BLM Auctions Wayne Natl Forest Leases Today

As MDN alerted you in October, the Bureau of Land Management (BLM) announced they would auction 33 parcels in Ohio’s Wayne National Forest (WNF) to allow shale fracking (see BLM Launches Auction to Lease Wayne National Forest for Fracking). The parcels add up to just 1,600 acres, but hey, it’s a start. As we said at the time, “WNF is a ‘patchwork’ of public land scattered among private land. Some 60% of the mineral rights below WNF are privately owned. Those mineral rights owners have been denied the use of their property rights for a decade.” An anti-fossil fuel nutter stopped by and left a somewhat profane comment on that post (since deleted) opining that private landowners in WNF could have allowed drilling at any time–that we don’t know we’re talking about. But the obtuse commenter either doesn’t understand, or intentionally overlooks, the fact that without these little parcels of federal land–which have been off limits for the past 10 years–drillers cannot form large enough units on which to drill in WNF. Without the federal land getting leased, private land can’t drill either. Today is the day that the BLM conducts its first WNF auction. Fortunately the auction is online, so we won’t have to endure the typical freak show by anti-fossil fuelers so often associated with these events…
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Former PA AG Kathleen Kane’s Vendetta Against Marcellus Co Over

One of the many companies in the Marcellus industry targeted by Pennsylvania’s former Attorney General, Kathleen Kane, for extinction was Minuteman Environmental Services, a PA company that served the shale industry with several different businesses (see PA’s Anti-Drilling AG Charges Minuteman with Enviro Crimes). Kane orchestrated what can only be called a terror attack on Minuteman and its owner Brian Bolus and his family (see Minuteman Enviro Says PA AG Office “Terrorized” Family Members, Filing Lawsuit). Minuteman wasn’t the only business she attempted to bully. She also tried to turn accidents into crimes for both XTO Energy (see PA AG Abuses Her Authority, Files Criminal Charges Against XTO) and EQT (see PA Attorney Gen. Kane Abuses Office Again, Arrest Warrant for EQT). But it was her vendetta against Minuteman that was the most poignant and egregious–using the power of the AG’s office to bully a small business literally out of existence (since gone bankrupt). One of the charges was that the owner of the business, Brian Bolus, illegally added his mom and dad to the health insurance plan for the company. Fantastically Kane went after mom and dad, charging them with health care fraud. That charge, along with other charges, have been dropped now that Kane herself has been tried and convicted and will do jail time for committing perjury (among other things) in a case unrelated to Minuteman and the Marcellus industry. Kane is headed to jail (see PA’s Anti-Drilling AG Kathleen Kane Sentenced to Jail for Perjury). As one of the employees in the AG’s office said, “through a pattern of systematic firings and Nixonian espionage, she created a terror zone in this office.” Kane’s reign of terror is now over–and the case against Minuteman is now mostly gone, with just a few loose ends to tie up…
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Blue Wolf Stalks and Rescues Extreme Plastics from Bankruptcy

Extreme Plastics Plus (EPP) has been manufacturing and installing well pad liners since 2007. Pad liners protect the ground from accidental spills of frack wastewater and chemicals used during the drilling process. Located in Fairmont, WV, EPP’s customers are in the Marcellus and Utica Shale region. In order to expand, EPP raised an undisclosed amount of investment money from Hastings Equity Partners in 2013 (see WV Well Pad Liner Company Gets Shot of Investment Money to Grow). However, with the downturn in the oil and gas market over the past couple of years, EPP fell on hard times and earlier this year filed for bankruptcy (see WV Oilfield Services Co. Extreme Plastics Files for Bankruptcy). Just last month MDN told you that Blue Wolf Capital Partners was on the hunt for bargains and had offered a “stalking horse” bid to purchase EPP out of bankruptcy (see Stalking Horse – Blue Wolf Hunts Extreme Plastics in Bankruptcy). Blue Wolf landed its prey, buying the company’s assets out of bankruptcy. According to Blue Wolf, EPP will now exit bankruptcy with a debt-free balance sheet and will be in position for an eventual oil and gas market recovery. We reckon this is a happy ending–far better than selling off assets and everyone losing their jobs…
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FirstEnergy Finds Buyer for 4 PA NatGas-Fired Power Plants

FirstEnergy, based in Akron, OH, is one of the nation’s largest investor-owned electric systems, serving customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York. FirstEnergy owns a variety of regulated and non-regulated power generation plants. In November the company announced it wants to sell six power generating plants in PA, four of them natural gas-fired plants (see FirstEnergy Selling 4 NatGas-Fired Electric Plants in PA). The plants being sold are non-regulated–part of FirstEnergy’s strategy to become a 100% “regulated” utility in the next 18 months. Good news: FirstEnergy found a buyer willing to pay $885 million for the four natgas plants in PA…
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GTL Vendor Velocys Releases Plan to Jump-Start the Company

When it comes to gas-to-liquids (GTL), MDN has observed (as we stated in a story yesterday, see Somerset KY Attempting to Land $70M Gas-to-Liquids Plant), that there’s a lot of thunder, a lot of smoke, a lot of sizzle–but no lightening, fire or steak. That is, GTL projects get rumored, even announced–but seem to never get built. With certain exceptions. One of those exceptions is a pilot project built by Velocys in Oklahoma. We’ve written a fair bit about Velocys, a UK-based company, over the past several years (see our stories here). Velocys previously purchased a GTL project planned for Ashtabula, OH, receiving all necessary permits to begin construction, but then put the project on indefinite hold this past August (see Ashtabula, OH GTL Plant on Hold “Indefinitely”). GTL plants convert natural gas, a hydrocarbon, into other hydrocarbons, like diesel fuel, gasoline, solvents and waxes. They are a potential new market for an overabundance of supply in the Marcellus/Utica. Velocys is one of the vendors that builds GTL plants–or at least wants to build them. The company has just released a new strategy plan to turn things around and actually begin building GTL plants. Will it be different this time?…
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New Study: O&G Exploration Bounces Back in 2017, Profitable Again

Global research firm Wood Mackenzie, a trusted source of commercial intelligence for the world’s natural resources sector, recently published a new study that predicts global oil and gas exploration and production (i.e. drilling) in 2017 is going to bounce back–in a pretty big way. E&P companies in North America are forecast to boost their capital expenditures in 2017 by 24.5%–the first increase since 2014. Perhaps some independent verification of that prediction has just been provided by EQT. As we note in a related story today, EQT is boosting their capex next year to $1.5 billion–a 50% increase (see EQT 2017 Forecast: Drilling 119 Marcellus, 81 UD, 7 Utica Wells). However, the trend in recent months will continue toward “a smaller, more efficient industry.” In other words, we won’t see the roaring days of a few years ago, but at least we’ll see an uptick in new drilling in the coming year. Here’s what the brains at Wood Mackenzie predict will happen in the next 12 months…
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Are Lower Costs to Produce Shale Oil Only a Mirage?

Every now and again it’s fun to read Peak Oil people and their wild theories that oil will run out any year now. Such theories have been exposed as complete bunkum, mainly because those crusty old guys (and gals) in the U.S. oil patch keep figuring out how to do new things to extract oil, at cheaper prices. Technology gets better, procedures get better, we do more with less. And we produce more oil, year after year. But it’s still good to read those with a different viewpoint from time to time, just to keep us on our toes. Sometimes they even make some good points. That’s what we found in an article that posits the theory that shale oil really isn’t as good as it may appear. Why? According to this peak oil author, better technology now being used is not nearly as important as the technique currently employed called “high grading”–or targeting the sweetest of the sweet spots, which are far more productive than the run-of-the-mill drilling locations. The author maintains we’ll run out the best areas to drill soon, leaving us with less-than-optimal areas and therefore much higher costs. And then shale is toast. That’s the theory anyway…
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Marcellus & Utica Shale Story Links: Tue, Dec 13, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: OPEC’s production cut won’t boost Marcellus shale output; SWPA Enviro Health Project exploits children to support fractivist cause; FERC denies Elba Island LNG re-hearing request from Sierra Clubbers; proppant demand on the rise; oil rig count spikes way up; Trump will resolve Dakota Access, Keystone XL pipeline delays in January; and more!
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