Rex Energy Sells 4,100 Acres, 14 Utica Wells in OH to Antero Resources

Rex Energy announced yesterday the company has cut a deal with Antero Resources to sell all of Rex’s “Warrior South Area” assets to Antero. Which may should like a big deal, but really isn’t. The assets sold include 4,100 net acres in perhaps the hottest part of the Ohio Utica Shale: Guernsey, Noble and Belmont counties. It also includes 14 Utica Shale wells. However, the wells are only producing 9 million cubic feet per day (MMcf/d) collectively. The sale price is $30 million–or $7,317 per acre. Rex says the acreage and wells are in a “non-core” area for the company. Rex, a driller focused mainly on the Marcellus/Utica (headquartered in State College, PA), has had its share of financial challenges. In December the company was warned by the New York Stock Exchange that the per share price is too low and the stock is in danger of being delisted (see Rex Energy Stock Threatened with De-Listing by Nasdaq). This sale is the latest in a string of sales meant to improve the company’s financial health…
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Would Williams Sell Its “Crown Jewel” (Transco)? You Bet Your Shoes!

To say that it was a roller coaster ride for Williams in 2016 doesn’t even come close to reality. The company received no less than two takeover/merger attempts. 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). A month later Enterprise released a statement saying they’re finished with Williams, throwing in the towel, no longer interested (see Drama: Enterprise Bails on Williams Merger, No Longer Interested). What’s going on with all of this drama? At its core, Williams owns a “trophy asset,” what some call the “crown jewel.” That asset? The mighty, 10,500-mile Transcontinental Gas Pipe Line Co (Transco). Everyone wants Transco in part because of its geography in the Marcellus/Utica. So far Williams has resisted selling either Transco or the entire Williams company. But CEO Alan Armstrong–perhaps the guy most responsible for building the Transco–said this response to a question asking whether or not the company would ever sell the Transco: “I bring an extra pair of shoes to the office every day, just in case somebody offers me enough for the pair I’m wearing.” Meaning yes, if the price is right, he would sell it…
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Antero Resources Pulls Curtain Back on Plans for 2017

Ladies and gentleman: Start your drill bits! Yesterday Antero Resources, one of the biggest drillers in the Marcellus/Utica, released their road map for what lies ahead in 2017 for the company. Among the gems: The company plans to do a serious amount of drilling. They will have drilled 170 new wells, bringing them online, by the end of the year, with another 30 drilled but not completed. Antero will spend $1.3 billion to do it–with another $200 million spent on land deals. Daily production is forecast to average somewhere around 2.1 to 2.2 billion cubic feet (Bcf) per day, up 20-25% over production in 2016. Observation: Antero will spend about what it spent last year, but still goose production by nearly a quarter more than last year. Talented folks! Antero, as we’ve previously highlighted, has what we consider to be the best hedging in the business. They announced two-thirds of their production for 2017 is hedged at $3.68/Mcf (thousand cubic feet). In fact, all of their production for this year is hedged, at various price points. The spot price of natural gas today, as this was being written, was $3.27/Mcf. Here is Antero’s success road map for the next 365 days…
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PA DEP Slowing Down Permits to Construct Well Pads & Pipelines

In 2012, the Pennsylvania Dept. of Environmental Protection (DEP) launched an “expedited” review process for erosion and sediment control general permits that it grants when drillers or pipeline companies plan to push dirt around on more than 5 acres at a time. Which means every pipeline built and every shale well pad constructed. The expedited review process shortened the time to get a permit down to as little as 14 days–provided the paperwork was filled out correctly. The DEP conducted an internal review and found that 59% of the time they didn’t get the paperwork in a form they wanted, so they disqualified those applications. Now the DEP is revising its rules for expedited review, meaning they’re pretty much doing away with it. Welcome back to long delays in getting permits to push dirt around. This action appears to be a response to stinging criticism from the PA legislature that permits, which are supposed to be issued in 14 days, are taking over 100 days–a charge leveled by PA Sen. Camera Bartolotta who is introducing legislation to put a burr under the DEP’s saddle. So the DEP is saying fine, we’ll just change it back to the way it used to be. You can now expect long permit delays from the outset. Your state government at work, serving the people…
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Patterson-UTI Dec Rig Count, Big 9% Jump Up from Nov

As 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 December, saw the biggest month over month increase since the trend reversed. In December, Patterson’s rig count hit 71, up 6 from 65 in November. That’s a big 9% jump!…
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SWEPI Auctioning 189K PA/NY Conventional Acres, 1,500 Active Wells

SWEPI, formerly known as Shell Western E&P Inc., is the North American land-based drilling arm of giant Royal Dutch Shell. SWEPI has an active drilling program in the Marcellus/Utica region. Some of that active program has traditionally been in shallow, or conventional (not shale) drilling. Using a broker, SWEPI has put up a mammoth 189,000 acres of its conventional/shallow leases and wells for sale by auction. The leases and some 1,500 active oil and gas wells are located in Forest, Elk, McKean, and Warren counties in Pennsylvania, and Cattaraugus County in New York. The sale includes shallow rights (not shale rights) only. SWEPI claims there are another 10,000 potential well locations. Here’s the details…
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OH Judge Orders ODNR to Allow Shuttered Injection Well to Reopen

American Water Management Services (AWMS) owns a wastewater injection well in Trumbull County that supposedly caused a low-level earthquake (that nobody could feel) in 2014. Two wells located at the site, both operated by AWMS, were “temporarily” shut down by the Ohio Dept. of Natural Resources following the quake (see ODNR Temporarily Shuts Down Injection Wells After Low-Level Quake). One of the two injection wells was allowed to re-open, but not the other (see ODNR Clears Trumbull Co. Injection Well in August Quake). However, AWMS can’t open just the one well. They need to open both and operate both. The ODNR is supposedly crafting new regulations that will govern the offending well that may or may not have caused the low-level quake and a year-and-a-half later the ODNR has not released those new regs. Meanwhile, everyone at that operation is out of a job. AWMS appealed the closure and in December 2015, a county judge threw out the appeal (see Judge Tosses Appeal to Re-Open Trumbull, OH Injection Well). So AWMS appealed it to the next level up–the 10th District Court of Appeals–in January 2016 (see AWMS Appeals Decision Upholding Trumbull Injection Well Closure). We’re not sure where the Appeals Court case sits, but a county judge has just ordered ODNR and AWMS to submit paperwork that will allow the well to reopen. Soon. The judge is telling the ODNR, no more foot-dragging. Get it done, now…
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FERC Grants Permission to Begin Leidy South Construction in PA/VA

In August of 2016 the Federal Energy Regulatory Commission (FERC) finally granted a certificate to Dominion to build its Leidy South Project, a $210 million to build and/or upgrade six compressor stations along the DTI pipeline system in Pennsylvania, Maryland and Virginia (see FERC OKs 6 Dominion Compressor Station Upgrades in PA, MD, VA). The upgraded compressors would allow DTI to pump an additional 155,000 dekatherms per day of natural gas, providing that gas to new and expanding natgas-fired electric generating plants. But apparently “yes” doesn’t mean “yes you can begin construction.” Earlier this week FERC granted its permission to Dominion to begin actual construction on the compressor stations…
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Magnum Hunter Dumps Shallow Well Contract Drilling

Magnum Hunter Resources Corporation (MHR), a driller 100% focused on the Marcellus/Utica emerged from bankruptcy last 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). In November, the company announced a new CFO (see Magnum Hunter Rebuilds Executive Team, Gets New CFO). Reinhart continues to build his team and tweak the company’s portfolio. Once upon a time Magnum Hunter had a number of subsidiaries: GreenHunter Resources (water and wastewater), Eureka Hunter (pipelines), and Alpha Hunter Drilling. GreenHunter is now gone, sold and merged into Fountain Quail Disposal (see GreenHunter Out of Bankruptcy, Merges with Fountain Quail Disposal). However, MHR retained both Eureka Hunter and Alpha Hunter. Earlier this week MHR announced they have sold some of Alpha Hunter, the part that does shallow well (conventional) drilling. The buyer and the sale price were not disclosed…
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High-Priced PA Strippers Go Back to Court, Impact Fee Semantics

In 2014 we brought you the interesting story of strippers in the Marcellus–stripper wells, that is (see High-Priced Strippers in PA: Semantic Gymnastics with Impact Fee). Synder Brothers is an oil/gas producer in Pennsylvania. Most of the wells they drill are vertical-only wells. Among them are 24 wells from 2011 and 21 wells from 2012 that are vertical only–but all targeting the Marcellus. According to the definition of a stripper well under the Act 13 law passed in 2012, a well qualifies as a stripper well if it doesn’t produce over 90 thousand cubic feet (Mcf) of natural gas per day. Synder Bros. says their wells don’t, ergo their wells are stripper wells and not liable to pay an impact fee. The PA Public Utility Commission (PUC), charged with evaluating what does and does not qualify, says nope–your wells target the Marcellus formation and produced above 90 Mcf for at least one month out of the year, therefore must pay the impact fee. So the PUC sued Snyder Bros., intending to collect $500,000 in unpaid fees PLUS a $50,000 fine for inconveniencing the PUC (see PA PUC Sues Snyder Bros to Collect $500K in Unpaid Impact Fees). Now, more than a year after first hearing the case, PA Commonwealth Court wants to hear it all over again. Can’t enough of those strippers…
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Boone Tells The Donald How to Make America Great Again re Energy

T. Boone Pickens, a Texas oil man (pronounced “aaalll man” in Texas) needs no introduction. In a post on LinkedIn, Boone offers some great advice to the incoming President-elect Donald Trump on how The Donald can make America great again, using domestic energy resources. Boone’s plan has two parts: (1) Don’t screw up what we have going for us. (2) Don’t settle for what we’ve done so far. Here’s some great insights from someone The Donald should listen to…
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Marcellus & Utica Shale Story Links: Thu, Jan 5, 2017

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Southwestern, strong but still takeaway problems; Dakota Access Pipeline still in limbo; Tillerson gets $180M on his way out the Exxon door; will Schlumberger continue to be the #1 OFS company; Asia becoming largest importer of US LNG; and more!
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