Carbon Natural Gas Buys Cabot’s Conventional Wells in WV-OH-VA

Carbon Natural Gas Company, through its affiliate Carbon Appalachian Company, teased in a press release issued yesterday that the company has just completed the acquisition of “natural gas producing properties and related facilities” located “predominantly in the State of West Virginia” for $21.5 million. The release does not identify the seller–but MDN believes we know who it is: Cabot Oil & Gas. We supply our evidence below. Carbon Natural Gas is an independent oil and gas exploration and production company (i.e. “driller”) that owns, operates and develops oil and gas properties in the Appalachian, Illinois and Ventura Basin areas of the U.S. Most of the wells they own and operate are conventional. However, in April the company began dipping its toe into unconventional shale as well (see Carbon Natural Gas Targets Chattanooga Shale in TN). The April announcement said the company had formed a subsidiary called Carbon Appalachian Company, with backing from two unnamed institutional investors. The new venture has access to a whopping $100 million to get them going, with $20 million of that going to the purchase of “natural gas producing properties and related facilities” located in Tennessee. It is the shale-focused subsidiary Carbon Appalachian that closed on this new $21.5 million transaction of gas wells and a pipeline system located mostly in WV. So are the assets they just bought shale-related?…
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New Pipelines Raise Gas Prices for M-U Drillers by 30% in 2017

Pipelines make a HUGE difference in the price drillers can get for their gas. When more pipelines get built to haul gas out of an over-saturated/producing area, like the Marcellus/Utica, the higher the price drillers can get for their gas. It’s simple Economics 101. Right now we have too much supply and not enough demand. When pipelines start flowing our gas to other markets, it the over-supply goes to places where there’s not enough supply and prices go up. This is not just theory. It’s fact. Our favorite government agency, the U.S. Energy Information Administration, has done an analysis of the price fetched for Marcellus/Utica gas for the first seven months of 2017 versus the same period in 2016. Extra/new pipeline capacity has come online in the first half of 2017. The EIA found that in the first seven months of 2016, our gas averaged a sale price of $0.76 below the benchmark Henry Hub price. In the first seven months of 2017, our gas averaged a sale price of $0.53 below the Henry Hub. The gap is narrowing year over year. That 53 cent price is a 30% improvement over last year. So yes, pipelines make a HUGE difference in the price of natural gas!…
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Pittsylvania County Decides to Obey Fed Law re Mountain Valley Pipe

Once upon a time it was a given that local officials (state, county, township) would obey federal laws. It’s what responsible adults do. You obey the law, even if you don’t agree with or like the law. If you don’t like the law, you work to get it changed. Ignoring the laws you don’t like is a prescription for anarchy and the end of civilized rule (a descent into tyranny). When local officials, like those in Pittsylvania County, VA willingly, enthusiastically obey the law these days (as it relates to federally-approved pipelines), it’s the exception rather than the rule. It’s noteworthy. Such is the post-Obama world we now live in. Don’t like a law? Ignore it. Break it. Subvert it. But not in Pittsylvania. Tuesday night the Pittsylvania County Board of Supervisors discussed the legal “wrangling” over easements and eminent domain for Mountain Valley Pipeline, a $3.5 billion, 303-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County. The Board was in agreement: this pipeline is a GOOD thing, and easements for it in Pittsylvania are bound and governed by federal law–not local or state laws. Residents and their representatives on the county board are not free to violate those laws. What breath of fresh Virginia mountain air!…
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New Wireline Company Targeting Marcellus Attracts PE Funding

A brand new wireline oilfield service company called Reach Wireline has attracted an investment from private equity company Hastings Equity Partners. Reach Wireline, which is headquartered in Fort Worth, TX, either already has, or soon plans to have, operations in the DJ, Permian and Marcellus Shale plays, according to the company’s website. A wireline is a cable used to lower or retrieve equipment or measurement devices into a well for the purposes of well intervention, reservoir evaluation, and pipe recovery. Reach’s claim to fame is that it offers “leading edge greaseless cable.” The press release does not say how much money Reach received. Hastings Equity Partners focuses on investing in lower middle market energy services and equipment companies in the U.S. Hastings formed their “Hastings Equity Fund III” in 2014 with $172 million of commitments. Since that time Hastings has invested in a number of companies. Reach is the latest…
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Corrosive Use of Legal System Attempts to Stop M-U Pipelines

Constant frivolous lawsuits against legal, legitimate businesses performing a valuable service for society is having a corrosive effect on our legal system. That’s the thought that hit MDN as we read, yet again, about lawsuits and actions against pipelines in Virginia and West Virginia. In Virginia, radicals from the Blue Ridge Environmental Defense League are pressuring the state Attorney General to get involved to try and stop Dominion’s Atlantic Coast Pipeline–a $5 billion, 594-mile natural gas pipeline that will stretch from West Virginia through Virginia and into North Carolina. In West Virginia, the Sierra Club and several other far-out-on-the-left fringe groups are suing the state Dept. of Environmental Protection for having the audacity to evaluate and then approve the Mountain Valley Pipeline project there. Mountain Valley is a $3.5 billion, 303-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County. This ongoing barrage of lawsuits and actions are meant to delay these projects–to give antis more time to whip up opposition and to figure out how to legally (or illegally) stop them. Yes, antis often engage in illegal activities when they disagree with a lawful activity, like building a pipeline. All of these legal machinations tie up our courts and, in our opinion, corrode our legal institutions, causing irreparable harm to pipeline companies. It’s time to fight back and hold these groups (and individuals) accountable. Make them PAY (money) for their strategy of delay. Only when we hold people accountable for their actions will this mess stop…
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Energy Transfer Floats 54M New Units, Looks to Raise $1 Billion

Energy Transfer Partners (part of Energy Transfer Equity) is the company that built the Dakota Access Pipeline (now flowing, thankfully). They are also the pipeline company building both the Rover Pipeline in Ohio and Michigan, and the Mariner East 2 natural gas liquids pipeline from eastern Ohio across Pennsylvania to the Philadelphia area. Big company, big projects. ETP recently sold off 32% of the Rover project to Blackstone for $1.57 billion (see Energy Transfer Sells 32% Ownership in Rover Pipe to Blackstone). It takes a LOT of money to build these pipeline projects. Sometimes companies like ETP borrow via issuing debt (“notes”). More often they sell equity–or ownership. Earlier this week ETP announced is offering a new round of units (think shares of stock). No doubt the money will be used to help fund projects including Rover and ME2. ETP is offering 54 million units hoping to get $18.65 per unit–or a cool $1 billion…
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Nuverra Environmental Exits Chapter 11, $500M Debt Magically Gone

Nuverra Environmental Solutions (formerly Heckmann) is one of the largest companies in the United States that handles transportation and disposal of shale drilling wastewater and leftover rock and dirt from drilling. The company has major operations in the Marcellus/Utica region. In January 2016, the company, going through tough economic times, was de-listed from the New York Stock Exchange (see Nuverra Environmental Delisted from NYSE, Now a Penny Stock). In April of this year, Nuverra issued their full year 2016 update which showed a $169 million loss for the year (see Nuverra Environmental 2016 Update – Red Ink Slows, Some). And in May, the company filed for bankruptcy (see Nuverra Environmental Files for Chapter 11 Bankrutpcy). It’s now three months later, and Nuverra has emerged from bankruptcy with $70 million of new financing and magically dumping $500 million of debt. Like others before them, Nuverra turned its creditors into owners, swapping out debt for ownership equity, thereby screwing existing shareholders–their shares become so watered down they are worthless. As part of the restructuring, the old board of directors (former shareholders) are now gone, and a new board has been appointed…
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Philly Refinery “Mired in Debt” – Fights for Survival

In 2012, Sunoco inked a deal with The Carlyle Group to form a joint venture to keep Philadelphia’s historic refinery operating (see Sunoco & Carlyle Group Ink Joint Venture for Philly Refinery). The jv was called Philadelphia Energy Solutions (PES), and its CEO was the charismatic Philip L. Rinaldi, who was called “fossil Phil.” The refinery flourished–and saved 850 jobs. But PES hasn’t been without its challenges. They tried to expand their operation at the Southport Marine site in Philadelphia by leasing an additional 200 acres to build a terminal for shale oil imports and exports. But in the end, Gov. Wolf (a dunce) decided the land next to the refinery would be better used as a parking lot for imported cars coming from Japan (see PA Gov Wolf Kills Plan for PES Refinery Expansion in Philadelphia). Late last year fossil Phil decided to hang it up and retire (see PES’ Phil Rinaldi Stepping Down; Will Philly Energy Hub Die?). Can’t blame him. PES is now, according to Bloomberg, in a fight for its survival. The culprit is the exorbitant (we’d call it extortionist) fees PES must pay the federal government for something called Renewable Identification Numbers, or RINs. What are they? And will they spell the end of PES?…
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Shale Drillers Using Less Frac Sand as Prices Soar

Necessity is the mother of invention. Over the past year or so we’ve chronicled the dramatic increase in the amount of sand used in fracking. Recently we told you that Chesapeake Energy drilled what we believe to be the highest-producing Marcellus well (so far), with an initial production of 61 million cubic feet per day of gas (see Chesapeake 2Q17: “Rambo” Marcellus Well Produces Record 61 MMcf/d). Chessy’s “Rambo” well used 32 million pounds of frac sand. The trend has been to increase the use of frac sand. The more sand, the better the result. Except now that’s changing. Frac sand prices have been skyrocketing. Sand is some 12% of the cost of drilling and fracking a well. Shale drillers are beginning to innovate ways to achieve the same high yield results, but using less sand. What are they using instead? Some use “chemical diverters” to spread the sand slurry more evenly. Some reduce the distance between fractures–“tight spacing.” The point is shale drillers are doing what they have to do (innovating) to stay profitable and keep drilling. And if that means using less sand in fracking, so be it…
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Marcellus & Utica Shale Story Links: Thu, Aug 17, 2017

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Is Range Resources takeover bait?; Talen Energy relocates HQ; Rice Energy accused of not paying overtime; Shell cracker lauded by national leaders; demand for energy lawyers picks up in Pittsburgh; natgas industry comes to the rescue in WV flood; shale will beat OPEC because drillers can now profit at $40; Sierra Club sues Energy Dept over grid study; automation the key to future of o&g; manufacturers oppose Trump’s push for LNG exports; and more!
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