Rex Energy Sells Itself to PennEnergy Resources for $600M

Rex Energy, one of our favorite small drillers, has finally found a buyer for its Marcellus/Utica assets. And it’s a good home. After scheduling and rescheduling a bankruptcy auction four times in a single week, Rex canceled the auction and said it has cut a deal with PennEnergy Resources to buy the company–for $600.5 million. You may recall that Rex, heading into bankruptcy in May, owed nearly $1 billion to several creditors (see Rex Energy Owes Nearly $1B – Who They Owe & How Much). If the deal is for $600.5 million, somebody’s not going to get paid everything they’re owed. But then, that’s the nature of bankruptcy court–to decide who gets what and how much. The deal Rex/PennEnergy is subject to approval by the bankruptcy court, but we expect it will get approved. Part of the deal calls for PennEnergy to pay $1 million to Rex landowners who had sued the company claiming Rex didn’t pay them royalties. We think PennEnergy will be a good home for the Rex assets. PennEnergy launched in 2011, founded by two former Atlas Energy executives–Rich Weber and Greg Muse. The company is backed by EnCap Investments and now has 70 employees. No word on how many of Rex’s employees will come along with the deal. Rex’s acreage sits close to PennEnergy’s, hence the interest. Below the details as we have them, including Rex’s SEC filing outlining the deal…
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Top 25 Producing Gas & Oil Wells in Ohio Utica for 2Q18

Somebody must have lit a fire under the Ohio Dept. of Natural Resources (ODNR). The ODNR issued first quarter 2018 production numbers for shale oil and gas production a little over a month ago, in July (see Top 25 Producing Gas & Oil Wells in Ohio Utica for 1Q18). Which does seem a bit late. Yesterday ODNR made up for it by issuing production numbers for 2Q18. Natural gas production was up an astounding 42% over the same period last year (after being up 43% in 1Q18). Utica natgas production broke record, hitting a new all-time high of 554.3 billion cubic feet (Bcf) in 2Q18. Unlike 1Q18 when Utica oil production was down 3.6%, in 2Q18 Utica oil production was up, a big 11%! Ohio’s oil production has seesawed up and down over the past few years. Once again Ascent Resources, founded by the late Aubrey McClendon, dominated the top 25 highest-producing gas wells, with 18 of the top 25. Eclipse Resources grabbed a majority of the top 25 most-producing oil wells, with 12 of 25 wells on the list. The top 6 oil wells were all Eclipse wells, all located in Guernsey County. Below we have the ODNR’s high level overview of the numbers, along with MDN’s own exclusive analysis showing: the top 25 producing gas wells, the top 25 producing oil wells, and then the top 25 gas and oil wells as ranked by average production per day. There is a difference. We show you which wells are not just producing the most quantity overall, but which wells are producing at the fastest (most productive) rates–even if those wells haven’t yet been online a full three months. We also include a link to the complete list (Google spreadsheet) of 2,035 wells included in the 2Q18 ODNR report, in a more useful format than that provided by ODNR…
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Peters Twp Votes to Allow Fracking Under Town Property, Again

Peters Township, the most populous township in Washington County, PA, is one of the seven selfish towns that sued the state in 2012 over the zoning provisions in the then-new Act 13 law, eventually winning at the PA Supreme Court level (see PA Supreme Court Rules Against State/Drillers in Act 13 Case). The Act 13 victory gave townships like Peters the right to pass local zoning ordinances that restrict, but don’t outright ban, Marcellus/Utica drilling. In September 2016, Peters decided to officially screw Marcellus drillers. Town council passed a drilling ordinance that says drilling is ONLY allowed in areas zoned for industrial uses, which rules out areas zoned for agricultural uses, where most drilling happens (see Peters Twp Gives the Middle Finger to Drillers One Final Time). Even the theoretical drilling that would happen in industrial areas, a grand total of 138 acres in the township, would have to be a “conditional use” with loads of permits and reviews. In other words–don’t bother drilling in Peters. So we found it quite ironic that in May 2017 Peters Township Council threw their lordly “principles” right out the window by signing a five-year lease with EQT allowing drilling under (not on) some of the township’s own land, something they’ve denied every other landowner in the township (see Peters Township Votes to Allow Fracking Under Town Property). They’ve just done it again. Peters Township Council voted Monday to approve a lease with Range Resources for the very same terms as they agreed to with EQT. This time the land is located under Peters Lake Park. That’s right, drilling and fracking under a lake, in Peters Township, where the town can get away with it, but not private citizens. How much will Peters get this time? Keep reading for the answer, available only on MDN…
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Local Leaders Get Ready for Belmont County, OH Cracker Plant

It sure feels like PTT Global Chemical, the Thailand-based petrochemical giant that says it wants to build an ethane cracker in Belmont County, OH, is getting close to making a positive final investment decision (FID). On Monday we told you that an Ohio State Representative, Andy Thompson, said such a decision will be forthcoming in “a month or so” (see PTT Decision on Ohio Cracker Announced in Next “Month or So”). We have more evidence of an impending decision. Recently two dozen local county officials, from both sides of the Ohio River, went on a field trip to Beaver County where Shell is building their $6 billion ethane cracker. The officials wanted to see, first-hand, how the project is impacting the local area. They got eyes- and earsful. They came back jazzed. Here’s our point: A horde of local officials doesn’t traipse around the countryside wasting time unless they are convinced the project is going to happen. From the language this group of officials is using, and their overall demeanor, we’d say the PTT Belmont cracker is a happening project…
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FERC Approves Mountaineer XPress Pipe Rate Increase

We spotted a story that contains information we don’t fully understand. Columbia Gas Transmission is currently building the Mountaineer XPress Pipeline, a $2 billion, 170-mile pipeline that will flow 2.7 billion cubic feet (Bcf) per day of natural gas from existing and future points of receipt along or near the Columbia pipeline system–most of it located in West Virginia (see Details on Columbia Pipeline Mountaineer XPress Pipeline Project). At 2.7 Bcf/d, Mountaineer XPress is the second largest (by volume) new pipeline project for the Marcellus/Utica region–second only to Rover’s 3.25 Bcf/d pipeline. It is a big and important project. When Columbia (aka TransCanada) filed the original application, approved by the Federal Energy Regulatory Commission, they sought permission to charge $9.827 per dekatherm (one dekatherm is equivalent to one thousand cubic feet, or 1 Mcf) to flow gas along the pipeline. Put another way, shippers without a contract who want to ship along the pipeline will pay $9.83/Mcf to ship gas. Since gas typically fetches less than $3/Mcf, how can you make any money? That’s what we can’t figure out. Perhaps one of our sharp MDN readers can enlighten us? MDN Note: We have THE BEST readers! Dmitry Brown, a Senior Analyst with UGI Energy Services, wrote to clear up our confusion. The prices are per month, not per day. Shippers on MXP were expecting to pay $9.827/Mcf/month, or $ 0.32/Mcf/day. Columbia recently filed a request with FERC to increase the charge from $9.83/Mcf to a whopping $14.66/Mcf! The reason, according to Columbia, is that project costs have ballooned from $2 billion to $3 billion, “related to contractor labor costs, inspection costs, and outside services costs that substantially exceeded the contingency established for such charges.” Last Friday FERC approved the 49% increase. Now shippers will have to pay $14.663/Mcf/month, or $0.48/Mcf/day. Quite an increase…
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Eclipse’s Top Brass Not Sticking Around After Blue Ridge Merger

MDN brought you the big news yesterday that Eclipse Resources is merging with Blue Ridge Mountain Resources (see Eclipse Resources Merging with Former Magnum Hunter). We noted that nowhere in the announcement and paperwork we read that Eclipse co-founder and CEO Ben Hulburt would be staying with the newly merged company. We now have confirmation that Hulburt is leaving when the deal closes. We also have confirmation that pretty much all of Eclipse’s top brass is leaving–except for Oleg Tolmachev, who will become the senior vice president and COO of the newly merged company. In addition to Hulburt’s departure, Eclipse executive VP/general counsel Christopher Hulburt is leaving, and executive VP/CFO Matthew DeNezza will also exit stage right. All three are being paid more than $1 million (Ben Hulburt more than $3 million) to leave…
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Enbridge Buying Out Balance of Spectra Energy for $3.3B

In Feb. 2017 Canadian pipeline operator Enbridge Inc. completed an all-stock deal to buy out pipeline operator Spectra Energy (based in Houston) for $28 billion (see Spectra Energy is No More – $28B Merger with Enbridge Complete). Spectra has a number of critical pipeline infrastructure projects in the Marcellus/Utica region, including the still-on-life-support Access Northeast pipeline to New England, the mighty NEXUS pipeline that spans Ohio, and the now completed Algonquin Incremental Marketing (AIM) pipeline project. Spectra also built the Access South, Adair Southwest and Lebanon Express projects to expand one of the largest natural gas pipelines in the U.S. (and in the northeast)–the Texas Eastern Transmission (Tetco) pipeline. Even though Spectra is a wholly-owned subsidiary and essentially an arm of Enbridge, some of Spectra’s ownership still belongs to outside investors via a master limited partnership (MLP). We’ve previously written about MLPs disappearing following the Trump tax cut (see our MLP/Trump stories here). Enbridge says its time to chase in all of the outstanding shares owned by others and has just struck a deal to buy out Spectra’s MLP common units for $3.3 billion…
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Energy Stories of Interest: Wed, Aug 29, 2018

The “best of the rest”–stories that caught MDN’s eye that you may be interested in reading: OH oil and gas industry needs workers; 5 new shale wells approved in Columbiana County, OH; the northeast’s changing role as US natgas supplier; PA DEP offers $2K rebate to buy natgas vehicles; WVU forms study abroad partnership with Argentia–to study shale?; Cheniere files to flow gas into 5th LNG export terminal; why natgas prices can’t go higher; M-U drives US natgas production growth; Silicon Valley eyes fossil fuel industry; Mexico’s new president about to ruin oil industry; and more!
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