Judge Blocks New Lease Sales in Ohio’s Wayne Natl Forest

Radicalized leftist groups pretending to care about the environment, including the Center for Biological Diversity, Sierra Club and Ohio Environmental Council, have struck again. In May 2017 the three groups sued the U.S. Forest Service and U.S. Bureau of Land Management (BLM) to block the sale of leases for oil and gas drilling in Ohio’s Wayne National Forest (WNF). Last week a federal judge ruled in their favor. The court has effectively blocked all future lease auctions for WNF and is considering overturning two previous auctions. This is a DIRECT attack on the property rights of private landowners.
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EQT Cuts Capex Another $75M, Cancels 15% of Pipeline Contracts

Yesterday EQT, the nation’s largest natural gas producing company, issued a press release to update investors and the marketplace on a couple of important issues. First, the company has sliced off another $75 million in previously-planned spending for 2020. The company now plans to spend $1.075 – $1.175 billion on drilling and other expenses this year. Second, the company “has entered into an agreement with a third-party to permanently release firm transportation obligations of approximately 400 MMcf/d, or approximately 15% of EQT’s current portfolio.” Translation: EQT was able to cancel 15% of the contracted pipeline capacity they had, lowering expenses.
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Chesapeake Energy Hires “Restructuring Advisers”

Over the past half-decade or more we’ve read and often reported on rumors and speculation that Chesapeake Energy Corporation, co-founded by Aubrey McClendon (who was later ousted by corporate raider Carl Icahn) would have to declare bankruptcy. Aubrey loaded the company up with debt. His successor, Doug Lawler, has tried to whittle that debt down, but he’s done his own fair share of larding the company up with debt too (see Chesapeake Now Gone from Ohio Utica; Spends $4B in Eagle Ford. Reuters is reporting the company has just hired “restructuring advisers.” A euphemism for bankruptcy advisers?

NOTE: We’ve been contacted by several readers to alert us that the restructuring advisers hired by Chessy were used by the company previously to restructure debt in 2016 (without filing for bankruptcy). Did we jump to the wrong conclusion about their hiring this time? Perhaps! Time will tell.
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EIA Report: M-U Gas Production WAY Down March, April

Each month the U.S. Energy Information Administration (EIA) produces its Drilling Productivity Report (DPR), our favorite monthly report. The DPR estimates how much oil and natural gas each of the country’s seven largest shale plays produced in the previous (current) month, and how much each will produce in the coming (next) month. The February DPR showed, for the first time, combined natgas production from all shale plays would decrease beginning in March (see EIA: Shale NatGas Production Declines First Time in 39 Months). The EIA tweaks their numbers up and down each month. They badly underestimated how much of a gas production drop all shale plays would experience in March, including the Marcellus/Utica.
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Marcellus/Utica Companies Switch to “Work from Home” Model

A number of Marcellus/Utica drillers and pipeline companies are taking action to slow and potentially stop the spread of the COVID-19 coronavirus. Several companies (so far) have instituted mandatory work-from-home orders. Those companies include the Pittsburgh-based companies CNX Resources, Equitrans, and EQT Corp. By the time this is published more may have joined the list.
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Oil Heading for $20/Barrel; Price in Freefall; Uncharted Territory?

In early January, the average price for a barrel of oil was $63. Yesterday the price closed at $28.70. Word on the street is that the price may go as low as $20/barrel, soon, and stay there for a while. Why? Because the Saudis and Russians have oil-pumping fever. They’re pumping as much oil as fast as they can. And that’s producing a global surplus of oil chasing buyers who don’t want it. According to IHS Markit VP and head of oil markets Jim Burkhard, “The last time that there was a global surplus of this magnitude was never. Prior to this the largest six-month global surplus this century was 360 million barrels. What is coming will be twice that or more.” The price of oil has crashed–and unless the Saudis and Russians let up, the price will stay crashed for some time to come.
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PIOGA, POGLA, Other M-U Events Canceled or Postponed

It seems the news gets worse with each passing day. Yesterday we watched President Trump’s daily press conference to discuss the COVID-19 coronavirus. His health experts now recommend pretty much a shutdown of the entire country–no gathering in groups of more than 10 people for the next two weeks. Needless to say a number of conferences and events have either been canceled or postponed or rescheduled. One of those events is the Pennsylvania Independent Oil & Gas Association (PIOGA) Spring Meeting scheduled for April 1 in Pittsburgh. That event is now postponed (details below). Another is the 2020 Pennsylvania Oil and Gas Landowner Alliance (POGLA) Conference scheduled for April 19-21 in State College. Also postponed. We have a list below for those events now postponed or canceled.
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Shale Energy Stories of Interest: Tue, Mar 17, 2020

MARCELLUS/UTICA REGION: Dominion Energy commits $1 million to coronavirus relief efforts; All PA DEP offices statewide are closed until March 31; NATIONAL: Pioneer CEO says U.S. oil output could drop 20% on shale retreat; Big shale borrowers on fast track to junk in latest oil rout; We’re paying the price for the death of journalism; INTERNATIONAL: OPEC shift to maintain market share will cause global inventory increases and lower prices.
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