Magnum Hunter: Preparing to Sell, or Filing for Bankruptcy?
Sure looks to us like time has finally run out for Marcellus/Utica driller Magnum Hunter Resources (MHR). The company is now either shopping itself looking for a buyer, or preparing to file for bankruptcy. Our evidence? On Friday, MHR suspended monthly dividend payments on their stock and hired financial advisory firm PJT Partners and law firm Kirkland & Ellis to advise MHR’s board of directors “regarding potential strategic alternatives to enhance liquidity and address the Company’s current capital structure.” According to one analyst we’ve read, addressing a company’s capital structure is coded language for “we’re about to file for bankruptcy protection.” Here’s MHR’s recent history and the announcement from Friday, to provide more context…
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If you stick a cube of sugar in a batch of poison, the poison will still kill you, although it will taste better. Part of PA Gov. Tom Wolf’s poisonous budget that went down in flames last week (see 
A Belmont, Ohio man is accused of stealing more than $100,000 worth of equipment from two CNX Marcellus well sites just across the border in Greene County, PA. Two thefts happened in mid-August, and a third one on Sept. 21. Matthew Bartimus, currently hailing from Bethesda, OH, is accused of stealing a flaring chimney, pipeline choking systems, shutoff values and numerous studs and bolts. Not stuff you just throw on eBay or peddle at the local flea market. But then nobody ever accused common criminals of actually having any brains. Apparently he had a market for his stolen goods from August because Bartimus showed up to steal again in September. This time, however, he was caught red handed by employees arriving for work who held Bartimus until the police arrived. In later questioning, Bartimus confessed to the thefts…
The United Kingdom (as in Merry Old England) is finally, seriously, considering permits to allow shale fracking in the country. It’s taken a long time, and it’s certainly not a done deal yet. But it’s getting much closer. A Conservative Member of Parliament (MP) from a district in the north of England likely to see shale drilling when/if it happens recently traveled 3,500 miles to visit Pennsylvania, to see the effects of shale drilling firsthand. We applaud the MP’s efforts to see it up close. Unfortunately, Conservatives in the UK are more like RINOs here–there really aren’t all that many true conservatives in the socialistic UK. So when our “Conservative” MP came calling, one of the “expert” groups he took a tour with was the nutty Martians, a small group of anti-drillers in Butler County called the Mars Parent Group (see 
Thank God for the U.S. Court of Appeals for the Sixth Circuit! Last Friday the Sixth Circuit issued a stay on the odious and overreaching Environmental Protection Agency (EPA)/Army Corps of Engineers’ (ECA) so-called update that redefines Waters of the United States (WOTUS) to include just about everything, including mud puddles (see 
Early last week MDN told you about NY Gov. Andrew Cuomo’s disastrous new pick to run the Dept. of Environmental Conservation (DEC), the agency that oversees oil and gas drilling in the Empire State (see 
Short selling of Gastar Exploration stock has increased–certainly not a positive sign for the company. From time to time we bring you a story, like this one, that on the surface appears to be of interest only for investors rather than landowners or companies that sell goods and services to the shale industry (supply chain). MDN does have a number of investors who subscribe, but if you think stories like this one are only for investors, you are mistaken. Landowners, supply chain companies, even those in elected government are all affected and should pay attention. Short selling is when investors buy stock on a gamble that the stock will decrease–not increase–in price. When a company’s stock decreases in price, the company has a lower market capitalization and it makes it (a) harder to borrow money, and (b) if they can borrow the money, they have to do it at a higher interest rate, making business activities less profitable. If we cut out all of the connections from point A to point B and just boil it all down: when a driller’s stock price decreases significantly, it means less drilling and financial instability for the company, which does not benefit landowners and the supply chain companies that want to sell goods and services to that driller. In other words, it means less royalties, less business opportunities, less jobs and less economic impact. That’s why we report stories like the following…
The oil and gas industry is far better at self-regulation and self-policing than any government agency can provide. Governmental regulators take forever to inflict new regulations–and they take even longer to lift those regulations when they’re no longer necessary or useful (witness the ban on crude oil exports in place since the early 1970s that the House of Representatives voted to lift last Friday, but Obama has promised to veto). A great example of self-regulating and self-policing is the American Petroleum Institute (API). Last week the API issued updated hydraulic fracturing standards with an aim to continuously improve well integrity, groundwater protection, and environmental safety. While API’s recommended practices are not binding on drillers, API standards are highly respected and used by many drillers–those who care about doing it right…
Below are upcoming events for the next three months (90 days). To see the full list of future events, visit this page:
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: fate of Philly energy hub in hands of next mayor; PA towns get big money from impact fee; RR inspectors missed defect that led to fiery derailment in WV; lifting the ban on crude exports not a slam dunk; Morgan Stanley says low natgas prices through 2020; Puerto Rico changing to natgas; LNG projects ‘dying off’; and more!