Chesapeake Energy 3Q16: Revenue & Production Down, Lost $1.2B
Chesapeake Energy released it’s third quarter 2016 update yesterday. Revenues were down 33% year over year. Production for all forms of hydrocarbons the company extracts–oil, natural gas and natural gas liquids, expressed as million barrels of oil equivalent or MMboe–was down 2 MMboe (around 3%). The company lost $1.2 billion in 3Q16–a marked improvement over losing $4.6 billion in 3Q15. Most of the loss was a paper loss (write-downs for impairments) and not out-of-pocket money. Chesapeake remains one of the largest producers in the Marcellus/Utica region, with a combined production in the two plays of 261 thousand barrels of oil equivalent (~1.5 million cubic feet per day of natural gas). One thing stands out in the 3Q16 update: Chesapeake’s renewed/big push in the Haynesville. The company operated an average of 11 rigs in 3Q16 (down from 18 in 3Q15), drilling 63 wells (down from 81 in 3Q15) and completing 80 wells (down from 84 in 3Q15). They connected 105 wells to pipelines for production in 3Q16 (down from 112 in 3Q15). All of those numbers are cumulative across all shale plays. Unfortunately Chesapeake doesn’t break out any of their numbers by individual shale play. They remain the biggest driller in the Ohio Utica. Here’s the update…
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Eclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA that drills mostly in Ohio, released their third quarter 2016 update yesterday. In 2Q16 Eclipse resumed drilling with one rig, allocated a drilling budget of $196 million, and began completing previously drilled but uncompleted (DUC) wells in their portfolio (see 
In mid-October Gulfport Energy was one of the first out of the gate with information on the third quarter (see 
Carrizo Oil & Gas, a Houston-based driller, actively drills in the Eagle Ford Shale in South Texas, the Delaware Basin in West Texas, the Niobrara Formation in Colorado, and until mid-year in 2015, they did have an active drilling program in the Ohio Utica and Pennsylvania Marcellus. No more. They haven’t drilled in Appalachia since 3Q15. According to Carrizo’s latest quarterly update for 3Q16, that (sad) state of affairs continues…
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 
Magnum Hunter Resources Corporation (MHR), a driller 100% focused on the Marcellus/Utica emerged from bankruptcy in May, less than five months after filing (see 
This is an important story for both drillers and rig workers, potentially answering the question of who can and can’t be sued if something goes wrong when drilling a well. In 2006 Atlas Resources leased land in Greene County, PA to drill shale wells. In 2007 Atlas hired Gene D. Yost & Son, Inc. to drill wells for Atlas, including on the land leased in Greene County. Yost was the subcontractor, employing people to do the work using Yost’s equipment. As workers were removing drill pipe, preparing to shut in the well, there was an accident which appears to be operator error. One man, Rock A. Doman, was killed. The Doman family later filed a wrongful death lawsuit against Atlas Energy for negligence. After years of litigation and court findings, an appeals court ruled last week that Atlas is, in fact, a “statutory employer” under PA law, meaning they are immune from such lawsuits. That is, because Atlas hired another company for that company’s services, they (Atlas) cannot be held responsible for what the company they hired theoretically did or did not do. In this case, Yost’s “negligence” (if indeed there was any negligence) is not transferable to Atlas…
This story reaches back just a bit, but we found it interesting and instructive. On Thursday, Sept. 29, MarkWest Energy gave a tour of its facilities in eastern Ohio. Ethane was one of the big topics of discussion. During that discussion, MarkWest’s vice president of operations, Dave Ledonne, said this about the announced Shell and hopefully soon-to-be announced PTT Global ethane cracker plants: “The cracker plants are the end game. They are what we really need.” What did he mean?…
MDN has been reporting on the Ohio Dormant Minerals Act (DMA) for years. In a nutshell, there are two DMAs in Ohio–one passed in 1989 that went into effect in 1992, and another in 2006 which added certain additional procedural requirements to the 1989 version. The DMA in its various versions provides for mineral rights that had previously been separated from surface rights to transfer back to the surface owner under certain conditions. The problem, for drillers and for landowners in Ohio, is in knowing which set of DMA rules to use (1989 or 2006) in determining who owns the mineral rights. A number of DMA cases went before the Ohio Supreme Court. In May, Ohio attorney David Wigham (Roetzel & Andress law firm) said there are signs that the Supremes were about to release a massive, all-in-one-go ruling on the DMA (see 
Though often we’re irritated, sometimes we simply marvel at the arrogance of organizations like THE Delaware Riverkeeper. They honestly think they know better than you what kind of energy you should have the right to buy. The people who run the organization (Maya van Rossum, who is THE self-appointed keeper of the Delaware River Basin), irrationally hate all fossil fuels. Even though Maya & company use those fossil fuels every day of their lives. In fact, even though their lives DEPEND on fossil fuels. van Rossum and those who follow her philosophies have settled on a new strategy to try and defeat the use of fossil fuels: stop all new pipeline development. Period. The only way they can do that is to bully and intimidate federal and state agencies–like the Federal Energy Regulatory Commission (FERC) and the Pennsylvania Dept. of Environmental Protection (DEP). Currently it’s FERC in Maya’s cross-hairs. Maya and THE Delaware Riverkeeper are convening a meeting in Washington, D.C. at the National Press Club (nice place, we’ve eaten there) called “People’s Hearing Investigating FERC.” You read that right. In an attempt to bully and humiliate the hard-working people at FERC, Maya plans to initiate a media circus to pressure FERC into denying, among other projects, the PennEast Pipeline. She’s billing the event as a hearing for those who “have experienced abuse at the hands of FERC and the pipeline industry.” We’re mulling over the possibility of a hearing into those abused by Maya and THE Delaware Riverkeeper. We thing we’d have a pretty strong case…
This past Monday, Oct. 31, our favorite government agency (the U.S. Energy Information Administration) issued their Natural Gas Monthly report. The report covers data received up through August 2016. Even though the data is a couple of months old, it is instructive (and interesting). EIA says the month report, “highlights activities, events, and analyses of interest to public and private sector organizations associated with the natural gas industry. Volume and price data are presented each month for natural gas production, distribution, consumption, and interstate pipeline activities. Producer?related activities and underground storage data are also reported.” We found the report interesting as we scanned through it and thought you would too…
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Rex Zone 3 east-to-west on schedule for start-up; Murrysville, PA slates public hearing on new fracking rules; it’s getting harder to impress investors with shale; gas rigs go up again; gas keeps bumping nuclear out of the ring; and more!