Chesapeake Sells 90% of Eagle Ford Assets to WildFire for $1.4B
Yesterday Chesapeake Energy announced it has cut a deal to sell the majority of its Eagle Ford oil assets to WildFire Energy I LLC for $1.425 billion. The sale includes approximately 377,000 net acres and approximately 1,350 wells in the Brazos Valley region of its Eagle Ford asset, along with related property, plant, and equipment. In 2018 Chesapeake, under the direction of then-CEO Doug Lawler, purchased 420,000 net acres in the Eagle Ford shale and Austin Chalk formations in Texas from WildHorse Resource Development Corp for $4 billion (see Chesapeake Now Gone from Ohio Utica; Spends $4B in Eagle Ford). The company grew its Eagle Ford assets with more purchases and currently (prior to the sale) owns 610,000 acres.
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We have two related lawsuits to report on involving landowners in Susquehanna County, PA, and Callon Petroleum. As most lawsuits are, these two are complicated. But, at a very high level, the concept is simple. The landowners allege that Callon Marcellus (formerly Carrizo Marcellus) shorted them on royalty payments. The landowners sued, but Callon sold its assets in northeastern PA (to BKV) and engaged in a shell game to move the proceeds of that sale ($74 million) directly to the mothership, Callon Petroleum, as a way of avoiding liability to pay, just in case they lose the royalty lawsuit.
Kinder Morgan issued its fourth quarter 2022 update yesterday. Among the news updates, we learned that work on two of three compressor station projects along the Tennessee Gas Pipeline in Pennsylvania and New Jersey (near New York City) is now underway. There was also some big news about top management shuffles. CEO Steve Kean is retiring, setting off a game of musical chairs (or musical ladders) with existing employees moving up the ladder at the company.
Earlier this month, radical Bidenistas at the EPA announced they have rewritten a rule aimed at regulating all waters in the U.S., putting power over just about everything (including oil and gas drilling) into the federal government’s hands via WOTUS, or Waters of the United States (see 
Yesterday the NYMEX Henry Hub price for natural gas dropped 27.5 cents from the previous day to close at $3.31/MMBtu. It is the lowest settlement price in 19 months, since June 22, 2021. The reason for the crash in price is low demand. Digging further, there is low demand because (1) the weather is warm this winter (so far, anyway), and (2) some 2 Bcf/d of demand is still gone because the Freeport LNG export facility remains offline. The question is, when will demand, and the price, go higher again? And how much higher will it go this year and next? The U.S. Energy Information Administration weighs in on those questions.
Alan Armstrong, the CEO of pipeline giant Williams (which has MAJOR pipeline assets in the Marcellus/Utica), delivered a talk yesterday in the company’s hometown of Tulsa, Oklahoma, to a group at the University of Tulsa. Summarizing his talk, Armstrong said we can have lower emissions right now. The way to do it is with natural gas. The problem is, of course, nobody can get a new pipeline for natural gas permitted anymore. The government, and lawsuits, are blocking new pipeline projects. The system of permitting needs to get “straightened out” according to Armstrong. Put another way, the system is BROKEN.
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