CNX Pays $180K for Erosion, Sedimentation at SWPA Well Sites

The Pennsylvania Dept. of Environmental Protection (DEP) says CNX Resources failed to prevent soil erosion at seven of the company’s well pad sites in Washington and Greene counties in 2017/2018. The failure, says DEP, resulted in the release of soil and sediment, including a few cases of sediment-laden water being released into nearby streams. CNX corrected the violations and has struck a deal with DEP regarding compensation. Instead of paying a fine to the DEP, CNX will pay $180,000 to restore a trout stream in a Washington County park.
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Marcellus Companies $tep Up to Help During COVID-19 Crisis

Companies in the Marcellus/Utica shale industry have stepped up and given money, and in some cases retooled manufacturing operations, in order to help communities, first responders and medical professionals respond to the COVID-19 coronavirus pandemic. Companies like ExxonMobil, Range Resources, Cabot Oil & Gas, EQT, Alta Resources, Chevron, Greylock Energy, Olympus Energy, Penn E&R, Southwestern Energy and others. We are gratified and proud of the industry where we hang our hat.
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What May Lie Ahead for Chesapeake Energy in the Near-Term

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In mid-March, MDN brought you the news that Chesapeake Energy had hired “restructuring advisers” to help the company navigate a $9 billion debt millstone hanging around its neck (see Chesapeake Energy Hires “Restructuring Advisers”). We got some blowback at the time for implying restructuring is more-or-less a euphemism for bankruptcy. Fair enough. Sometimes restructuring avoids bankruptcy. But Chesapeake’s stock is now down 99% in value, trading this morning at 17 cents per share. The picture by anyone’s standard is pretty bleak. The company is about to do a reverse stock split to boost the per-share price. What happens next? Can the company stay out of the bankruptcy ditch?
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Shell Files for Waiver to Restart PA Cracker Work w/Fewer Workers

Pennsylvania Gov. Tom Wolf, like governors in neighboring states hit hard by the COVID-19 coronavirus, has elected to shut down all non-essential (called non-life-sustaining) businesses in the state until further notice to prevent the spread of the virus. The state issued a comprehensive list of which kinds of businesses could, and could not, continue working during the shutdown. Some 35,000 businesses on the non-life-sustaining list have requested a waiver from the state Dept. of Community and Economic Development (DCED). The DCED has so far granted 5,693 waivers, denied 8,952 requests, and ruled another 8,365 do not require a waiver because they fit the life-sustaining definition outlined in the shutdown order.
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Range Resources Cuts Budget Again, Down Another $90M

Yesterday Range Resources announced it is hacking off another $90 million from its 2020 budget. In January the company announced it would reduce its 2020 budget by 29%, from spending $728 million last year to $520 million this year (see Range Releases 2020 Budget: Spending 29% Less, Focus on Marcellus). Yesterday the number for this year went down to $430 million, a 40% cut over last year’s budget. The reason for the additional cut? The ongoing low price of natural gas.
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Chesapeake Energy & Total Beat Class Action Royalty Lawsuit in OH

In 2015 a group of Ohio landowners did what landowners had previously done in Pennsylvania, Texas and elsewhere–they filed a proposed class-action lawsuit against Chesapeake Energy claiming Chessy had screwed them and about 1,000 other Ohio landowners out of a collective $30 million in royalty payments (see OH Landowners File Royalty Class Action Lawsuit Against Chesapeake). It took nearly five years with a lot of twists and turns, but yesterday the U.S. District Court for the Northern District of Ohio ruled in favor of Chesapeake, dismissing the claims against them.
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EQT Restarts Fracking Ops After Worker Diagnosed with COVID-19

Last week MDN told you that a contractor working in EQT’s hydraulic fracturing (“completions”) operation who had worked at a site in Belmont County, OH tested positive for COVID-19 coronavirus (see EQT Stops Fracking After Worker Gets COVID-19; Suspends Dividends). Because the worker had been in contact with a number of other workers in EQT’s completions unit, the company temporarily shut down all completions (fracking) operations until the expiration of a 14-day waiting period based on when the worker had come in contact with others. The wait is over. On Sunday EQT restarted fracking and completions operations.
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Shell Pulls Out of Lake Charles LNG Project, Energy Transfer Stays

Is this the beginning of a pullback from LNG project? Scared of the impacts of the coronavirus and the price of oil crashing, Royal Dutch Shell is pulling out of a 50/50 joint venture partnership with Energy Transfer (ET) to build a new LNG export facility in Lake Charles, Louisiana. In corporate speak, Shell says, “This decision is consistent with the initiatives we announced last week to preserve cash and reinforce the resilience of our business,” and “the time is not right for Shell to invest.” Translation: We’re scared. And who can blame them? All of a sudden there are LNG cargoes sailing the oceans with no place to unload (see LNG Cargoes All Dressed Up with Nowhere to Go).
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Will Shell Cracker Construction Delay Affect Ohio Cracker Timing?

Nearly two weeks ago Shell, at the prompting of local officials, shut down construction of the mighty ethane cracker plant the company is building in Beaver County, PA (see Shell Shuts Down SWPA Cracker Plant Construction re COVID-19). How long will construction be stopped? According to a Shell spokesman, “I have no timeline for a return at this time.” What if the work stoppage drags on for months? It could, potentially, have a domino effect on another nearby cracker project–across the river in Belmont County, Ohio.
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EQT Stops Fracking After Worker Gets COVID-19; Suspends Dividends

The Pittsburgh Business Times is reporting that a contractor working in EQT’s hydraulic fracturing (“completions”) operation who last worked at a site in Belmont County, OH has tested positive for COVID-19 coronavirus. Because that worker has been in contact with a number of other workers in EQT’s completions unit, the company has temporarily shut down all completions (fracking) operations. In a separate and unrelated announcement, EQT told investors they are (for now) suspending quarterly dividend payments and will use the money instead to pay down near-term debt.
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Shell Ethane Pipe Construction in SWPA Allowed to Restart

Here’s a rum’un (Brit speak meaning “strange” or “odd”) if ever we’ve heard of one. Shell shut down construction activity a week ago at its mighty ethane cracker plant site in Beaver County, PA, sending nearly 8,000 people home (see Shell Shuts Down SWPA Cracker Plant Construction re COVID-19). There are still several hundred people on location to secure things and ensure no mischief is made while the other workers are away. However, work on Shell’s Falcon pipeline project, the pipeline that will feed ethane to the (now quarantined) plant, is allowed to continue as “life-sustaining” work under PA Gov. Tom Wolf’s order closing some businesses but keeping others open.
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Equinor (Statoil) Stops All U.S. Shale Drilling, Incl. Marcellus

Oil and gas drilling giant Equinor (formerly called Statoil) is owned by the Norwegian government. Equinor/Statoil has drilled in the Marcellus/Utica for years. As recently as last June the company reported drilling 9-14 Utica wells per year (see Equinor (Statoil) Drilling Long Utica Laterals, Production Up 5X). The company also drills oil wells in the U.S., primarily in the North Dakota Bakken. All of that–both Utica and Bakken drilling–has come to a screeching halt. Yesterday the company announced it is reducing its drilling budget worldwide by $400 million and is “halting” all U.S. onshore (i.e. shale) drilling and completion activities.
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Montage Resources Trims Another $45M Off 2020 Capex Budget

In February Montage Resources said in 2020 it will increase production approximately 6% over 2019 while slicing its capital expenditure budget by 44%, to $190-$210 million for the year (see Montage Resources 2020 Sneak Preview: More OH Marcellus Drilling). That was BC, before coronavirus. It’s now AD, after (oil price) disaster, and the company has just announced it will decrease capex spending by another $45 million. To be fair, the company does not specifically blame either the coronavirus or the oil price shock for its actions. In a statement, the company says it continues to “monitor market conditions” and adjust accordingly. However, there is a big change in drilling strategy coming…
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Diversified Agrees to Plug an Extra 2 Wells per Year in Ohio

Diversified Gas & Oil owns close to 8 million acres of leases with some 60,000 (mostly) conventional oil and gas wells. Their focus has been to acquire quality production and cash flow–regardless of the well or commodity type (gas or oil)–in the Appalachian Basin. They currently have over 400 Marcellus/Utica shale wells in their portfolio too. When a gas or oil well quits producing, it needs to be plugged. We were aware of deals Diversified has cut with both Pennsylvania and West Virginia to plug old, non-producing wells (see DEP and Diversified Gas & Oil Compromise on Plugging Old PA Wells and Diversified Deal in WV to Plug 730 Abandoned Wells Over 15 Years). It turns out Diversified also has a deal in place with Ohio to plug old wells, a deal that was recently modified.
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Encino Tops IP Charts with Ohio Utica Wells in 2019

Encino Acquisition Partners (aka Encino Energy) bought all of Chesapeake Energy’s Ohio assets for $2 billion in 2018 (see Stop Press: Chesapeake Sells ALL of its Ohio Utica Assets for $2B). The deal included all of Chessy’s 933,000 Ohio acres (with 320,000 net Utica acres) and 920 operated and non-operated Ohio Utica wells. Since that time Encino has quietly become one of the state’s top producers. The biggest news to come from the recently released Debrosse Memorial report is the high initial production (IP) rate for the wells Encino drilled in 2019. The IP rates are through the roof!
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