EnerVest & EV Energy Partners on the Rebound with $70+ Oil

Private equity firm EnerVest owns a lot of acreage and wells (most of them conventional) in the Marcellus/Utica region. In addition to investing in land and wells, EnerVest also has its own drilling subsidiary, EV Energy Partners (EVEP), with operations and assets in OH, PA and WV. EVEP is an MLP–a master limited partnership. While EVEP is joined at the hip with EnerVest, they are (on paper) two different companies. EnerVest has vast holdings and is in the top 25 oil & gas companies in the nation. Last July the Wall Street Journal ran a story that said EnerVest was worth nothing on paper. EnerVest pushed back on that story saying it wasn’t true–at least not completely true. EnerVest chief administrative officer, Ron Whitmire, said the company’s vast holdings are structured as more than a dozen companies. Although some of EnerVest’s companies are in trouble, the entire pie, according to Whitmire, is not in danger of bankruptcy. Conversely, Whitmire’s comment also meant that at least one or more of the EnerVest companies were/are in danger of bankruptcy. EVEP was one of them, filing in early April (see EV Energy Partners Files for Chapter 11 Bankruptcy). A new Bloomberg story takes a look at EnerVest and its 72 year-old CEO, John Walker. The article says Walker, “sees redemption ahead as oil prices rise and EnerVest gets its finances in order.” That’s certainly some good news for the company. We might summarize it this way: The current high price of oil has just pulled EV’s bacon out of the fire…
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Shell Cracker Advertises First 40 Permanent Production Jobs

Although Shell has hired a few permanent workers for its mighty $6 billion ethane cracker complex currently under construction in Monaca (Beaver County), PA, the company has just (for the first time) posted a job notification for bulk hiring of permanent positions. The job notice, posted on the BrassRing HR website, provides a detailed job description for “Shell Production Operators” in Monaca–40 of them. The job includes, “monitoring, controlling, starting and stopping equipment (such as furnaces, pumps, compressors, etc.), conducting activities that pertain to unit operation, and taking corrective action when necessary to ensure that all unit conditions and operations are in compliance with safety, environmental, and operating policies and procedures.” In order to qualify, prospects must jump through a several hoops (mechanical aptitude tests). If selected, candidates will go through extensive training from now until the plant opens some 2-3 years from now. Here’s the deets, including the full job description…
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Big Data Comes to EQT – Drilling Now Done Remotely from Pittsburgh

Noble Energy drilling simulator

Back in 2015 MDN editor Jim Willis had an experience he won’t forget. Cabot Oil & Gas chief geologist Buddy Wylie gave Jim and landowner Chris Acker a personal tour of two wells being drilled on Chris’ property. Wyle is THE guy most responsible for Cabot’s enormously successful drilling program in Susquehanna County. As a reminder, Cabot (a single company) currently produces 2.2 billion cubic feet per day of natural gas out of Susquehanna County (a single county), representing 2.6% of ALL natural production in the U.S.! Jim won’t forget Buddy regaling us with the wonders of mud logging. 🙂 Part of the tour included a visit to “the dog house”–the control center that sits atop the drilling rig. The dog house/control center is packed with computers and monitors–akin to something you might see in a jet cockpit. Just like the military now flies airplanes unmanned (drones) with people sitting in a control room thousands of miles away, drilling rigs are now being steered and controlled by a remote cockpit (dog house) hundreds of miles away. Big Data has come to the oil patch–at least it has for the country’s largest natural gas-producing company, EQT. What started as an experiment a year ago has blossomed into a control center operating all 10 of EQT’s active drilling rigs. All directional drilling, geosteering and drilling engineering, happens from a control center in EQT’s Pittsburgh headquarters. It’s really cool stuff. Beyond being cool, it saves money and time, making the company more efficient. Up next? Remote control of fracking operations…
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Rex Energy Owes Nearly $1B – Who They Owe & How Much

Last week Rex Energy filed for Chapter 11 bankruptcy protection (see Clock Runs Out – Rex Energy Files for Chapter 11 Bankruptcy). Right after filing, the company announced it has put up essentially all of its Marcellus/Utica assets (leases, wells, etc.), for sale, in order to pay off what it owes (see Fire Sale: Rex Energy Selling Everything to Pay Back Lenders). Which begs the question: What does the company owe? As it turns out, it’s close to $1 billion. The company, in a filing made on the first day of bankruptcy proceedings, included a list of who it owes, for what purpose, and how much–totaling $984.5 million. The biggest chunk is owed to a Delaware bank, some $617 million. However, Rex also owes money to 29 other entities, including MarkWest Energy, various oilfield services companies, taxes, and even some royalties are owed. We have the full list of the 30 entities that are owed money–detailing how much and for what purpose…
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UGI Expanding NEPA Gathering System to Flow More Cabot Gas

UGI, a large utility (and pipeline) company located in Pennsylvania, has announced they will expand a northeastern PA pipeline gathering system. UGI built what they call the Auburn Gathering System between 2011 and 2015–46 miles of pipe, two compressors stations and various other pipeline related facilities located in Susquehanna, Wyoming, and Luzerne counties (near Scranton). UGI spent $215 million to build the system, a system that currently flows 470 million cubic feet per day (MMcf/d) of natural gas. Much (most?) of that the gas comes from Cabot Oil and Gas in Susquehanna County. The new news is that UGI build two new compressor stations, adding to the existing two, which will increase flows through the system by another 150 MMcf/d–all of the increase coming from Cabot. Here’s the good news that more Cabot gas will soon flow through the Auburn System, connecting with two of the biggest pipeline systems in the country–the Tennessee Gas Pipeline (Kinder Morgan) and the Transco Pipeline (Williams)…
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Fire Sale: Rex Energy Selling Everything to Pay Back Lenders

Some even sadder news to share about Rex Energy. On Friday we told you that Rex had filed for Chapter 11 “voluntary” bankruptcy protection (see Clock Runs Out – Rex Energy Files for Chapter 11 Bankruptcy). After our story, Rex released a press release to announce not only are they seeking Chapter 11 protection, they are, as of now, putting all of their Marcellus/Utica assets (wells, leases, etc.) up for sale–in both Pennsylvania and Ohio. The stated reason is to “maximize their long-term value and prospects.” To find good homes for those assets with another driller, because Rex obviously doesn’t think after exiting bankruptcy the company will be doing much in the way of drilling. And they need the cash from those asset sales to pay back lenders. In the end, our “little engine that could,” could not. Notice that Rex filed for Chapter 11 (reorganization), not Chapter 7 (liquidation). The company says “drilling and production programs are operating as usual, and the Company is maintaining the necessary staffing and resources to meet its commitments to gathering and processing partners.” So, limited business as usual–until everything is sold–and then there won’t be any business. Looks to us like it’s still a liquidation–except on Rex’s terms, instead of a forced auction of assets…
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Rice Brothers Act II – $200M Marcellus/Utica Investment Firm

Good news! The four Rice brothers, all of whom formerly worked in the family business, Rice Energy, have launched a new venture. You will recall last November EQT consummated a deal to buy and merge in Rice Energy, paying $8.2 billion to do so (see Out with the Old: Rice Energy Sign Comes Down Day of EQT Merger). Not all of that money went into the pockets of Dan, Toby, Derek and Ryan Rice–but you can be sure a good chunk of it did. We’ve been wondering where the Rice boys would land since they have a non-compete clause with EQT. Would they leave the Pittsburgh region and restart somewhere else? Fortunately, no! The four boys plus a fifth partner, a former VP at Rice, have pooled their money and expertise and have just launched Rice Investment Group (RIG), a (so far) $200 million “multi-strategy fund investing in all verticals of the oil and gas sector with a focus on partnering where our operational, technical, and strategic experience add value.” We love everything about the Rice boys. They’re young, irreverent, know how to have a good time, and smart. They come from good stock. Their dad, Dan Rice III, was once the most successful mutual fund manager in the United States, for over a decade, until the company he worked for (BlackRock) booted him for their own bungling and lack of communication with investors (see BlackRock’s Screw-up with Dan Rice & Rice Energy). The boys learned from the best and now they’ve launched an investment firm of their own. When you look at their website homepage, it is classic Rice boys–an animated video of an 800-pound gorilla on the homepage, signalling their intention to be THE big player in funding Marcellus/Utica ventures…
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School Near Pittsburgh Considers EQT Deal: $2,500/Ac, 15% Royalty

Last week MDN told you about the ongoing vendetta by a few anti parents in the Mars School District (half hour from Pittsburgh, in Butler County) and their Big Green accomplices. They suffered a major court defeat (see Dela. Riverkeeper Suffers Major Defeat in Martian Well Case). Rex Energy has drilled two wells about 3/4 of a mile from one of the Mars schools, and wants to drill another four. The Martians bleat and blat that faraway drilling activity will somehow hurt “the children.” Compare that attitude with the parents (and school district officials) in the Kiski Area School District in Westmoreland County (about 40 minutes from Pittsburgh). The Kiski Area School will vote tonight on a lease deal with EQT to allow shale drilling UNDER SCHOOL PROPERTY! The district will get $2,500 per acre in a signing bonus, and 15% royalties on any gas produced. If signed, the school’s bonus check could be as high as $310,300–for “the children.” The difference in attitude (and aptitude) between the parents in Mars and the parents in Kiski could not be more striking…
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Clock Runs Out – Rex Energy Files for Chapter 11 Bankruptcy

In early April, Rex Energy, a driller focused solely on the Marcellus/Utica driller, defaulted on payments it owes to debtholders (see Rex Energy Defaults on IOUs, Can’t File Annual Report on Time). Rex told the Securities and Exchange Commission (SEC) the company could not make a semi-annual interest payment due on senior notes on April 2. Rex said in the filing that the noteholders to whom payment is due signed a temporary “forbearance” agreement that gives Rex a little breathing room, until April 16. The April 16 payment didn’t happen. Rex and the noteholders signed a second forebearance agreement giving Rex another extension, then another, then another. At least four, maybe five such extensions were granted. But in the end, Rex could not work out favorable terms. And lack of progress caused the banks that lend Rex money to call in the loans. With no money to pay those loans, Rex has no choice but to file for Chapter 11. Rex reported in an SEC 10-Q filing on Tuesday that: “An acceleration notice from the lenders of our senior term loan has been received and we lack the liquidity to pay these obligations. Given these circumstances, the Company is currently in the process of preparing to file for protection under Chapter 11 of the U.S. Bankruptcy Code which is expected to occur imminently following the filing of this Form 10-Q.” Rather ominously, the next sentence reads: “There can be no assurances that the Company will be able to reorganize its capital structure on terms acceptable to the Company, its creditors, or at all.” What does this mean for Rex’s Marcellus/Utica drilling program?…
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Liberal Groups Force Range, Anadarko to Consider Global Warming

We get tired of saying it, but perhaps we should never get tired of saying that according to the most reliable methods of tracking temperatures on earth (by satellite), THERE IS NO GLOBAL WARMING. The only way global warming alarmists get away with claiming the earth is heating up is by using doctored computer algorithms. The actual testing and measurement of temps doesn’t show we’re heating up! And yet the manipulators who persist in using scare tactics that mankind is somehow causing the earth to heat up catastrophically by burning fossil fuels and leaking methane into the atmosphere, have just claimed a couple of more scalps in their efforts to shut down the fossil fuel industry. A so-called church, the Unitarian Universalist Association (people who believe in everything, consequently they believe in nothing) bought $2,000 worth of Range Resources stock and proposed a resolution to all shareholders at the annual meeting that forces Range to publish a report on how evil the company is for causing global warming (i.e. produce a report on Range’s efforts to scale back methane emissions). The measure passed by 50.25%. A group called As You Sow bought Anadarko stock and floated a resolution instructing the company to produce a report on how mythical man-made global warming will affect the company financially as it will no doubt have to scale back its exploration and production. That resolution passed by 53%. These groups, with innocent-sounding names, are NOT innocent. They are far left, liberal groups that have snookered shareholders into voting against their own best interests by harming the very companies they invest in, forcing those companies, ultimately, to stop drilling. All in the name of “climate change” (i.e. global warming)…
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Update on Hess’ Activity in the Ohio Utica: Completing 5 Wells

It’s been a while–quite a while–since we’ve heard anything about Hess’ Utica drilling program. The last article we ran on Hess drilling in the Utica was in April 2016 when Hess management said that while they have “good rock” in the Utica, they would mothball their Utica operations until more pipelines are built. Looks like the pipelines are built. We spotted a story that gives new information about Hess’ plans in the Utica. They currently have 59 wells producing in the Ohio Utica. They’re working to complete another 5 previously drilled (in 2015?) wells, which will give them 64 producing wells “in the next month or so.” As for new drilling, the company will hopefully restart their program to drill new wells “hopefully in mid-2019.” Here’s what Hess’ “Utica operations area lead” guy had to say at a Kiwanis Club meeting last week in Steubenville about how much, and where, they’re drilling in the Utica…
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Average Workers at Top Marcellus Drillers Make $100K+ Salary

The average worker who works for producers (i.e. drillers) in the Pennsylvania Marcellus makes among the highest average salaries of any industry in the state. Looking at six of the state’s top Marcellus drillers, the average worker made $113,610 last year! That’s an average taken from workers at CNX Resources, Range Resources, Chesapeake Energy, Southwestern Energy, EQT and Cabot Oil & Gas. We hasten to add not “all workers” but “average” or “median” workers–meaning there are people who make below that number and people who make well above that number. It also means the majority of Marcellus workers in those companies made at least $100,000 per year. Those working for oilfield services (OFS) companies like Halliburton, Baker Hughes and others didn’t fare quite as well, making an average of $52,000-$80,000 per year. Still, hey, it ain’t bad money! Here’s a look at the average wage for top Marcellus drillers and the OFS companies that serve them…
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Investor Owning 3% of Range Stock Voting Against Mgmt Compensation

Although the average employee at Range Resources made $123,500 last year (see today’s lead story, Average Worker at Top Marcellus Drillers Makes $100K+ Salary), those in upper management at Range made considerably more. We don’t have the 2017 number, but in 2016, Range CEO Jeff Ventura made $9.8 million (see EQT Pay Dispute – Comparing CEO Salaries for Top M-U Firms). Ventura’s salary works out to be 79 times the average Range worker’s salary–actually far better than the average for all industries which averages 140 times as much. Still, not everyone is happy with the what Range’s upper management gives themselves. A significant investor in Range, Stelliam Investment Management, which owns around 3% of all outstanding Range stock, has issued a press release and an open letter to the board to say they intend to vote against Range’s proposed management compensation plan at today’s annual meeting. Stelliam says over the past four years management compensation has “remained generous” while during the same period the company’s stock price has slipped a huge 80% in value. So who is Stelliam, and does their vote of no confidence create any issues for Range management?…
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Shell’s PA Ethane Cracker Plant Gets a Name: Shell Polymers

If you’ve read MDN for any length of time, you know about a $6 billion ethane cracker plant being built by Shell in Monaca (Beaver County), PA–near Pittsburgh. The plant will chemically “crack” ethane, an abundant natural gas liquid (NGL) that comes out of the ground along with methane, creating polyethylene from the ethane. Polyethylene is, in essence, raw plastic. Manufacturers in the region and beyond will use the plastic pellets Shell will produce at the plant to create an unlimited variety products. Shell is a smart company. They’re as much a marketing company as they are an oil and gas producer and petrochemical manufacturer. They know the value of positioning and mind share. We hadn’t thought about it previously, but we always just thought of and called the project the “Shell cracker plant.” The plant now has a name: Shell Polymers. The name Shell Polymers has been around for a long time but had fallen out of use when Shell largely exited the plastics business. With the new cracker coming online in the next few years, it’s time to revive the Shell Polymers name/brand and apply it to the cracker plant, which is how the project was being pitched at the last week’s NPE2018 (formerly called the National Plastics Exposition) in Orlando, Florida…
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Statoil Gets a New Name Starting Today – Equinor

Can you imagine an oil company being ashamed of the word “oil”? Sounds like a European thing–and indeed it is. Statoil, Norway’s largest oil company (in fact, the single largest company in Norway period) with operations in 36 countries around the world and over 20,000 employees–is ashamed of its own name. And so, as of today, Statoil is changing its name to Equinor. “Equi” stands for equal, equality, or equilibrium (take your pick), and “nor” stands for Norway. Whatever. We mention this bit of tomfoolery because Statoil (now Equinor) still has meaningful leases and assets in the Ohio Utica. According to MDN’s forthcoming Marcellus & Utica Shale Upstream Almanac 2018 (on sale June 1st), in 2017 Statoil had 42 spud wells in the Ohio Utica, with 18 of them producing. Not huge, but also not nothin’. Here’s the tale of the oil company that doesn’t want to be called an oil company any more–even though they still are…
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San Francisco Play Exposes $18B Environmental Fraud

A shocking and at times farcical tale of how an environmental lawsuit turned into the world’s biggest fraud is revealed in a new play. The world premiere of “The $18-Billion Prize,” based on the true story of rainforest natives and their New York lawyer “fighting for justice” against one of the world’s biggest oil companies, opens May 19 at San Francisco’s Phoenix Theatre. Performances continue through June 3. Written, or perhaps a better word is assembled, by Phelim McAleer and Jonathan Leaf, the play uses exact words from transcripts of court documents. In 1993, Steven Donziger, a Harvard-educated American lawyer, represented indigenous groups from Ecuador’s rainforest in a class action lawsuit against Chevron–a shakedown. The case received an enormous amount of media attention, including major coverage by Vanity Fair, Rolling Stone and 60 Minutes to name a few, and it drew the support of international celebrities. Chevron, to their credit, fought back. An American court found evidence of fraud and ordered Donziger to hand over his files and diaries, which exposed a massive bribery and corruption scheme. The play will make you laugh, and cry, and make you angry that such a long-running fraud could be perpetrated here in the United States…
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