The mayor of Bloomingdale, OH, in Jefferson County, wants Ascent Resources to “come to the table for more fair arrangements on leases, road use agreements and fixing already-damaged roads.” The mayor and the village council are threatening to sue Ascent if they don’t “come to the table.” In other words, pay up or else. What has Ascent done to anger the mayor and village? Primarily the issue involves RUMAs–road use maintenance agreements. Some roads the village says Ascent uses have been damaged and the village wants them fixed. They also want a new agreement in place to pay for more fixes in the future. The mayor also says Ascent is using pressure tactics in leasing land from village residents. Some one-third of the village is now leased. These problems have been going on for about a year now, and the situation seems to be coming to a head…
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Category: Ascent Resources
Ascent’s $1.5B OH Utica Deal Yields $1.4M in Fees for 2 Counties
In late June Ascent Resources, a company founded by Aubrey McClendon after he left Chesapeake Energy, announced it is buying 113,400 Utica Shale acres along with 93 operating wells located in eastern Ohio for $1.5 billion (see Ascent Resources Spends $1.5 Billion to Buy OH Utica Acreage, Wells). It’s a big deal, making Ascent one of the largest privately owned exploration and production companies in the U.S. It’s also a big deal for the counties where the land is changing hands. A large part of the acreage is located in Jefferson County, with sizable chunks in Belmont, Noble and Harrison counties. Why is it a big deal for the counties? It takes time (and consequently fees) to transfer all those thousands of leases from one owner to another. Counties stand to make a big windfall. For example, in Jefferson County, some $305 million worth of transfers will take place between CNX and Ascent, netting the Jefferson clerk’s office $1.2 million in fee revenue! It is the single largest ownership transfer in Jefferson County history. In neighboring Belmont County (to the south of Jefferson), $58 million worth of transfers are taking place, netting the county $173,000 in transfer fees. No word yet on how much money Noble and Harrison stand to make…
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Ascent Resources Spends $1.5 Billion to Buy OH Utica Acreage, Wells
Last Thursday, Ascent Resources, a company founded by Aubrey McClendon after he left Chesapeake Energy, announced it is buying 113,400 Utica Shale acres along with 93 operating wells located in eastern Ohio for $1.5 billion. The new acreage tips Ascent over the 300,000 Utica acre line and catapults the company into one of the largest privately owned drillers (exploration and production) in the U.S. The companies doing the selling are CNX Resources and Hess (selling a joint venture they co-owned, each selling their share for $400 million each, for a total of $800 million), Utica Minerals Development (a subsidiary of First Reserve, a private equity firm headquartered in Greenwich, CT, and EMG), and a fourth, unnamed mystery seller. The CNX/Hess acreage (78,000 net acres of the 113,400 acres) is located in the wet gas window of Belmont, Guernsey, Harrison and Noble counties. We’re not sure about the location of the other acreage. The CNX/Hess jv sale marks Hess’ total exit from the Utica Shale. So how will Ascent pay for all of their new shiny new assets? After all, they only just emerged from bankruptcy in April (see Ascent Resources Marcellus Exits Chapter 11 Bankruptcy). [Correction: Ascent Resources Marcellus was the part of the Ascent business that filed for bankruptcy and is not related to Ascent Resources Utica and this new transaction.] Ascent will pay for it by issuing $965 million in new shares of equity (private stock), and borrowing $535 million under their existing line of credit…
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Ascent Resources Marcellus Exits Chapter 11 Bankruptcy
In February, MDN brought you the news that Ascent Resources Marcellus, a company founded by Aubrey McClendon after he left Chesapeake Energy, had filed for Chapter 11 bankruptcy (see Ascent Resources’ Marcellus Unit Files for Chapter 11 Bankruptcy). Ascent Marcellus is one of several companies using the Ascent name. The Ascent Marcellus piece of the pie owns 43,000 of leases and has drilled some 547 wells in West Virginia. Big operation. The good news (if there’s ever good news in bankruptcy), is that 75% of the debtholders signed onto a prepackaged bankruptcy plan. The plan worked. On March 30 Ascent announced it has officially emerged from bankruptcy with a new board of directors and the same management team as before…
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Ascent Resources Marcellus Plans to Exit Bankruptcy in Record Time
On Wednesday MDN brought you the news that Ascent Resources Marcellus, a company founded by Aubrey McClendon after he left Chesapeake Energy, has filed for Chapter 11 bankruptcy (see Ascent Resources’ Marcellus Unit Files for Chapter 11 Bankruptcy). Ascent Marcellus is one of several companies using the Ascent name. The Ascent Marcellus piece of the pie owns 43,000 of leases and has drilled some 547 wells in West Virginia. Big operation. The good news is that, according to Ascent, 75% of the shareholders in the company are already on board with a plan to hand over ownership to existing debtholders. Ascent worked hard to put all of their ducks in a row and presented a “prepackaged” bankruptcy plan to the court–a plan that should make things go fast. In fact, Ascent Marcellus expects to exit bankruptcy by March 31st. Below we details about who Ascent owes money to, and how they plan to order “one prepackaged bankruptcy to go” at the bankruptcy court drive-thru window…
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Ascent Resources’ Marcellus Unit Files for Chapter 11 Bankruptcy
Please see comments from Ascent Resources below in the 2/7/18 update…
We have to confess, we did not see this one coming. Ascent Resources Marcellus, a company founded by Aubrey McClendon after he left Chesapeake Energy, has filed for Chapter 11 bankruptcy. Note that Ascent, which was spun off from the McClendon company American Energy Partners, has a split corporate structure. On paper there are a number of “Ascent Resources” companies: Ascent Resources, LLC; Ascent Resources Utica Holdings, LLC; Ascent Resources – Utica, LLC; Ascent Resources Management Services, LLC; and, Ascent Resources Marcellus Holdings, LLC. Same management team for all and frankly, as a practical matter, they are all one company. But it is the last one in the list, Ascent Marcellus, that is seeking bankruptcy protection. According to the company website, Ascent Marcellus focuses its drilling activity on 43,000 leased acres in West Virginia. Ascent Marcellus has a couple of loans it can’t repay, so it’s taking the bankruptcy route which will transfer ownership of that portion of the company from existing shareholder to debtholders. We’ve seen this movie before. Nobody gets screwed except existing shareholders–at least, that’s the theory. According to an announcement by Ascent, the “restructuring” as it’s called, will not affect landowners or vendors. This is “an operational restructuring and is not intended to restructure or compromise any vendor, service provider, contractor, lessor, working interest owner or royalty owner obligations.” Of course “intent” and reality are sometimes two different things. We’ll keep a close eye out as this develops…
2/7/18 Update: Ascent Resources sent clarifications to our statements and assumptions above. Below are Ascent’s comments as provided, verbatim. We thank Ascent for taking the time to comment.
Regarding the comment that they are basically the same company:
It isn’t all the same company. This is a very important distinction. There are several different companies with similar names that are managed by another separate company that also has a similar name. The Marcellus company always had separate assets in West Virginia, a separate capital structure and separate debt that was collateralized solely by the West Virginia assets. It’s not all the same company.
Regarding the comment that “Nobody gets screwed except existing shareholders–at least, that’s the theory.”
You should know that Marcellus private equity owners hold more than 75% of the stock and control the board, so they were integrally involved in determining the most appropriate outcome for shareholders as part of the Chapter 11 discussions. So “in theory” does not apply to the detailed plan of reorganization that has been worked out between the company’s owners and the creditors. Continue reading
OH Utica Production 3Q17: Ascent Res. Dominates Top Producers
The Ohio Dept. of Natural Resources (ODNR) has just issued production numbers for the third quarter of 2017. The good news is that production is up for both natural gas AND oil. Utica natgas production saw a huge percentage increase–up 27.51% over the same period last year. 2Q17 Utica natgas production increased 16% over the previous year, and 1Q17 production increased 13% over the previous year. Although the trend has been up this year, 3Q17’s jump is really big (nearly double) compared to previous quarters. The even better news is that until 3Q17, Ohio oil production was trending down quarter after quarter–but in 3Q17 the trend reversed. Utica oil production was up slightly, close to 3%, over the same period last year. The ODNR report lists 1,796 horizontal wells, of which 1,760 reported production of some amount. The average natgas well produced 261,681 million cubic feet (Mcf) during 3Q17, and the average oil well produced 2,367 barrels of oil. But as we all know, each well is unique. Below we give you an MDN exclusive, showing the top 25 natgas wells and top 25 oil wells. In 3Q17, the top 3 natgas wells were drilled and operated by Ascent Resources. Rounding out the top 5 were two wells drilled by Rice Energy (now owned by EQT). All top 5 producing natgas wells in 3Q17 are located in Belmont County. What about oil wells? The top 2 producing oil wells were drilled by Ascent Resources. Coming in at #3 was a well drilled by Eclipse Resources, followed by #4 drilled by Chesapeake Energy. Rounding out the top 5 producing oil wells was a well drilled by Ascent Resources. Four of the five top producing oil wells are located in Guernsey County, with one in Harrison County. You might say, with some justification, that Ascent Resources (formerly called American Energy Partners, Aubrey McClendon’s startup following Chesapeake Energy), dominated the top producing wells for 3Q17, for both natgas and oil…
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McClendon-Founded Ascent Resources Looks to Launch $3.5B IPO
The Wall Street Journal is reporting rumors that the privately-held Ascent Resources, which targets the Utica Shale in Ohio, is shopping for bankers to help it with an initial public offering (IPO). Ascent reportedly is aiming for a stock market valuation of $3.5 billion. Ascent was formerly known as American Energy Partners (AEP), founded by Aubrey McClendon after he was unceremoniously dumped as CEO of Chesapeake Energy–the company he co-founded. AEP set up a number of subsidiary companies to target different shale plays. One of the largest was aimed squarely at the Ohio Utica (American Energy Partners–Utica LLC). That company later left the AEP fold, under pressure from investors, and became an independent company, renaming itself as Ascent Resources. Ascent, just like founder Aubrey, went on a money-raising binge after departing the AEP fold. In March 2016 Ascent floated 2.2 billion common units (think shares of stock) to raise $500 million (see Ascent Resources Sells More of Company to Pay Down Debt). Ascent planned to use that money to pay off existing notes, or IOUs. In August 2016, Ascent flirted with bankruptcy but pulled its bacon out of the fire by restructuring its debt (see Ascent Resources Talking to Creditors to Restructure $1.2B Debt). In November of last year, Ascent sold another 3.5 billion common units, hoping to raise $787 million to pay down outstanding debt (see Ascent Resources Sells Another 3.5 Billion Units for $787 Million). In March of this year, Ascent floated yet more IOUs, hoping to raise $1.5 billion (see Ascent Resources Continues Aubrey’s Borrowing Ways: $1.5B in IOUs). The company now plans to convert itself into a public stockholding company, in order to raise a staggering $3.5 billion…
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Utica Leasing Takes Off in Jefferson County, OH – Bonus $6K/Acre
In early June, MDN brought you the news that officials with Ascent Resources (formerly American Energy Partners) and Chesapeake Energy said their respective companies are putting a renewed focus on Jefferson County, OH in the coming months (see Uptick in Utica Drilling Predicted for Jefferson County, OH). We have some evidence that their words are becoming actions. MDN pulled the list of requests to drill new horizontal wells in Jefferson for Jan 1 – Jun 29 from the Ohio Dept. of Natural Resources’ website. Indeed, we found 19 such permit requests, most of them from Ascent and a few from Chesapeake (see the chart below). However, before the drillbit hits the dirt, you must first lease land. An MDN reader and landowner who lives in Jefferson County sent us an update on leasing activity in the county–very exciting leasing activity. Not only is Ascent active, so too is Gulfport Energy…
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Uptick in Utica Drilling Predicted for Jefferson County, OH
Jefferson County, OH is not the first (or even second or third) county you think of when you think “Utica drilling.” But that may soon change. Jefferson shares borders with other counties that are heavily drilled–Carroll, Harrison and Belmont. There has been some drilling in Jefferson in the past, but with the slowdown over the past few years, not much has happened. But according to Ascent Resources and Chesapeake Energy, their respective companies are putting a renewed focus on the county in the coming months. Which is good news indeed. Couple that with a possible ethane cracker plant coming to Belmont County, and (according to the Chamber of Commerce), Jefferson is heading for “a brighter future” thanks to the Utica industry…Continue reading
Platts: M-U Drillers Need to Double Rigs to Fill Pipelines in ’17
Platts senior energy analyst Luke Jackson yesterday posted a Platts Snapshot titled, “New Northeast US Gas Pipelines Will be Hard to Fill.” Provocative title. It’s a video. Below is a transcript of the video. In it, Jackson says according to their analysis that drillers in southwestern PA and eastern OH and the northern panhandle of WV will struggle, but eventually succeed, in producing enough natural gas to fill new pipelines coming online this year. But they won’t be able to fulfill their obligations until perhaps December 2017. That is, Antero, Range Resources and Ascent Resources will need to rapidly ramp up drilling–or risk paying for pipeline capacity they’re not using. However, it was Jackson’s comment about pipelines coming online in 2018 and 2019 that really caught our attention. He says in the video: “This new capacity will be nearly impossible to fill, barring a massive ramp in drilling activity, which, per our forecast, is not expected to occur.” So Platts says Marcellus/Utica drillers will not be able to produce enough natural gas to fill all of the new pipelines that will be online by 2019. If we assume the price of natgas goes higher over the next few years (not an unreasonable assumption), what this means is that new drilling is going to ramp up like crazy in the next few years. Buckle up! Here’s the transcript…
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Ascent Resources Continues Aubrey’s Borrowing Ways: $1.5B in IOUs
Feed me, feed me! Let’s be honest. Aubrey McClendon (God rest his soul) almost bankrupted Chesapeake Energy. The company’s stock price took a nose dive when the price of oil and natural gas went over a cliff. Aubrey had the company leveraged to the eyeballs and it teetered on the edge of bankruptcy until last year, when CEO Doug “the ax” Lawler claimed the company was out of the woods. We won’t recount our disdain for how Aubrey was ejected from the company he founded (by evil corporate raider Carl Ichan). After leaving Chesapeake, Aubrey started a new company–American Energy Partners (AEP). That company, AEP, set up a number of subsidiary companies to target different shale plays. One of the largest was aimed squarely at the Ohio Utica. That company later left the AEP fold (under pressure from investors) and became an independent company, renaming itself as Ascent Resources. However, Ascent, just like pappa Aubrey, went on a money-raising binge. In March 2016 Ascent floated 2.2 billion common units (think shares of stock) to raise $500 million (see Ascent Resources Sells More of Company to Pay Down Debt). Ascent planned to use that money to pay off existing notes, or IOUs. In August 2016, Ascent flirted with bankruptcy but pulled its bacon out of the fire by restructuring its debt (see Ascent Resources Talking to Creditors to Restructure $1.2B Debt). In November last year Ascent sold another 3.5 billion common units, hoping to raise $787 million to (yes) pay down outstanding debt (see Ascent Resources Sells Another 3.5 Billion Units for $787 Million). Here we are four months later, and Ascent is back, floating (yep)–new debt. New IOUs. Ascent pushed out an announcement yesterday that the company is offering $1.5 billion of senior unsecured notes. Unsecured means if they go belly up, investors in those notes won’t see a penny…
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Ascent Resources Sells Another 3.5 Billion Units for $787 Million
In March of this year MDN reported that Ascent Resources–formerly Aubrey McClendon’s American Energy Partners’ Utica Shale company–floated 2.2 billion common units (think shares of stock) to raise $500 million (see Ascent Resources Sells More of Company to Pay Down Debt). Ascent planned to use that money to pay off existing notes, or IOUs. The company is back again, this time selling ANOTHER 3.5 billion common units hoping to raise $787 million. And yes, much of it will be used to pay down outstanding debt. But the company also plans to use $175 million of the proceeds to fund their Utica drilling program in Ohio. According to Ascent CEO Jeff Fisher, with this round the company will have raised $1.5 billion in cash from selling off ownership of the company. Each time they float more units it further waters down the value of existing common units, i.e. makes each share less valuable. How many more units can they float without totally dilluting the value for existing owners?…
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Ascent Resources Talking to Creditors to Restructure $1.2B Debt
Last week MDN told you that ratings agency Fitch Ratings had issued a “Loans of Concern” report, which is a report on loans the agency believes companies will soon default on. One of the names in the list stood out to MDN: American Energy-Marcellus (see Fitch Ratings: American Energy-Marcellus May Default on Loan). We speculated at the time, and have now confirmed, that American Energy-Marcellus is the same company as Ascent Resources. Shortly after the Fitch report, Bloomberg ran an article reporting Ascent Resources-Marcellus (the former Aubrey McClendon American Energy subsidiary focused on the Marcellus/Utica) is in talks with creditors to “restructure” some $1.2 billion worth of loans and debt. Restructuring doesn’t always mean “bankruptcy”–but it usually does. Especially when dealing with the amounts we’re talking about, over $1 billion, and especially when that word is used in the oil and gas industry. The latest trend has been to work out bankruptcy deals ahead of time, before you file, called a “prepackaged bankruptcy.” Here’s what Bloomberg is saying about talks and plans to “restructure” debt at Ascent Resources-Marcellus…
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Fitch Ratings: American Energy-Marcellus May Default on Loan
Ratings agency giant Fitch Ratings maintains and periodically issues a “Loans of Concern” list. It is a list of companies Fitch considers to have “material, near-term default risks.” That is, the companies will likely default on repaying loans, which may lead to nastier things, like a bankruptcy. As of last week when Fitch issued the list, there were 53 companies on it. Of those 53 companies, some 49% of them (26 in all) are energy companies. You must be a Fitch subscriber in order to see the full report/list of companies. Alas, we are not. However, Argus got a look and lists a few of the names in the list. One of those names stood out for us: American Energy-Marcellus, which is one of the American Energy subsidiary companies founded by former Chesapeake Energy CEO Aubrey McClendon. American Energy’s Marcellus/Utica division later changed its name to Ascent Resources in June 2015 (see Big McClendon News: Sells 35K Utica Acres, Creates New Company). In August 2015 Moody’s, another ratings agency, downgraded Ascent’s credit profile (see Moody’s Downgrades Ascent Resources Credit Profile to Basement). Ascent has been working hard to stay afloat (see Ascent Resources Offers to Trade IOUs Due 2021 with IOUs Due 2021 and Ascent Resources Sells More of Company to Pay Down Debt). We are assuming Fitch’s name use of American Energy-Marcellus is the same company as Ascent Resources–but we don’t know for sure…
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Which 5 Drillers Dominate in the Utica Shale?
Everyone loves a Top 5 or Top 10, including MDN. Who are the Top 5 drillers in the Utica Shale? It depends, of course, on your criteria for selecting such a list. One of MDN’s favorite writers on The Motley Fool website, Matt DiLallo, has just published what he calls “The 5 Companies Dominating the Utica Shale Play.” In other words, the Top 5 Utica drillers. Matt points out that in the span of five short years the Utica has become the nation’s second largest shale gas play, behind only the Marcellus. Matt uses a combination of acres-under-lease and number-of-wells-drilled to come up with his list of five drillers who are leading the charge in the Utica. It won’t surprise you to learn that Chesapeake Energy, which was the first company to drill in the Utica under then-CEO Aubrey McClendon, is head-and-shoulders above the rest as the #1 Dominator in the Utica. Some of the others in the Top 5 list may, however, surprise you. Here’s Matt’s excellent roundup of the Utica…
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