CNX’s Pipelines to be Used for “Partners” – Not Just CNX Res.
Yesterday we brought you the news that CONE Midstream has been renamed to CNX Midstream, and that CNX Resources is now the sole owner of the entire gathering pipeline system (see CONE Midstream Gets a New Name: CNX Midstream Partners). CONE was originally a joint venture between CONSOL Energy (the “CO” part of the name) and Noble Energy (the “NE” part of the name). CONSOL and Noble had a joint venture on hundreds of thousands of Marcellus/Utica Shale acres. Some of the wells drilled were “owned” by CONSOL, some by Noble. CONSOL and Noble decided to divide up the JV, each taking a piece, in late 2016 (see Divorce: CONSOL & Noble Dissolve M-U Joint Venture). Then in May 2017, Noble up and sold all of their Marcellus leases and wells, to HG Energy (see Noble Energy Sells Remaining M-U Assets for $1.2B – Who Bought?). Not long after, Noble announced they also want to sell their share of CONE. Long story short, CNX (formerly CONSOL) bought Noble’s CONE share, and now owns it lock, stock and barrel. Does that mean CNX will no longer flow gas from HG Energy (formerly Noble) wells served by their 100%-owned pipelines? Not on your life! CNX will continue to service HG Energy’s wells, and may even run gathering lines to other competitors’ wells (i.e. “partners”) in the areas where CNX Midstream operates. So said CNX CEO Nick DeIuliis on a conference call yesterday with analysts. DeIuliis is jazzed that his company now owns 100% of the pipeline gathering system because it will allow them to “move quickly” to seize opportunities…
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CONE Midstream is, or rather was, a pipeline joint venture between CONSOL Energy and Noble Energy (“CO” from CONSOL and “NE” from Noble Energy), formed in the summer of 2014 to service wells drilled as part of CONSOL & Noble’s drilling joint venture (see 
The Pennsylvania Dept. of Environmental Protection (DEP) has fined CNX Resources (formerly CONSOL Energy/CNX Gas) $433,500 for violations at four shale well sites in Greene County, PA. The violations, which happened in 2015/2016, include failure to control and dispose of wastewater properly and failure to prevent erosion. Some of the flowback/wastewater ended up in a small stream called Jacobs Run. We always find the language of these announcements by the DEP somewhat strange: “CNX Gas Company, LLC (CNX) has agreed to two civil penalties totaling $433,500 for violations at well sites in Greene County.” Really? The company getting fined has to “agree” to accept the fine? Apparently we don’t fully understand how regulatory agencies work in PA. What if CNX didn’t agree to the fine? Would the DEP come back with a lower amount, “Will you accept this fine instead?” But we digress. CNX themselves noticed the problems and self-reported the violations. After doing so, they fired two of the service companies they were using. The unnamed service companies were obviously guilty of cutting corners that resulted in improper disposal of wastewater. Interesting factoid: Half of all the wells CNX has drilled in PA are located in Greene County…
CONSOL Energy, headquartered in Pittsburgh, began life as a coal company some 150 years ago. For the past half dozen years MDN has reported on CONSOL’s transformation from coal company to natural gas company. That transformation, as of yesterday, is complete. In July CONSOL filed paperwork with the Securities and Exchange Commission that laid out a plan to split the company in two, into a coal company and a natural gas exploration and production company (see 
A week ago a sharp MDN reader (landowner) in West Virginia emailed us to ask about news of a sale by CNX Gas (i.e. CONSOL Energy) of their leases and wells in Doddridge County to Antero Resources. We were stumped. We’ve neither heard nor read anything about it. We searched. And searched. And searched. Nothing. She wrote again a few days later–had we heard anything? Nope. Then we got a second email from another MDN reader asking about the same thing. Our second questioner is in the oil and gas industry. When we questioned him, he gave us a few more clues: It may not only be in Doddridge, but also Tyler County too. There’s something happening in both areas. So we put our feelers out to a number of industry contacts and heard back from one of them–a highly placed source–who confirmed our tipsters. So we now have three people confirming. We know something has been sold and deeds are getting transferred from CNX to Antero in at least one county. Our best guess is that a sale is happening not just in Doddridge, but also in Ritchie, Tyler and Pleasants counties too. We have not (yet) been able to confirm this with Antero, but we feel we have enough to share with you, our valued readers. Here’s what we know, the evidence we have, and a map of the acreage we believe has been/is getting transferred from CNX to Antero…
This is a story we have not previously covered on MDN. It goes back to 2010 and involves two of the biggest Marcellus/Utica drillers–although in this case the issue is not related to the Marcellus/Utica. Landowners in southwestern Virginia previously sued both EQT and CONSOL Energy’s CNX subsidiary over charges that EQT and CNX shorted landowners out of royalties owed to them, claiming post-production expenses, deductions for severance taxes, etc. that should not have been taken. The wells drilled were conventional wells–some 3,347 EQT wells and 4,261 CNX wells. The vertical wells targeted methane extraction from coal seams–not horizontal wells through shale, which is far more common today. Some lawsuits were green lighted as class action cases in 2013, with a potential for “thousands of landowners” to participate in sharing $30 million in payouts. Last week a federal judge certified three of the five class action lawsuits, allowing them to move forward…
Yesterday CONSOL Energy released their fourth quarter 2016 results, along with a conference call to discuss those results. A few important items come out of yesterday’s activity. (1) The company lost $321 million in 4Q16. (2) CONSOL, originally a coal-only company, plans to either spin-off or sell the remaining coal assets it owns–this year–completing the process of transforming the company from coal to natural gas extraction. (3) CONSOL produced an average of 101.3 billion cubic feet equivalent of natural gas per day in 4Q16, up 6% from 4Q15. (4) The company shaved a dime off the costs to produce each thousand cubic feet (Mcf) of natgas–from $2.37/Mcf in 2015 to $2.27/Mcf in 2016. (5) Although the company lost money, the shale drilling business saw an increase in revenue in 4Q16 to $280.1 million (a 5.6% increase over 4Q15). (6) Although CONSOL has and continues to drill and complete wells in the Marcellus, their focus for new drilling is the Utica. Here’s the update…
The Pennsylvania Department of Environmental Protection (DEP) has fined two CONSOL Energy subsidiaries, CNX Gas (the drilling division) and CONE Midstream (co-owned by CONSOL and Noble Energy) for coloring outside the lines when they built some gathering pipelines in four western Pennsylvania counties. CNX was fined $139,000 and CONE was fined $45,000 for veering off the path officially filed with the DEP. According to DEP spokesman John Poister, the numskulls didn’t pay attention and were sloppy (our words, his sentiment). Here’s the official announcement from the DEP, along with comments from Poister…
An important case regarding royalties was ruled on in the Superior Court of Pennsylvania on April 7th. As with many of these cases, this one is complicated. We’ll do our best to summarize it. A husband and wife leased their property in the 1990s to a company that eventually sold the least to CNX (i.e. CONSOL Energy). The couple later signed another lease with CNX in 2002. Both leases states that CNX will pay the couple one-eighth of the sale price for the gas as a royalty. But more than just the wells on the couple’s land are commingled in a drilling unit, so the way CNX calculate the royalties (as per the lease) is to measure the amount of production at the wellhead and divide accordingly. If the couple’s well produced 20% of the overall volume produced by all the wells in the unit, they get 20% of one-eighth of the sale price. But here’s the thing: the amount of gas that eventually gets sold “down the pipeline” is less than what is produced at the wellhead. As gas travels through pipelines and compressor stations, some of it disappears. The couple’s attorney says because CNX can’t account for 100% of the gas that disappears (maybe more disappears from the neighbor than his client), that CNX is in breach of the lease and owes the couple a royalty based on the gas produced at the wellhead and not based on what is eventually sold “down the pipeline.” A lower court ruled in favor of CNX. Now, the Superior Court of PA has also ruled in favor of CNX and says the clever legal reasoning by the couple’s attorney doesn’t hold water…
Last Friday MDN brought you the news about a professor who devised a clever formula for evaluating the overall environmental impact of 20 Marcellus drillers (see