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China Comes to the Marcellus – to Learn and to Profit

In the dead of the holiday season, on Friday, Dec. 27, Energy Corporation of America (ECA) issued a press release that largely went unnoticed. In the release, ECA announced it has formed a 50/50 joint venture partnership with the world’s second largest (and China’s largest) coal company, China Shenhua Energy Company (100% Chinese government owned), to drill 25 Marcellus wells in Greene County, PA. Shenhua will invest $90 million in the venture and in the process learn how drill in shale–knowledge currently lacking in China. It’s not much of a stretch to predict this is not the final involvement of Chinese money that will flow to the Marcellus and Utica Shale.

Here is the brief statement issued by ECA, followed by a story about the jv from China Daily:
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ECA Breaks Ground on WV Regional HQ, Donates $600K to Clay Center

Last week Energy Corporation of America (ECA), an oil and gas driller with more than a million acres of leases in the Marcellus and Utica Shale region and operating 4,600 (mostly conventional) wells, broke ground on a new 60,000 square foot company eastern regional headquarters in Charleston, WV. They also made a $600,000 donation to the Clay Center for the Arts and Sciences.

From the company press release:
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ECA Moving/Expanding NE Headquarters to Charleston, WV

Energy Corporation of America (ECA) will unveil plans today to move its eastern regional headquarters from “over the river” in Kanawha City, WV into Charleston, WV proper—at the Northgate Business Park. The new 60,000 square-foot facility is a good sign that ECA will continue to expand its presence in the Marcellus Shale. Headquartered in Denver, CO, ECA owns over 1 million acres of leases from New York to Tennessee, and operates over 4,600 wells (mostly conventional) and over 5,000 miles of pipeline. Most of their northeast operations are in West Virginia.

More on the new office building:

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Federal Judge Upholds Split Decision in PA Royalty Case

A group of landowners who signed leases in western Pennsylvania with Energy Corporation of America (ECA) filed a lawsuit in June 2012 (Pollock, et al v Energy Corporation of America) alleging ECA improperly deducted certain expenses, and didn’t include certain revenues, when calculating and paying royalties. At the time, ECA counter-sued asking for summary judgment that the way they calculate royalties and revenues is OK according to accepted practice and previous court rulings.

Last fall Magistrate Judge Robert Mitchell “partially granted and partially denied” the summary judgment request from ECA. It was mostly a victory for ECA because it dismissed all but one of the charges by the landowners. The case was appealed by both sides to federal court and on Jan. 24, Judge Joy Flowers Conti of the Western District of Pennsylvania said Judge Mitchell’s interpretation of the case is correct. She upheld his decision. This is an instructive case for both landowners and drillers, and a caution to be sure the lease you sign spells out in minute detail how royalties will be calculated…

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ECA 2Q12 Update: Wells & Pipelines Now Complete

Energy Corporation of America (ECA) and the Trust they use to distribute profit to investors issued their second quarter update yesterday. Among ECA news: They have completed the last of 52 wells as well as completing the expansion of a gathering  system expansion project in Greene County, PA. Three of the wells they’ve completed had an initial production of 10 million cubic feet of gas per day (Mmcf/d). All of their projects have been completed well ahead of schedule.

From the ECA update:

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