3 Drillers Pay $50K to Fund Mobile Emergency Unit for Belmont, OH

New mobile emergency response trailer (Credit: WTOV)

A feel-good story for your Friday. Three Utica Shale drillers operating in Belmont County, OH–EQT Corp., Ascent Resources and Antero Resources–between them donated $50,000 to the Belmont County Emergency Management Agency to purchase a mobile command unit trailer that can be hauled to sites where’s there is an ongoing emergency/crisis and used on location. Neighboring Monroe County will get to use it too. Taxpayers didn’t have to pay a dime. Everyone is tickled pink. Yes, there is some self interest in the donation, since better emergency response can theoretically aide their own workers in case of an emergency. But such incidents (in the shale industry) are rare. Chances are the trailer will be used for other types of emergencies. Which is just fine with the shale industry.
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EQT Tries to Gut WV 1982 Minimum Royalty Law for Flat Rate Leases

EQT certainly isn’t following Dale Carnegie’s advice on How to Win Friends and Influence People. Just the opposite, as the company continues to squeeze every last penny it can out of landowners’ pockets who hold old “flat rate” leases in West Virginia. We’ve reported on EQT’s efforts to overturn WV’s Senate Bill (SB) 360, passed earlier this year and signed into law by Gov. Jim Justice (see EQT Still Fighting WV Minimum Royalty Law for Flat Rate Leases). That law disallows post-production deductions for flat rate leases, ensuring landowners receive a minimum 12.5% royalty. In April, EQT sued to overturn the original law, from 1982, on which SB 360 rests–the law that guarantees a 12.5% royalty. Get rid of the original law, and the later law (disallowing deductions) disappears too.
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EQT Pays $394K for Acid Mine Leak in Mon River Following HDD Work

On January 29, 2017, EQT used underground horizontal directional drilling (HDD) to drill a hole under State Route 136 in Allegheny County, PA, to install a water pipeline. As they were drilling, using what we now know was an out-of-date map, EQT hit an abandoned coal mine full of water, and four million gallons of acid mine drainage (AMD) leaked into the Monongahela River. EQT worked hard and fast to stop the leak (stopping it two days later) and set up a system to prevent any further leaks. Now, nearly two years later, it’s time to pay the piper. EQT just agreed to a fine of $294,000 for violating the Clean Streams Law, and payment of an additional $100,000 to the Clean Streams Foundation to provide for maintenance, operation, and replacement of a system to keep AMD from leaking at the site in the future.
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EQT Stock Falls 46% in One Day, but Investors Didn’t Lose 46%

Click for larger version

Normally if a company’s stock falls upward of 50% in a single day, it indicates a catastrophe has happened. Bad news of biblical proportions. But such is not the case with EQT, the country’s largest natural gas producing company. EQT’s stock closed at $34.64 per share on Monday. By the end of Tuesday, it was $18.56, down 46.4%. Why? Because the company split in two, with EQT Corporation retaining all of the drilling assets, and a new company, Equitrans Midstream Corp., taking off with all of the midstream (pipeline) assets.
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WV Class Action Against EQT re Royalty Deductions Heads to Court

It’s been five years in the making, but finally a class action lawsuit that began in 2013, on behalf of 10,000 West Virginia landowners and royalty rights owners against EQT’s practice of deducting post-production expenses from royalty payments, will finally get its day in court in two weeks. That’s what we learn from an extended article published by ProPublica and the Charleston Gazette-Mail on the topic of WV drillers and their practice of “whittling away payments” from rights owners. Just over a month ago MDN told you about an elderly WV couple who won their private lawsuit against EQT on the same matter (see EQT Loses Post-Production Deduction Lawsuit to WV Couple). Based on the outcome of that lawsuit, EQT should be a tad nervous about this class action proceeding to trial.
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It’s Here! EQT Midstream Division Now Split into Standalone Co.

As of today, EQT Midstream, a division of EQT (the driller), is no more. In its place is Equitrans Midstream Corporation–a completely new, standalone company that is no longer tied to, nor a part of, EQT. The changeover happened at 11:59 pm Eastern time last night. Today is the first full day of a new era for EQT and its former midstream division. Thomas F. Karam is president and chief executive officer of the new Equitrans Midstream. What led to the split between EQT (the driller) and EQT (the midstream company)? We’ll explain.
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Did Shale Well Methane Migration Cause SWPA Home to Explode?

On Wednesday a man in Clarksville (Green County), PA turned on his gas stove and it exploded, catching fire to and leveling the entire house. The man, his girlfriend and young child were helicoptered to a hospital burn unit. The working theory/assumptions are (a) the man didn’t smell mercaptan, therefore the source of the gas that exploded was not from the stove or line into the house itself, and (b) because there is an EQT shale well “across the street” and a gathering pipeline that runs “next to the house,” methane “may have” migrated from the shale well to the home, or methane leaked from the gathering line into the home.
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EQT 3Q18: Major Shakeup in Top Ranks, Stock Price Plunges

EQT’s stock price fell off a cliff after yesterday’s 3Q18 update – click for larger version

EQT, the nation’s largest natural gas producer, released their third quarter 2018 update yesterday and held a quarterly analyst phone call. It wasn’t the best day for EQT. Performance during 3Q didn’t meet expectations, with the company showing a loss of $39.7 million. They also announced a “guidance” reduction for 2018–they won’t produce as much natural gas as previously forecast–which led to EQT’s stock plunging by 13%. Plus there’s more churn at the top of the company. While CFO Robert McNally will soon become CEO as previously announced, three other high level executives are quitting (or were fired, not sure which) [a trusted source has told us all three were fired] and three new people have been appointed to those positions–including a change in VP of production.
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EQT Board Votes to Split Company in Two Beginning Nov 12

We now have a date for when EQT (the driller) and EQT Midstream (the pipeline company) will split and become two separate, independent companies that will no doubt continue to work together, but will in fact be two companies. That date is November 12. In a pair of press releases issued yesterday, EQT outlined how the transition to two publicly traded companies, EQT Corporation (stock ticker EQT) and Equitrans Midstream Corporation (ticker ETRN) will happen. One of the releases names four new members for the EQT board once the split occurs, and reaffirms that current EQT CFO Robert McNally will stop “Acting” and become the full, official President & CEO of EQT.
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Who’s the Biggest NatGas Producer in the Ohio Utica?

The Ohio Oil and Gas Association (OOGA) and St. Clairsville Area Chamber of Commerce sponsored an update on the Utica Shale and its impacts in southeastern Ohio at a one-day event held yesterday at Belmont College. The upshot of the day seemed to be this: The Utica is still creating thousands of jobs, and still attracting millions of dollars in investment. Among the speakers were reps from both EQT and Ascent, who had some interesting comments about their respective operations. Question: Who do you think is the largest natural gas producer in Ohio today? One of the speakers made the surprise claim that her company is now the top producer in Ohio.
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By the Numbers – Revenue & Profitability for M-U Drillers

The expert analysts at RBN Energy have just published their “fourth and final” in a series of posts looking in detail at E&Ps (exploration & production companies, or “drillers”). One of the groups of E&Ps they examine are “gas-weighted” E&Ps–or drillers who mostly extract natural gas. In looking through the list, you immediately realize every one of them has operations in the Marcellus and/or Utica Shale region. Yes, a few also have operations in other plays, but they all have at least some operations here. The real value in the article is an accompanying spreadsheet comparing various financial metrics (apples to apples)–things like total revenue, lifting costs, production costs, and “pre-tax income,” meaning profitability. How do our drillers compare with each other?
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EQT Loses Post-Production Deduction Lawsuit to WV Couple

It’s this kind of story that makes our blood boil–we won’t lie. EQT tried to shaft an elderly couple in Ritchie County, West Virginia out of royalty money by slipping in not only post-production deductions never agreed to in the contract, but also by slipping in a deduction for WV severance taxes owed by EQT itself. Maddening!
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PA Court Upholds $1.1M Fine on EQT re Wastewater Impoundment

Yesterday Pennsylvania’s Commonwealth Court upheld a PA Dept. of Environmental Protection (DEP) fine levied on EQT for $1.1 million related to a leaky wastewater impoundment in 2012. The case dates back to 2014 when the PA Dept. of Environmental Protection (DEP) slapped EQT with a $4.53 million fine for a leaky wastewater impoundment in Tioga County, something that happened two years earlier (see PA DEP Levies Biggest Fine Ever, $4.5M Against EQT). EQT never said there wasn’t a problem with leaks at the site, but they did say the way the DEP calculated the fine was unreasonable and arbitrary. EQT appealed the fine and the case all the way to the PA Supreme Court, and in April of this year, the Supremes ruled in favor of EQT, saying that the DEP’s levied fine was excessive and that the DEP misinterpreted language in the 1937 Clean Streams Law (see PA Supreme Court Axes DEP $4.5M Fine in EQT Tioga Wastewater Leak). We thought that was the end of the case. But it wasn’t. The Supremes ruled on “water to water” contamination in the case, but not on “ground to water” contamination. PA law allows for companies to be on the hook for each day a contaminant enters the water table. In May the court heard oral arguments over how to prove whether contaminants in the soil have moved into groundwater (see EQT Continues to Fight PA DEP Fine re Wastewater Impoundment). What lawyers argued was whether or not, and how, the DEP can prove contaminants in the ground, there because of EQT’s leak, can be proven to have leached into the water on any given day. DEP claimed to have a formula and calculated a revised $1.1 million fine based on assumptions about how many days the contaminants leaked out of the ground. Yesterday, Commonwealth Court agreed with DEP and upheld the fine…
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3 Counties, 5 Drillers Led OH’s 50% Increase in 2Q Gas Production

The Pareto Principle is alive and well in the Buckeye State. You may know it as the 80/20 rule, or in this case, the 75/25 rule. The rule that states roughly 80% of the results come from 20% of the effort. Last week MDN brought you the latest update from the Ohio Dept. of Natural Resources–their second quarter 2018 report showing all production coming from the Ohio Utica Shale (see Top 25 Producing Gas & Oil Wells in Ohio Utica for 2Q18). While MDN provided you with Top 25 lists showing the best-performing wells (both gas and oil) during 2Q, and while we provided you with a better spreadsheet to view the information than that provided by the ODNR itself, our analysis was basic and high level. Utica natgas production was up a big 42% over the same period last year, and Utica oil production was up 11%–a cumulative 50% increase when you convert it all into equivalents. The experts at S&P Global Platts have done a deep dive into the numbers and have found that three counties represent 75% of all production in 2Q18, and five drillers represent 75% of all production in 2Q18. Which counties and which drillers? Read on…
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EQT People: Who Stays with Mom & Who Goes with Dad After Co Split

It’s an amicable divorce, the split of EQT into upstream (drilling) and midstream (pipelines). But it’s still a divorce, and the parents have to decide which kids will go or stay with which company. The “kids” in this case are the top managers, the executives. And we have the list. After EQT announced its plan to buy/merge in Rice Energy last year, the company got pushback from a couple of so-called activist investors (i.e. corporate raiders). One raider, Jana Partners, tried its best to stop the EQT/Rice deal outright (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Jana slithered away after the merger happened. However, a second raider, D.E. Shaw, supported the merger but lobbied hard that once the merger is complete, the company should split itself into two companies: upstream (drilling) and midstream (pipelines). Shaw’s pressure made EQT tap dance to their tune (see Under Pressure, EQT Moves Up Timeline to Explore Splitting Co.). True to their word, once Rice was merged in, EQT then added a couple of new board members and set about exploring how to separate the company into two companies. The theory is that by separating, each company can focus on what it does best (drilling or pipelines), meaning each separately will have a higher valuation/stock price than the two combined. That is, “the sum of the parts” is worth more than the whole. In February the company decided it will, indeed, split (see EQT Pulls Trigger to Split Company in Two: Drilling & Pipelines). Yesterday EQT released the list of which top execs will go, and which will stay, with upstream and midstream…
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EQT Searches for Indians Before Building Freshwater Pond in SWPA

EQT signed a lease with a landowner in Washington County, PA back in 2007 that allows the company to drill and/or develop surface property–building things like a freshwater (NOT wastewater) pond that can be used for nearby drilling. The landowner’s daughter, who either doesn’t understand drilling (or more likely does understand but doesn’t like it) claims there is an unmarked, single grave somewhere on the property (presumed to be an Indian), using that claim to stop EQT’s work on building the water pond. EQT is patiently playing along, waiting for–even paying for and assisting with–an archaeological dig to see if the grave and other Indian remains can be located. So far, nothing has been unearthed–except for a lot of hot air…
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