EQT Corp

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    WV Surface Owners Win Important Case Against EQT re Drill Pad

    A West Virginia Circuit Court case decided last week (by jury) found in favor of surface owners against a well pad constructed by EQT. The decision has far-reaching implications for not only surface owners and drillers, but mineral rights owners too. From the first time we read about so-called “joint development” legislation being promoted by the drilling industry in WV (back in February), we’ve not been fans (see More on WV’s Push for “Joint Development” Instead of Forced Pooling). In brief, there are a number of existing old leases in WV, signed before shale drilling began, that prevents drillers from drilling a horizontal well across an individual property boundary line–until a new lease is signed. Joint development says if the driller already owns the leases on all adjoining properties they want to combine into a drilling unit, they can do so without signing a new lease. The proposed joint development law seemed to us to be a way for drillers to avoid negotiating and paying more for new leases–which they should be willing to do! However, the case of Crowder and Wentz v EQT puts joint development in a new light for us. The case appears (to us) to be an abuse of power by surface owners against both drillers and mineral rights owners–by using the current prohibition against joint development. We certainly understand why surface rights owners would resist having a drill pad on their property, however, that’s life. They bought land (or inherited it, etc.) that doesn’t have mineral rights attached. Under existing WV law, a well pad can be drilled, taking 10-15 acres of the surface land (against the surface landowner’s wishes, but with compensation), in order to access the minerals under that specific piece of property. However, the court ruled last week in Crowder and Wentz v EQT that a driller cannot then use that same already-constructed well pad to further drill wells that access minerals under other, adjacent properties. Which in our book makes a strong case for a joint development law, to avoid this kind of misuse by surface landowners…
    Read More “WV Surface Owners Win Important Case Against EQT re Drill Pad”

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    M-U’s Biggest Drillers Increase NGL Production for Extra Money

    When a driller sinks a hole in the ground looking for one hydrocarbon–like natural gas–other hydrocarbons also come out of the ground. Sometimes its oil. Sometimes condensate. Sometimes natural gas liquids (NGLs), including ethane, propane, butane, pentane, etc. In northeast and central Pennsylvania where the Marcellus Shale is prolific, most of what comes out of the ground is just methane–or natural gas. However, in the southwestern portion of PA, and in the northern panhandle of WV and on into eastern OH, it’s a different story. They are considered “wet gas” areas because (depending on the county) the wells are prolific NGL producers. Most NGLs, like propane, fetch much higher prices than plain old methane. Typically ethane is the NGL that mostly comes out of the ground, but for many drillers ethane can’t (yet) be sold, so it’s considered a “waste” product, mixed into the methane stream to get rid of it. But that’s changing. There are now pipelines to carry ethane to facilities in both Philadelphia and to a cracker plant in Canada. There’s even a pipeline for ethane (and other NGLs) that goes all the way to the Gulf Coast (ATEX, Appalachia to Texas). Some of the largest Marcellus/Utica drillers now have markets for their NGLs, so they are ramping up production and selling more NGLs. In fact, six of the eight largest M-U drillers increased their NGL production in the second quarter of 2017 compared to 2Q16. Which six increased, and which two decreased NGL production last quarter?…
    Read More “M-U’s Biggest Drillers Increase NGL Production for Extra Money”

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    Fayette County, WV Loses Appeal to Block Injection Well

    An effort by Fayette County, WV to ban injection wells in the county has gone down to a final defeat. In January 2016, three liberal Democrat county commissioners from Fayette County, with the backing and help of the radical WV Mountain Party, voted to ban injection wells in the county (see WV County Officially Bans Injection Wells; Children Brainwashed). The ban was intentionally written so broadly it would also ban the operation of more than 500 vertical oil and gas wells in the county. The next day EQT sued to overturn the ban (see EQT Sues WV County that Banned Injection Wells, Seeks Injunction). One of the chief architects of the ban, from the Mountain Party, admits the ban was intended to stop all oil and gas activity in the county (see Anti Admits Fayette County, WV Ban Aims to Shut Down All O&G Wells). Fearing they would lose the EQT lawsuit, in March 2016 the Fayette commissioners backed away from the position of banning everything to do with drilling in the county. They revised the proposed ban regulation as a tactic to avoid losing their court case (see Fayette WV Commissioners Change Ban to Focus on Injection Wells). It didn’t work. In June 2016, a federal judge tossed out Fayette’s illegal ban (see Federal Judge Rules Fayette County Injection Well Ban Illegal). But that didn’t stop the lib Dems who, with the assistance of the radical Appalachian Mountain Advocates, appeal the federal judge’s decision (see Fayette County, WV Appeals Federal Court Ruling on Injection Well). That appealed case went to the 4th U.S. Circuit Court of Appeals, which has just ruled that Fayette County was out of line (copy of the decision below). Counties can’t make up their own oil and gas regulations–that right is reserved to the state…
    Read More “Fayette County, WV Loses Appeal to Block Injection Well”

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    Perverse Corporate Raider Calls EQT Plan to Buy Rice “Perverse”

    Barry Rosenstein – JANA Partners

    Corporate raiders buy just enough shares of stock in a company so they can put one or two members on the board of directors and control the company. Once a raider gains control, he fires a bunch of people, sells a bunch of assets, declares the company “healthier” and the stock price goes up. Once the stock price jumps, the raider then sells his shares at a profit and moves on to the next victim. That’s how disgusting, PERVERSE corporate raiders work. So imagine our outrage at reading comments by corporate raider Barry Rosenstein, of JANA Partners, who is trying to stop the merger/buyout of Rice Energy by EQT. Rosenstein calls the deal “perverse,” nothing more than a way for corporate executives to boost their own salaries. Kind of like the pot calling the kettle black, don’t you think?…
    Read More “Perverse Corporate Raider Calls EQT Plan to Buy Rice “Perverse””

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    WV Shale Well Initial Production Rates Jump 20% in One Year

    Of the three Marcellus/Utica producing states–Pennsylvania, Ohio and West Virginia–only WV reports well production on an annual basis. Not frequent enough! In July WV published production numbers for 2016. The exciting news is that on average, initial production (IP) of Marcellus/Utica shale wells surged 20% over 2015. IP is the amount of gas (or oil or NGLs) flowing from a well. However, when you dig into the numbers, you learn that IP rates did not go up universally across the state. Some counties had big increases, other counties went the other way. The same with drillers. Some drillers (like Antero) saw a big bump up in average IP rates. Other’s (like Southwestern Energy) saw a dip in IP rates from 2015 to 2016…
    Read More “WV Shale Well Initial Production Rates Jump 20% in One Year”

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    Rice Energy Paid $180M for LOLA Energy; CEO Didn’t Want to Sell

    In July MDN brought you the news that Rice Energy had bought out the assets of LOLA Energy (see LOLA Energy Sells Out to Rice Energy, Deal Kept Hush-Hush). NGI’s ace reporter Jamison Cocklin was the first to break the news. Since that time, neither Rice nor the company buying Rice, EQT, have talked about it. In fact, they have refused to comment on it. Last week other news sources observed that Rice Energy’s quarterly update contains information about purchasing LOLA Energy (although even the quarterly update doesn’t use the name LOLA). The interesting thing is that the quarterly update pegs the amount. Rice Energy paid $180 million for the assets of LOLA Energy. LOLA was birthed near the end of 2015, by former EQT executives using $250 million of private equity money from Denham Capital (see New Marcellus/Utica Drilling Company is Born – LOLA Energy). Hmmm. Investors put up $250 million, but two years later the company sells for $180 million. We don’t pretend to be high finance experts, but it sure looks to us like a negative ROI on the transaction. Yet we read claims that “everybody who put in money made money.” How does that work?…

    Update: see a note in the comments. It appears that although $250M was promised by investors, not all of it is paid up front. Thx to MDN reader Venture Energy for enlightening us!
    Read More “Rice Energy Paid $180M for LOLA Energy; CEO Didn’t Want to Sell”

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    Rice Energy Investor Sues in Fed Court to Block Sale to EQT

    In June EQT and Rice Energy announced that EQT will buy out and merge in Rice Energy, to create (in EQT) the largest natural gas-producing company in the United States (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). You may see headlines from time to time that say EQT is paying $6.7 billion for Rice. However, EQT is also assuming $1.5 billion worth of Rice Energy debt as part of the deal–so in our book, the total price paid is $8.2 billion, not $6.7 billion. A few weeks after the announced merger, so-called “activist investor” (i.e. corporate raider) Jana Partners, in league with the Cohen family (Atlas Energy) started a proxy fight to block EQT’s takover/merger with Rice Energy (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Instead of buying Rice, Jana is demanding that EQT split itself into two companies–upstream (drilling) and midstream (pipelines). Experts don’t give Jana much of a chance. However, we now have opposition on the other side of the isle–from a disgruntled investor in Rice Energy. On Wednesday, Rice Energy investor Patrick Gordon filed a lawsuit in Delaware federal court alleging that Rice, as part of the agreed merger, submitted incomplete paperwork (called an S-4) that “failed to include necessary financial information that would allow shareholders to make an informed decision when voting on the proposed sale to EQT.” Gordon says Rice’s sale price isn’t high enough. Gordon wants the court to stop a shareholder vote on the deal until an amended S-4 is filed, giving what Gordon says is the full financial picture…
    Read More “Rice Energy Investor Sues in Fed Court to Block Sale to EQT”

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    Anatomy of a Merger – The Years’ Long Road to EQT/Rice Deal

    In June EQT and Rice Energy announced that EQT will buy out and merge in Rice Energy, to create (in EQT) the largest natural gas-producing company in the United States (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). You may see headlines from time to time that say EQT is paying $6.7 billion for Rice. However, EQT is also assuming $1.5 billion worth of Rice Energy debt as part of the deal–so in our book, the total price paid is $8.2 billion, not $6.7 billion. Have you ever wondered how a massive deal like this comes together? Did the top brass at EQT phone up the top brass at Rice and say “let’s go for coffee” and a few months later there’s a deal? Nope. Doesn’t happen that way. In paperwork filed with the Securities and Exchange Commission, EQT (and Rice) outlined the chronology of how this deal came together. It’s far more complicated than the most complicated soap opera you can imagine. The story begins with EQT keeping a close eye on available acreage in the southwestern Marcellus region. EQT noticed an “accelerating trend” of consolidation. In 2015, a full two years before the EQT/Rice announcement, EQT lusted for more acreage and feared that if Rice combined with someone else, an important opportunity would be lost. So EQT got outside help (Wachtell Lipton) to begin the process of evaluating a buyout of Rice (June 2015). In July 2015, the muckety mucks from both Rice and EQT got together to talk, and “informally” discussed the potential benefits of a merger. But the talks went nowhere at the time. In early 2016, two other companies (unnamed) held similar talks with Rice. EQT then jumped back into the mix, in May 2016. EQT and Rice promptly got more serious about sniffing around each other, signing confidentiality agreements and beginning the due diligence process. Things moved quickly. Rice investigated mergers with two other companies and with EQT. EQT pressed Rice for an answer in July 2016. Talks broke down by the end of the summer in 2016. Rice then bought out Vantage and EQT snapped up more Marcellus acreage in various deals. And the soap opera goes on from there. We have the full script below…
    Read More “Anatomy of a Merger – The Years’ Long Road to EQT/Rice Deal”

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    EQT 2Q17: Ends Utica Drilling for Now, Merger with Rice on Track

    My how times change. Just last October EQT indicated that in the not-too-distant future the company would be primarily a Utica Shale driller (see EQT 3Q16: Company will Soon be Primarily a Utica Driller). The company had experimented with Utica wells in Greene County, PA and Wetzel County, WV–with good results. Earlier this month a couple of EQT reps giving a talk to the Monongahela Area Chamber of Commerce said EQT would drill seven Utica wells in the Mon Valley–THIS YEAR (see EQT Update on Mon Valley Drilling – 7 Utica Wells Coming This Yr). Yesterday EQT held a conference call and issued their second quarter financial and operational results. Buried in the update was this statement: “In anticipation of the merger with Rice Energy, EQT has suspended its Utica test program as improved returns on Marcellus wells resulting from longer laterals made possible by the Rice acquisition are higher than the return expected on the average Utica well today.” No more Utica drilling–at least for now. My how times change. Also of keen interest, on the conference call, EQT CEO Steve Schlotterbeck said the board is working on a comprehensive review of the company, post-merger with Rice, and one of the options will be “splitting the companies” (upstream/drilling and midstream/pipelines), as corporate raider Jana Partners has been pressuring them to do…
    Read More “EQT 2Q17: Ends Utica Drilling for Now, Merger with Rice on Track”

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    LOLA Energy Sells Out to Rice Energy, Deal Kept Hush-Hush

    NGI’s Shale Daily has done it again. Ace reporter Jamison Cocklin has unearthed news that (so far) no one else has: Rice Energy has quietly, confidentially, hush-hush purchased all of the assets of LOLA Energy. The sale raises a lot of questions. But first, who is LOLA? No, not the show girl in Barry Manilow’s 1978 hit song Copacabana. LOLA Energy was birthed near the end of 2015, by former EQT executives using $250 million of private equity money from Denham Capital (see New Marcellus/Utica Drilling Company is Born – LOLA Energy). The name LOLA comes from the phrase Locally Owned, Locally Accountable. LOLA didn’t waste any time. They leased land in Greene County, PA–a prime location highly prized by both Rice Energy and EQT–and also in West Virginia, land in Monongalia, Wetzel and Marion counties. Shale Daily reports that rumors have been swirling for weeks, but NGI now has the goods–copies of transfer records going from LOLA to Rice. For some reason, perhaps related to EQT’s impending purchase of Rice Energy, Rice and LOLA have kept the deal hush-hush. But the lid is off now! Here’s what we know about the deal, sprinkled with some MDN speculation…
    Read More “LOLA Energy Sells Out to Rice Energy, Deal Kept Hush-Hush”

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    Why Corp Raider Jana Won’t Succeed in Derailing EQT/Rice Deal

    One of our favorite oil and gas analysts, Richard Zeits, says it’s a long shot at best that the corporate raiders at Jana Partners will be able to scuttle EQT’s planned purchase of Rice Energy. In June, EQT announced a deal to buy out Rice Energy for $6.7 billion in cash and stock, and assume $1.5 billion in debt, for a total deal price of $8.2 billion (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). A few weeks later so-called “activist investor” (i.e. corporate raider) Jana Partners, in league with the Cohen family (Atlas Energy) started a proxy fight to block EQT’s takover/merger with Rice Energy (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Instead of buying Rice, Jana is demanding that EQT split itself into two companies–upstream (drilling) and midstream (pipelines). These kinds of machinations are far above our understanding when it comes to high finance. However, there is a guy who eats, sleeps and breathes this stuff–Richard Zeits of OIL ANALYTICS. In an analysis piece on the Seeking Alpha investors website, Zeits says, “Jana’s activism is unlikely to derail” the deal. Here’s his reasoning…
    Read More “Why Corp Raider Jana Won’t Succeed in Derailing EQT/Rice Deal”

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    EQT Update on Mon Valley Drilling – 7 Utica Wells Coming This Yr

    A couple of EQT representatives addressed the Monongahela Area Chamber of Commerce yesterday to update residents on EQT’s drilling plans in the Mon Valley region. The EQT reps said all of the wells drilled locally so far have been Marcellus wells. However, EQT plans to drill 7 Utica wells this year in the Mon Valley area. Here are some of the details on where EQT has been, and plans to, drill in the Mon Valley region during 2017…
    Read More “EQT Update on Mon Valley Drilling – 7 Utica Wells Coming This Yr”

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    Corp Raider Jana Sends Nastygram to EQT Demanding it Split in Two

    Earlier this week MDN told you the news that corporate raider Jana Partners, along with the Cohen family (of Atlas Energy fame), are colluding to try and stop the merger/sale of Rice Energy to EQT (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). The two groups together now own nearly 6% of EQT’s stock. Jana is trying to get two people added to EQT’s board. Their demands? Abandon the buyout/merger of Rice Energy, and that EQT needs to split itself in two, right now, into upstream (drilling) and midstream (pipelines). Jana filed the required paperwork with the Securities and Exchange Commission on July 3rd. On July 5th, Jana’s founder and managing partner, Barry Rosenstein, sent a letter (i.e. nastygram) to EQT–his list of demands. It’s going to be a long summer for EQT…
    Read More “Corp Raider Jana Sends Nastygram to EQT Demanding it Split in Two”

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    Rice Midstream Investors Hope Deal with EQT Doesn’t Happen

    When EQT and Rice Energy announced a deal in June for EQT to buyout and merge in Rice to create the largest natgas-producing company in the U.S., it seemed like a match made in heaven (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). However, not everyone is in favor of the merger, including a corporate raider who know owns nearly 6% of EQT’s stock (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). You can add another group–from the “inside”–that doesn’t want to see the merger happen either: investors in Rice Midstream. Rice Midstream is an MLP, or master limited partnership, a different structure from the usual stockholding corporation. In an MLP, investors hold “units” instead of shares, and those units are tax-advantaged. The bottom line is that Rice Midstream investors are, according to a Bloomberg Businessweek article, concerned that they will get the short end of the stick in a post-merger EQT world. Already the value of their units has fallen 20% since the announcement of the merger. It wouldn’t hurt Rice Midstream investors’ feelings at all if Jana (evil corporate raider) prevents the merger from happening. For Rice Midstream investors, the enemy of my enemy is my friend…
    Read More “Rice Midstream Investors Hope Deal with EQT Doesn’t Happen”

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    Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal

    So-called “activist investor” (i.e. corporate raider) Jana Partners, in league with the Cohen family (Atlas Energy) has started a proxy fight and is trying to block EQT’s takover/merger with Rice Energy. Jana is the same company that recently helped Amazon buy Whole Foods. In a filing with the Securities and Exchange Commission on Tuesday (embedded below), Jana disclosed the company has purchased ~5% of EQT’s stock and is launching an effort to block EQT’s proposed buyout of Rice Energy (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). As a quick reminder, here’s what corporate raiders (aka “activist investors”) do: They buy up enough stock in a company to control board decisions, getting several of their own people appointed to the board of directors. Typically corporate raiders will collude with another large stockholder or two to accomplish a board coup d’état. The corporate raider then forces the target company to sell off assets and layoff people. The resulting company is, they claim, “healthier” and more streamlined. The stock price bumps up, the raider sells its stock, pocketing a nice profit. And then moves on to the next target. Meanwhile, good people are standing in the unemployment line, in the wake of the raider’s “improvements.” There is nothing moral or righteous or just about the actions of corporate raiders. It is immoral, unjust and disgusting. In the words of Whole Foods CEO John Mackey, Jana are “greedy bastards.” That about sums it up. It’s distressing to see the Cohen clan collude in this kind of behavior. They should stick to their own knitting. Maybe if they had, their own company (Atlas Energy) wouldn’t have gone bankrupt (see Atlas Resource Partners Filing for Bankruptcy Tomorrow). Here’s the developing story of the effort to derail EQT’s deal with Rice Energy, and force EQT to break itself into pieces…
    Read More “Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal”

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    Will the Merged EQT/Rice Energy be Too Big for Investors?

    A week ago yesterday, EQT and Rice Energy announced some of the biggest news we’ve every reported: EQT is buying out and merging in Rice Energy, to create the largest natural gas producing company in the United States (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). The combined company will not only be the country’s largest shale gas producer, it will also jump to become the Marcellus/Utica region’s #1 producer/driller. Some analysts and investors are concerned about that. Since EQT/Rice is 100% focused on the Marcellus/Utica, does that put the company at risk? The market got a bit jittery following the announcement. Two days after the news EQT’s stock price tanked, down about $8/share. However, the stock price has since rebounded (see the chart below). Zacks Investment Research issued a research note last Friday analyzing the deal and what it may mean for investors…
    Read More “Will the Merged EQT/Rice Energy be Too Big for Investors?”