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Mgmt Changes at Gulfport – Getting the Montage Band Back Together

Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), emerged from bankruptcy in May 2021 with a new board and new top management. In January of this year, the company appointed a new CEO, John Reinhart, the former President and CEO of Marcellus/Utica driller Montage Resources Corporation before that company was gobbled up by Southwestern Energy (see Marcellus Veteran John Reinhart Joins Gulfport Energy as CEO). Yesterday Gulfport announced two more additions to senior management, a new CFO and new Senior VP of Operations (top driller). Both of them formerly worked at Montage Resources. Sure looks like Reinhart is getting the Montage band back together again!
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Eclipse Former Top Driller in M-U Becomes Top Driller in Ukraine

Oleg Tolmachev

For years we wrote about Oleg Tolmachev, chief driller at Eclipse Resources. He was the guy who figured out how to drill those record-breaking, super long onshore laterals–some of the longest on record (see our stories mentioning Oleg Tolmachev here). Eclipse was sold to, and merged in with, Montage Resources. Montage was then sold to and merged in with Southwestern Energy. Somewhere along the way Tolmachev departed. Some 16 months ago Tolmachev was hired by Ukraine to help that country figure out how to drill and frack wells so it can wean itself off Russian natural gas and oil. Prescient because Russia invaded Ukraine in February. Tolmachev and the company he works for, Naftogaz, is making an appeal to the U.S. and Canada to send technology, expertise, and most of all, money to help Ukraine begin its own fracking program.
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Former Top M-U Driller Works in Ukraine to Keep NatGas Flowing

Oleg Tolmachev

For years we wrote about Oleg Tolmachev, chief driller at Eclipse Resources. He was the guy who figured out how to drill those record-breaking, super long onshore laterals–some of the longest on record (see our stories mentioning Oleg Tolmachev here). Eclipse was sold to and merged in with Montage Resources. Montage was then sold to and merged in with Southwestern Energy. Somewhere along the way Tolmachev departed. Some 13 months ago Tolmachev was hired by Ukraine to help that country figure out how to drill and frack wells so it can wean itself off Russian natural gas and oil. Today Tolmachev is working to keep the natural gas flowing in the country, a country besieged by Russian invaders.
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Southwestern Completes Montage Merger, Now 3rd Largest M-U Co.

In August Southwestern Energy announced it is buying out and merging in Montage Resources in an all-stock deal (see Stop Press! Southwestern Energy Buying Montage Resources for $857M). As of Friday Montage, which was itself a merger of two companies (Blue Ridge Mountain Resources and Eclipse Resources) is no more. Montage is now a part of Southwestern.
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Montage Resources Releases Last Quarterly Update – Merging Next Wk

After a shareholder vote scheduled for next Thursday, Nov. 12, Montage Resources will be no more. The company is selling itself to Southwestern Energy in an all-stock deal worth $857 million (see Stop Press! Southwestern Energy Buying Montage Resources for $857M). Yesterday Montage issued what will be its very last quarterly update. What does the update show?
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Southwestern Expects to Close on Montage Purchase Nov. 12

Southwestern Energy Company released its third-quarter 2020 update last Friday. The company previously announced it is buying out and merging in Marcellus/Utica driller Montage Resources. During the 3Q conference call, CEO Bill Way said the company expects to close on the deal immediately after Montage Resources shareholders vote on the deal November 12. Also from the 3Q update: Southwestern managed to reduce the cost of drilling for one of their PA Marcellus wells down to $491 per lateral foot!
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Southwestern Raises $502M to Pay Off Montage Debt

Last week we brought you the bombshell news that Southwestern Energy is buying out and merging in Montage Resources in an all-stock deal worth roughly $857 million (see Stop Press! Southwestern Energy Buying Montage Resources for $857M). In a series of announcements yesterday, Southwestern said it has just finished raising $152 million from selling more stock, and is in the process of raising another $350 million from issuing new notes (debt, IOUs). The money raised ($502 million total) will be used to pay off debt owed by Montage.
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Southwestern Hits “Grand Slam” with Purchase of Montage Resources

Last week, in one of the biggest news stories (for us) so far this year, Southwestern Energy announced it is buying out and merging in Montage Resources (see Stop Press! Southwestern Energy Buying Montage Resources for $857M). The combined companies will create the third-largest (by acreage) Marcellus/Utica driller. Yet investors have pretty much yawned. The company’s stock went down after the announcement. According to one analyst, Southwestern’s purchase is a “grand slam” home run and investors should sit up and take notice.
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Stop Press! Southwestern Energy Buying Montage Resources for $857M

Holy smokes! We didn’t see this one coming. Just yesterday MDN brought you the second-quarter update from Montage Resources (see Montage Resources: 5 New OH Utica Wells, Profits Tumble in 2Q). Little did we know the company was in an advanced stage of negotiations to sell itself to Southwestern Energy. Perhaps “sell” isn’t quite the right word. The two companies are merging, with Southwestern taking over Montage, in an all-stock deal worth roughly $204.3 $857 million (NOTE: We amended this article after Raymond James calculated the deal to be worth a much higher amount, see our update below). The combination will create the third-largest (by acres leased) Marcellus/Utica driller with a combined 786,187 net acres.
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Montage Resources: 5 New OH Utica Wells, Profits Tumble in 2Q

Montage Resources, the new name for the merger of Eclipse Resources with Blue Ridge Mountain Resources which happened more than a year ago, issued its second-quarter 2020 update last week. Production for Montage in the Marcellus/Utica was up slightly (3%), to 551.7 MMcfe/d in 2Q. Profits, on the other hand, were way down. The company lost $68.9 million in 2Q20 versus making a $27.5 million profit in 2Q19. Low prices for natgas explain why.
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Montage Sells Non-Core Utica Pipe Assets to Int’l Buyer for $25M

Montage Resources, the new name for the merger of Eclipse Resources with Blue Ridge Mountain Resources which happened more than a year ago, announced yesterday it is selling its “non-core” wellhead gathering infrastructure (pipelines) in the Ohio Utica condensate development area to an unnamed international buyer for $25 million. The transaction is expected to close by the end of this year.
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COVID Impact on PA Landowners: Low Royalties, Lease Expirations

The Washington & Jefferson College Center for Energy Policy and Management (Washington, PA) is hosting a free webinar series on “Effects of COVID-19 and the Economic Downturn on Western Pennsylvania Shale Gas Development” during June and July. Two of the three sessions have already been held, including a session yesterday that discussed the impacts of COVID-19 on landowners who have leased their land for shale drilling. According to the speaker, there have been two notable effects of the virus for landowners: lower royalties and drillers not renewing leases (allowing leases to expire).
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9 Big M-U Companies Lost $2.6 Billion in Value During 1Q20

A word you will likely see a lot more of in quarterly updates by oil and gas drillers across the country is the word “impairment.” It’s an accounting term that means the value of an asset (leased acreage or wells) is adjusted, down, to reflect a company’s best guess as to how much revenue that asset can generate. We wrote about impairments back in 2015 (see A Basic Guide to Understanding “Impairments” for Marcellus/Utica). Largely because of impairments, nine of the biggest Marcellus/Utica drillers cumulatively lost $2.6 billion in value (on paper) during the first quarter of this year. However, two of the nine had no impairments. And one of the nine made a profit in 1Q20. Can you guess which one?
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Montage Opens Up the Taps – Shut-in Utica Wells Now Back Online

In April, Montage Resources shut-in “low margin production” wells in its liquids-rich producing area. The shut-ins primarily impacted Utica condensate production. In early May during the company’s first-quarter update conference call, CEO John Reinhart said the company had begun to restart some of the shut-in or “curtailed” production (see Montage Res. Drilled 4 Utica Wells in 1Q, Budget Cut Another 10%). Good news. As of June 1, “substantially all” of the shut-in production is now back online.
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M-U Drillers See New Interest from Bond (Debt) Investors

Wow! What a difference three months can make. In January Moody’s Investors Service downgraded EQT Corporation’s bonds to “junk” status (see Moody’s Downgrades EQT Debt to Junk Status Following Write-Down). A few weeks later Standard & Poor’s Global Ratings downgraded the credit rating for six of the biggest Marcellus/Utica drillers, including EQT (see S&P Downgrades Credit Rating for Six Big Marcellus/Utica Drillers). Once thought risky and speculative, investors seem to have changed their minds about investing in M-U debt. They’re taking a second look.
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