Chesapeake Refocuses on NatGas, Offers $1B in Post-Bankruptcy IOUs
Chesapeake Energy will emerge from Chapter 11 bankruptcy next week having dumped $7 billion of old debt (out of $8.9 billion) and taking on $2.5 billion in new debt financing (see Court Approves Chesapeake Bankruptcy Plan to Dump $7B of Debt). Yesterday the company issued an announcement to say it is raising $1 billion of new debt by floating two new rounds of notes (which we call IOUs). The company will also refocus away from oil drilling and back on its original mission of natural gas drilling.
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All three M-U states received permits to drill new shale wells last week. Pennsylvania received 22 new permits. Ohio received 2 new permits. And West Virginia received 8 new permits.
On Friday MDN told you that EQT has partnered with a company called Project Canary (used to be Independent Energy Standards Corporation) to use the TrustWell™ Responsible Gas Program to monitor two EQT gas wells to prove to the world (in particular the global warming lunatics) that EQT’s gas is good and green (see 
Yesterday EQT, the largest natural gas producer in the U.S., announced it is partnering with a Denver, CO company calling itself “Project Canary” to run a test on two of its shale gas pads, to prove the gas produced is “certified responsibly sourced” natural gas. The test will purportedly prove that EQT is doing a good job of producing its natgas with “high environmental and social standards.” Personally, we don’t think they have anything to prove, nor should they. But hey, it’s not our company to run.
CNX released fourth-quarter and full-year numbers yesterday, but without the usual press release summarizing the results. CNX’s top brass did hold a conference call with analysts to discuss the update. Right out of the chute CEO Nick DeIuliis opened up the session by making four points. Nick’s very first point was that “2020 marked the most successful year we’ve seen as an E&P” as measured by free cash flow.
Well, this is a bummer. Dave Spigelmyer, someone we consider to be a friend, is retiring from the Marcellus Shale Coalition (MSC) effective today. He will be replaced by MSC board member Dave Callahan, who officially takes over on Monday. Spigelmyer has been president (the second president of the MSC) since 2013. He took over from another terrific person, Katie Klaber, the organization’s first president. Dave Callahan has big shoes to fill, but we’re confident he’s up to the task.
Diversified Gas & Oil (DGO) owns close to 8 million acres of leases with some 60,000 (mostly) conventional oil and gas wells. Their focus has been to acquire quality production and cash flow–regardless of the well or commodity type (gas or oil)–in the Appalachian Basin. DGO currently owns over 400 Marcellus/Utica shale wells in their portfolio too. The company just added to their inventory of shale wells, closing on the purchase of five Utica Shale wells in Monroe County, OH. The purchase price for all five? $8.4 million.
It was exactly one year ago that the Pennsylvania Supreme Court ruled in THE most consequential lawsuit for Marcellus Shale drilling we’ve seen, a case called Briggs v Southwestern Energy (see 
We’ve noticed a flurry of new “notes” (i.e. bonds) being offered by Marcellus/Utica companies. We call notes/bonds IOUs. Typically a company will issue new notes (a promise to pay in the future, with interest) in order to retire older notes coming due. Notes are a form of self-financing by using debt instead of issuing new shares of stock (diluting existing shares). M-U drillers Range Resources and Antero Resources both quickly sold out of their recent note offerings at higher prices than originally requested. According to S&P analysts, the Range and Antero fast sellout is proof that credit is loosening for drillers in the M-U and in other shale plays.
EQT Corporation, the largest natural gas producer in the United States, is asking West Virginia officials to remove two judges from hearing cases brought by landowners against the EQT relating to royalty disputes for alleged improper deductions. EQT wants Judges Timothy Sweeney and David W. Hummel Jr. to be disqualified from at least three cases (that we know of).
It’s been a long road, but we’re nearing the end. Shell’s $6 billion ethane cracker plant, officially called the Pennsylvania Petrochemicals Complex (PPC), is close to being done. It’s likely the PPC, located in Beaver County, PA, will be up and running sometime next year. When it is, the market for Marcellus/Utica NGLs will profoundly change. PPC will use an average of 85,000 barrels per day of M-U ethane. Our ethane will no longer be a waste product that many drillers pay to get rid of, but rather a profitable product they sell.
Over the objections of a junior creditor group, a judge for the U.S. Bankruptcy Court in Houston said yesterday he will approve Chesapeake Energy’s bankruptcy plan to jettison $7 billion (out of $8.9 billion) worth of debt. Chesapeake will exit bankruptcy within the next 30 days and will continue to retain and drill on its Marcellus Shale assets in northeastern Pennsylvania.
In a pair of announcements earlier this week, U.S. Well Services announced it has signed new long-term deals with both Range Resources and EQT to supply “electric fracking” services. We told you in February 2020 that Range had signed on with U.S. Well Services to continue using its electric fracking service (see