Energy Companies | Industrywide Issues | M&A | Pennsylvania | Seneca Resources | Shell | Statewide PA | Tioga County (PA)
Fire Sale: Shell Sells All Remaining PA M-U Assets for $541M
A major announcement yesterday from both Shell and National Fuel Gas Company (NFG) says Shell has cut a deal to sell all of its remaining Appalachian assets, which includes 450,000 acres and some 350 producing M-U shale wells along with pipeline assets, to NFG for $541 million. The deal is expected to close by the end of July.
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We won’t lie, this news turns us red hot with anger. The sleazy Pennsylvania Attorney General, Democrat Josh Shapiro (who wants to ingratiate himself with wacko leftists because he’s running for governor) has just forced Inflection Energy to pay $40,000 to three Big Green groups as penance for an accident that allowed frack wastewater to escape into an unnamed creek. Inflection had to cop to committing a crime and pay money to groups seeking to destroy the company. THIS IS OUTRAGEOUS!
If an upstream (drilling) company with a long-term pipeline contract files for bankruptcy, does that give the company the right to break their pipeline contract? A major shipper on the Rockies Express (REX) pipeline, Ultra Resources, is expected to file for bankruptcy very soon. REX is concerned Ultra may claim its bankruptcy is a “get-out-of-the-contract free” card. REX has asked FERC to preemptively “assert its jurisdiction” as the arbiter of whether or not companies like Ultra can skip out of contracts.
Range Resources issued its first-quarter 2020 financial and operational update late last week. The company reported net income significantly increased to $145 million in 1Q20, up a staggering 10,117% from $1.4 million in 1Q19. Production averaged 2.3 billion cubic feet equivalent (Bcfe) per day, approximately 70% natural gas (the rest NGLs). Range says production in 2020 will stay about the same as 2019, yet they will only operate one drilling rig and one fracking crew in 2020 to maintain that level of production.
Cabot Oil & Gas, which is one of, perhaps the best-run shale drillers in the Marcellus/Utica, issued its first-quarter 2020 update on Friday. Cabot generated $53.9 million in net income in 1Q20 and $49.8 million in free cash flow (down from $308.4 million in free cash flow from 1Q19). Cabot is one of (the only?) natural gas drillers with five consecutive years of generating free cash flow. What’s ahead for Cabot in 2020 and beyond?
Southwestern Energy issued its first-quarter 2020 update on Friday. The company reported total production of 201 billion cubic feet equivalent (Bcfe) in 1Q20, which includes 1.7 Bcf/d of gas and 83,000 barrels per day of liquids. That’s up more than 10% from 1Q19’s 182 Bcfe, but down slightly from 4Q19’s 208 Bcfe. Southwestern reported a net loss of $1.5 billion, almost all of which was due to an impairment charge of $1.48 billion (in other words, it was a paper loss). The company made $594 million in profit in 1Q19.
Late last week National Fuel Gas Company (NFG), the parent company of Marcellus/Utica driller Seneca Resources, issued its second-quarter (everyone else’s first quarter) financial and operational update. The company’s natural gas production increased 10.7 billion cubic feet (Bcf), up 24%, due primarily to production from new Marcellus and Utica wells completed and connected to sales. The production increase is all the more impressive because Seneca curtailed (shut-in) 2.7 Bcf of natural gas production during the quarter due to lower spot prices at sales points in Pennsylvania.
Last year at this time the EQT’s then-management team was locked in a heated battle with the Rice boys–Toby and Derek Rice–who wanted to boot the existing management team and run the company themselves. EQT’s management at the time delayed the annual meeting until July (see 
Antero Resources issued its first-quarter 2020 update yesterday, delivering outstanding earnings guidance that “completely caught Wall Street and the bears off guard.” Management cut 2020 capex by $250 million, to $750 million (41% lower than 2019) while maintaining current production. Antero said it will hit $175 million free cash flow *this year* by spending less and producing the same.
Like Chesapeake Energy last week and Williams in late March, the Gulfport Energy board has decided to swallow a poison pill. Some companies call poison pills a “stockholder rights agreement” or a “shareholder rights plan.” In Gulfport’s case, they call it a “tax benefits preservation plan.” It doesn’t matter what you call it, it’s all the same thing. It’s a provision that defends the company against a takeover.
Last July MDN broke the news that LOLA Energy had filed a lawsuit in Greene County, PA against EQT for allegedly drilling shale wells under property EQT formerly leased, but property for which the leases had lapsed and were subsequently scooped up by LOLA Energy II (see 
It’s not a done deal yet, but according to sources willing to speak with Reuters, Chesapeake Energy is preparing the paperwork for a bankruptcy filing as one of its options to deal with debt payments it likely will not be able to pay this year. This should not be a surprise to anyone. We’ve been warning about a potential bankruptcy filing since last November (see 
CNX Resources released its first-quarter 2020 update yesterday, along with hosting a conference call with analysts. CEO Nick DeIuliis laid out a plan for the company for the next seven years. Silencing the naysaying critics who say shale companies are not profitable and some sort of Ponzi scheme, CNX says it is on track to make $300 million in free cash flow (i.e. profits) this year, $400 million next year, and then $500 million each year until 2026. CNX is a cash flow machine!
Yesterday EQT, the country’s largest natural gas-producing company (based in Pittsburgh) released “preliminary highlights” for financial and operational performance in first-quarter 2020, ahead of the official full release on May 7. It was a tease of good things to come in the full release. What did it show?
Great news! The Mariner East 2 pipeline project along with Shell’s mighty ethane cracker project will once again be able to restart their stopped construction. At least according to our reading of the law. As you may know the Pennsylvania Dept. of Community and Economic Development (DCED) has been “reviewing” waiver requests to allow all work to resume for both ME2 and the cracker project (see