Energy Companies

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    Rumor: EnCap Working on Plan to Merge Eclipse & Penn Energy

    Eclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA, announced in March the company is looking for another company to buy, or (more likely) for another company to buy them (see Eclipse Resources Board Considering Either Merger or Acquisition). We have some new news to report, about a potential sale of Eclipse. Or more properly, a potential merger. EnCap Investments is a private equity/investment firm headquartered in Houston. EnCap owns a majority of Eclipse’s common stock. Put another way, Eclipse is considered a “portfolio company” of EnCap–because he who owns the most stock controls the company. EnCap has a number of portfolio companies–other energy companies in which they invest. One of them is PennEnergy Resources, an active driller in the southwest PA Marcellus (see Top 10 Drillers in SWPA, by Number of Permits Issued). According to sources who have spoken to the Pittsburgh Business Times, EnCap is actively pursuing a combination/merger between Eclipse and Penn Energy…
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    PA Supreme Court Rules on Gorsline Zoning Case – Mixed Decision

    Not long after the Pennsylvania legislature passed the Act 13 Marcellus Shale drilling law in 2012, signed into law by then-Gov. Tom Corbett, seven selfish towns sued, claiming they should have the right (via zoning laws) to determine just where an oil and gas well can be located within their borders. The challenge was brought by rabid anti-drillers and appealed all the way to the PA Supreme Court, where unfortunately the antis won (see PA Supreme Court Rules Against State/Drillers in Act 13 Case). What the antis didn’t think about was the fact some towns may decide to exercise their newly-won rights to allow wells, instead of prohibit them. Whoops. Guess they didn’t see that one coming. A town in Lycoming County decided to allow a shale well on property zoned residential/agricultural (i.e. farming country) by using a “conditional use” permit. Anti-drilling Big Green groups, including PennFuture, THE (arrogant) Delaware Riverkeeper, and the Peters Township gang (none of which are from mid-PA where the town is located) sued to deny the town the right to exercise its Act 13 authority to allow a shale well. The case, Brian Gorsline v. Board of Supervisors of Fairfield Township (Gorsline is an avowed anti-driller), was appealed to the PA Supreme Court and in March 2017 (over a year ago!) the Supremes heard oral arguments (see Gorsline Zoning Case Argued Before PA Supreme Court Justices). Last Friday the Supremes came down from Mt. Olympus to issue their ruling–and they ruled (4-3) against the town and for the antis. However, before you jump to any conclusions and before you believe headlines from Big Green supporters trumpeting their “victory,” you need to know this: the decision potentially makes it harder (not easier) for antis to stop drilling in the future. We’ll explain…
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    SWPA Farmer Claims Shale Damaged Cattle Health, Reproduction

    A farmer who raises Angus beef cattle in East Millsboro (Fayette County), PA, in the southwestern corner of the state, claims that a shale well drilled on his property in 2010 by Atlas Energy (now owned by Chevron) created a “seep” that is affecting the health of his cattle. A seep is a place where water/liquids leak out of the ground. Soon after the well was drilled the farmer began to have trouble with his yearling heifers not getting pregnant. For those grazing near the well, only half got pregnant. The farmer then kept his herd from grazing near the well and noticed the pregnancy rate went from half to 100%–except for those who had previously grazed near the well. They continue to struggle with no pregnancies and miscarriages. All of which sounds like conclusive evidence that there is a problem with the well leaking something into the environment. However, both Chevron and the state Dept. of Environmental Protection have investigated and have not found any evidence that the well is impacting the health of the farmer’s herd. What do you do in a case like that?…
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    Financial Checkup for Marcellus/Utica Drillers

    RBN Energy, headed by founder Rusty Braziel (co-founder of Bentek Energy), is, in our opinion, the premier oil and gas analytics firm out there. Smart people working at RBN. And they offer up some amazing content on their blog site–for free! At least it’s free for a while, then it goes behind a paywall. A few days ago RBN published a blog post on the financial health for the 44 major publicly-traded U.S. exploration and production companies (drillers). RBN groups them into three categories: Oil-Weighted, Diversified, and Gas-Weighted. We found the Gas-Weighted list of 10 companies and the information revealed about them to be fascinating and worth studying. Each of the companies has major operations in the Marcellus/Utica–some of them totally focused on our region. Among the data points shared: revenue, production costs, lifting costs and more. We think of the following as a handy financial health scorecard/checkup for 10 of the biggest drillers in the M-U, including Antero Resources, Cabot Oil & Gas, Chesapeake Energy, CNX Resources, EQT, Gulfport Energy, National Fuel Gas (Seneca Resources), Range Resources, Southwestern Energy, and Ultra Petroleum…
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    Lib Group Didn’t Force Range to Consider Global Warming After All

    Sometimes there are happy endings! Two weeks ago MDN reported that a so-called church, the Unitarian Universalist Association (people who believe in everything, consequently they believe in nothing) had purchased $2,000 worth of Range Resources stock in order to propose a resolution to all shareholders at the annual meeting that forces Range to publish a report on how evil the company is for causing global warming (i.e. force the company to produce a report on their efforts to scale back methane emissions). We told you, based on reports, that the idiotic measure passed by 50.25% (see Liberal Groups Force Range, Anadarko to Consider Global Warming). Except it didn’t pass. The original count did not include “abstention” votes. An abstention is when someone intentionally or unintentionally does not vote. By law, abstentions are considered a “no” vote on shareholder resolutions. When the abstentions were added to the count, it tipped the scale in the other direction, meaning Range dodged a bullet–this year…
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    EQT’s Rise from Second-rate Utility to #1 U.S. NatGas Producer

    Last year when EQT bought out and merged in Rice Energy, it became 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). In the late 1980s EQT was known as Equitable Gas, a local gas utility company in Pittsburgh. It was a company with “poor customer satisfaction” (hence our provocative title of “second-rate” utility). So how on earth did a company that did no drilling rise to become the country’s biggest shale gas driller in under a decade? It started with the foresight of a previous CEO who saw the Marcellus as “the next big thing.” The company changed its name and branding to EQT in 2009, and they haven’t looked back since. Here’s the quick (and fascinating) history of how EQT transformed itself from a lowly gas utility into the powerhouse drilling company it is today…
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    EnerVest & EV Energy Partners on the Rebound with $70+ Oil

    Private equity firm EnerVest owns a lot of acreage and wells (most of them conventional) in the Marcellus/Utica region. In addition to investing in land and wells, EnerVest also has its own drilling subsidiary, EV Energy Partners (EVEP), with operations and assets in OH, PA and WV. EVEP is an MLP–a master limited partnership. While EVEP is joined at the hip with EnerVest, they are (on paper) two different companies. EnerVest has vast holdings and is in the top 25 oil & gas companies in the nation. Last July the Wall Street Journal ran a story that said EnerVest was worth nothing on paper. EnerVest pushed back on that story saying it wasn’t true–at least not completely true. EnerVest chief administrative officer, Ron Whitmire, said the company’s vast holdings are structured as more than a dozen companies. Although some of EnerVest’s companies are in trouble, the entire pie, according to Whitmire, is not in danger of bankruptcy. Conversely, Whitmire’s comment also meant that at least one or more of the EnerVest companies were/are in danger of bankruptcy. EVEP was one of them, filing in early April (see EV Energy Partners Files for Chapter 11 Bankruptcy). A new Bloomberg story takes a look at EnerVest and its 72 year-old CEO, John Walker. The article says Walker, “sees redemption ahead as oil prices rise and EnerVest gets its finances in order.” That’s certainly some good news for the company. We might summarize it this way: The current high price of oil has just pulled EV’s bacon out of the fire…
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    Shell Cracker Advertises First 40 Permanent Production Jobs

    Although Shell has hired a few permanent workers for its mighty $6 billion ethane cracker complex currently under construction in Monaca (Beaver County), PA, the company has just (for the first time) posted a job notification for bulk hiring of permanent positions. The job notice, posted on the BrassRing HR website, provides a detailed job description for “Shell Production Operators” in Monaca–40 of them. The job includes, “monitoring, controlling, starting and stopping equipment (such as furnaces, pumps, compressors, etc.), conducting activities that pertain to unit operation, and taking corrective action when necessary to ensure that all unit conditions and operations are in compliance with safety, environmental, and operating policies and procedures.” In order to qualify, prospects must jump through a several hoops (mechanical aptitude tests). If selected, candidates will go through extensive training from now until the plant opens some 2-3 years from now. Here’s the deets, including the full job description…
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    Big Data Comes to EQT – Drilling Now Done Remotely from Pittsburgh

    Noble Energy drilling simulator

    Back in 2015 MDN editor Jim Willis had an experience he won’t forget. Cabot Oil & Gas chief geologist Buddy Wylie gave Jim and landowner Chris Acker a personal tour of two wells being drilled on Chris’ property. Wyle is THE guy most responsible for Cabot’s enormously successful drilling program in Susquehanna County. As a reminder, Cabot (a single company) currently produces 2.2 billion cubic feet per day of natural gas out of Susquehanna County (a single county), representing 2.6% of ALL natural production in the U.S.! Jim won’t forget Buddy regaling us with the wonders of mud logging. 🙂 Part of the tour included a visit to “the dog house”–the control center that sits atop the drilling rig. The dog house/control center is packed with computers and monitors–akin to something you might see in a jet cockpit. Just like the military now flies airplanes unmanned (drones) with people sitting in a control room thousands of miles away, drilling rigs are now being steered and controlled by a remote cockpit (dog house) hundreds of miles away. Big Data has come to the oil patch–at least it has for the country’s largest natural gas-producing company, EQT. What started as an experiment a year ago has blossomed into a control center operating all 10 of EQT’s active drilling rigs. All directional drilling, geosteering and drilling engineering, happens from a control center in EQT’s Pittsburgh headquarters. It’s really cool stuff. Beyond being cool, it saves money and time, making the company more efficient. Up next? Remote control of fracking operations…
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    Rex Energy Owes Nearly $1B – Who They Owe & How Much

    Last week Rex Energy filed for Chapter 11 bankruptcy protection (see Clock Runs Out – Rex Energy Files for Chapter 11 Bankruptcy). Right after filing, the company announced it has put up essentially all of its Marcellus/Utica assets (leases, wells, etc.), for sale, in order to pay off what it owes (see Fire Sale: Rex Energy Selling Everything to Pay Back Lenders). Which begs the question: What does the company owe? As it turns out, it’s close to $1 billion. The company, in a filing made on the first day of bankruptcy proceedings, included a list of who it owes, for what purpose, and how much–totaling $984.5 million. The biggest chunk is owed to a Delaware bank, some $617 million. However, Rex also owes money to 29 other entities, including MarkWest Energy, various oilfield services companies, taxes, and even some royalties are owed. We have the full list of the 30 entities that are owed money–detailing how much and for what purpose…
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    UGI Expanding NEPA Gathering System to Flow More Cabot Gas

    UGI, a large utility (and pipeline) company located in Pennsylvania, has announced they will expand a northeastern PA pipeline gathering system. UGI built what they call the Auburn Gathering System between 2011 and 2015–46 miles of pipe, two compressors stations and various other pipeline related facilities located in Susquehanna, Wyoming, and Luzerne counties (near Scranton). UGI spent $215 million to build the system, a system that currently flows 470 million cubic feet per day (MMcf/d) of natural gas. Much (most?) of that the gas comes from Cabot Oil and Gas in Susquehanna County. The new news is that UGI will build two new compressor stations, adding to the existing two, which will increase flows through the system by another 150 MMcf/d–all of the increase coming from Cabot. Here’s the good news that more Cabot gas will soon flow through the Auburn System, connecting with two of the biggest pipeline systems in the country–the Tennessee Gas Pipeline (Kinder Morgan) and the Transco Pipeline (Williams)…
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    Fire Sale: Rex Energy Selling Everything to Pay Back Lenders

    Some even sadder news to share about Rex Energy. On Friday we told you that Rex had filed for Chapter 11 “voluntary” bankruptcy protection (see Clock Runs Out – Rex Energy Files for Chapter 11 Bankruptcy). After our story, Rex released a press release to announce not only are they seeking Chapter 11 protection, they are, as of now, putting all of their Marcellus/Utica assets (wells, leases, etc.) up for sale–in both Pennsylvania and Ohio. The stated reason is to “maximize their long-term value and prospects.” To find good homes for those assets with another driller, because Rex obviously doesn’t think after exiting bankruptcy the company will be doing much in the way of drilling. And they need the cash from those asset sales to pay back lenders. In the end, our “little engine that could,” could not. Notice that Rex filed for Chapter 11 (reorganization), not Chapter 7 (liquidation). The company says “drilling and production programs are operating as usual, and the Company is maintaining the necessary staffing and resources to meet its commitments to gathering and processing partners.” So, limited business as usual–until everything is sold–and then there won’t be any business. Looks to us like it’s still a liquidation–except on Rex’s terms, instead of a forced auction of assets…
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    Rice Brothers Act II – $200M Marcellus/Utica Investment Firm

    Good news! The four Rice brothers, all of whom formerly worked in the family business, Rice Energy, have launched a new venture. You will recall last November EQT consummated a deal to buy and merge in Rice Energy, paying $8.2 billion to do so (see Out with the Old: Rice Energy Sign Comes Down Day of EQT Merger). Not all of that money went into the pockets of Dan, Toby, Derek and Ryan Rice–but you can be sure a good chunk of it did. We’ve been wondering where the Rice boys would land since they have a non-compete clause with EQT. Would they leave the Pittsburgh region and restart somewhere else? Fortunately, no! The four boys plus a fifth partner, a former VP at Rice, have pooled their money and expertise and have just launched Rice Investment Group (RIG), a (so far) $200 million “multi-strategy fund investing in all verticals of the oil and gas sector with a focus on partnering where our operational, technical, and strategic experience add value.” We love everything about the Rice boys. They’re young, irreverent, know how to have a good time, and smart. They come from good stock. Their dad, Dan Rice III, was once the most successful mutual fund manager in the United States, for over a decade, until the company he worked for (BlackRock) booted him for their own bungling and lack of communication with investors (see BlackRock’s Screw-up with Dan Rice & Rice Energy). The boys learned from the best and now they’ve launched an investment firm of their own. When you look at their website homepage, it is classic Rice boys–an animated video of an 800-pound gorilla on the homepage, signalling their intention to be THE big player in funding Marcellus/Utica ventures…
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    School Near Pittsburgh Considers EQT Deal: $2,500/Ac, 15% Royalty

    Last week MDN told you about the ongoing vendetta by a few anti parents in the Mars School District (half hour from Pittsburgh, in Butler County) and their Big Green accomplices. They suffered a major court defeat (see Dela. Riverkeeper Suffers Major Defeat in Martian Well Case). Rex Energy has drilled two wells about 3/4 of a mile from one of the Mars schools, and wants to drill another four. The Martians bleat and blat that faraway drilling activity will somehow hurt “the children.” Compare that attitude with the parents (and school district officials) in the Kiski Area School District in Westmoreland County (about 40 minutes from Pittsburgh). The Kiski Area School will vote tonight on a lease deal with EQT to allow shale drilling UNDER SCHOOL PROPERTY! The district will get $2,500 per acre in a signing bonus, and 15% royalties on any gas produced. If signed, the school’s bonus check could be as high as $310,300–for “the children.” The difference in attitude (and aptitude) between the parents in Mars and the parents in Kiski could not be more striking…
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    Clock Runs Out – Rex Energy Files for Chapter 11 Bankruptcy

    In early April, Rex Energy, a driller focused solely on the Marcellus/Utica driller, defaulted on payments it owes to debtholders (see Rex Energy Defaults on IOUs, Can’t File Annual Report on Time). Rex told the Securities and Exchange Commission (SEC) the company could not make a semi-annual interest payment due on senior notes on April 2. Rex said in the filing that the noteholders to whom payment is due signed a temporary “forbearance” agreement that gives Rex a little breathing room, until April 16. The April 16 payment didn’t happen. Rex and the noteholders signed a second forebearance agreement giving Rex another extension, then another, then another. At least four, maybe five such extensions were granted. But in the end, Rex could not work out favorable terms. And lack of progress caused the banks that lend Rex money to call in the loans. With no money to pay those loans, Rex has no choice but to file for Chapter 11. Rex reported in an SEC 10-Q filing on Tuesday that: “An acceleration notice from the lenders of our senior term loan has been received and we lack the liquidity to pay these obligations. Given these circumstances, the Company is currently in the process of preparing to file for protection under Chapter 11 of the U.S. Bankruptcy Code which is expected to occur imminently following the filing of this Form 10-Q.” Rather ominously, the next sentence reads: “There can be no assurances that the Company will be able to reorganize its capital structure on terms acceptable to the Company, its creditors, or at all.” What does this mean for Rex’s Marcellus/Utica drilling program?…
    Read More “Clock Runs Out – Rex Energy Files for Chapter 11 Bankruptcy”

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    Liberal Groups Force Range, Anadarko to Consider Global Warming

    We get tired of saying it, but perhaps we should never get tired of saying that according to the most reliable methods of tracking temperatures on earth (by satellite), THERE IS NO GLOBAL WARMING. The only way global warming alarmists get away with claiming the earth is heating up is by using doctored computer algorithms. The actual testing and measurement of temps doesn’t show we’re heating up! And yet the manipulators who persist in using scare tactics that mankind is somehow causing the earth to heat up catastrophically by burning fossil fuels and leaking methane into the atmosphere, have just claimed a couple of more scalps in their efforts to shut down the fossil fuel industry. A so-called church, the Unitarian Universalist Association (people who believe in everything, consequently they believe in nothing) bought $2,000 worth of Range Resources stock and proposed a resolution to all shareholders at the annual meeting that forces Range to publish a report on how evil the company is for causing global warming (i.e. produce a report on Range’s efforts to scale back methane emissions). The measure passed by 50.25%. A group called As You Sow bought Anadarko stock and floated a resolution instructing the company to produce a report on how mythical man-made global warming will affect the company financially as it will no doubt have to scale back its exploration and production. That resolution passed by 53%. These groups, with innocent-sounding names, are NOT innocent. They are far left, liberal groups that have snookered shareholders into voting against their own best interests by harming the very companies they invest in, forcing those companies, ultimately, to stop drilling. All in the name of “climate change” (i.e. global warming)…
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