Energy Companies

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    Longer Laterals Major Trend in 2017 Marcellus-Utica Drilling

    Yesterday MDN updated you on Eclipse Resources’ program of drilling looooong laterals–the horizontal part of shale wells (see Eclipse Res. 3Q17: Super-Laterals Proving to be Super Productive). Eclipse is the reigning champ, having drilled the three longest onshore horizontal wells–in the WORLD. Upward of 3.5 miles underground! All three of Eclipse’s record-breakers are Utica wells. However, Eclipse isn’t the only driller hopping on the long lateral bandwagon. In June, Range Resources reported drilling the longest Marcellus lateral well (see Range Resources Drills Longest Marcellus Well Ever – in Washington Co.). If you compare the lateral length of Range’s wells from 3Q17 with 3Q16, they are drilling laterals 90% longer than they were just one year ago! EQT and Antero Resources are also experimenting with longer laterals. All of which leads us to christen 2017, “the year of the longer lateral”…
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    Antero’s $275M WV Wastewater Recycling Facility Ready to Launch

    By our reckoning, Antero Resources’ $275 million wastewater recycling facility in Doddridge County, WV is either already operational, or will be within the next few days (sometime this week). In 2015 Antero hired Veolia Water Technologies Inc. to build a new shale wastewater recycling facility in Doddridge County (see Antero Building New 60K Bbl Wastewater Recycling Facility in WV). The facility, called the Clearwater Facility, will process 60,000 barrels of wastewater per day, separating water, salt and radioactive particles. The salt can be sold to municipalities for use as road salt–but frankly there’s not enough of a market to sell it all. And not all of it will be of sufficient quality to be sold that way. So Antero also spent $20 million to build a landfill next to the plant for the salt (see Update on Antero’s $275M Wastewater Facility in WV). According to the Clarksburg Exponent-Telegram, an Antero official recently said the Clearwater Facility is set to open in “the first part of November.” If you consider the first 15 days of the month the first part of the month, that leaves two days for the facility to be up and running. Hence our speculation it either already is open, or will be this week…
    Read More “Antero’s $275M WV Wastewater Recycling Facility Ready to Launch”

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    Eclipse Res. 3Q17: Super-Laterals Proving to be Super Productive

    Last week Eclipse Resources, the “super-lateral” Marcellus/Utica driller, turned in its third quarter 2017 update. Eclipse is a Marcellus/Utica pure play driller headquartered in State College, PA that drills mostly in the Ohio Utica. Eclipse has drilled the top three longest onshore oil/gas wells in the world. What do we glean from the 3Q17 update? Two of their world’s longest onshore wells–the Great Scott 3H and Outlaw C11H–are now online and pumping. They are pumping record-setting amounts of condensate. Each is averaging 3,300 barrels of oil equivalent (BOE) to date on a restricted choke, consisting of almost 50% condensate and 68% in total liquids. Gushers! During 3Q17 Eclipse drilled 10 wells in all, including four super-laterals with an average lateral length of over 17,500 feet. So far the company has drilled 11 super-lateral wells with an average lateral length of ~18,000 feet–averaging just 16 days from spud to total depth. Incredible! The company had average daily production of 353 million cubic feet equivalent per day (MMcfe/d). On an analyst phone call, Eclipse’s top brass said they are working to create a “reputable” super-lateral program, meaning (our words) building a successful program of long laterals that also makes big money. Here’s the 3Q17 update, along with portions of the analyst phone call and the latest slide deck…
    Read More “Eclipse Res. 3Q17: Super-Laterals Proving to be Super Productive”

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    Questerre Plans 8 Initial Well Pads in Canadian Utica 2018-2019

    Although the primary focus of Marcellus Drilling News has always been on Marcellus and Utica Shale gas (and oil) as found in the northeastern U.S., the Utica Shale also underlies part of Canada’s Quebec province. From time to time we highlight news concerning the Utica in Canada. There hasn’t been much news to highlight over the years since Quebec has had a moratorium on fracking at least as long as New York’s moratorium (now at 9 years and 9 months and counting). But as we reported in December 2016, something of a minor miracle happened–the Quebec National Assembly voted to pass Bill 106, ostensibly to support Quebec’s “clean power plan” (see Fracking in Canadian Utica Shale Takes Big Step Closer to Reality). The bill includes a section that “lays out a framework for oil and gas development” in Quebec. Fracking will not begin immediately. The bill does, however, mean that new regulations will come along in 2017 and after that, it’s an almost certainty that fracking will begin. Those draft rules were finally been released in September of this year (see Quebec Government Publishes Draft Utica Fracking Regulations). Questerre Energy, which owns Canadian Utica leases in Quebec and has long lobbied get the government to allow Utica drilling. In Questerre’s recently-released third quarter 2017 update we get an update on their plans to drill in the Canadian Utica. The company says if progress continues with the draft regulations, they have eight well pad sites picked out where they will drill first–in locations that have been oil and gas friendly in the past…
    Read More “Questerre Plans 8 Initial Well Pads in Canadian Utica 2018-2019”

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    EQT/Rice Shareholders Make it Official – Merger Happens Nov 13

    Next Monday the largest natural gas-producing company in the these United States will be born–from the merger of EQT and Rice Energy, based in Pittsburgh. Yesterday the shareholders for both EQT and Rice voted to approve the merger/deal by overwhelming majorities. The megadeal was first announced back in June (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). Evil corporate raider Jana Partners tried to stop the deal–but failed, as they acknowledged earlier this week (see Corp Raider Jana Partners Admits Defeat Ahead of EQT/Rice Vote). Next Monday the transaction will be complete and the new EQT will produce more natural gas in the Lower 48 States than Chesapeake Energy, the current reigning champ. Some 84% of the EQT shareholders who voted, voted to approve the deal, and 74% of voting Rice shareholders voted in favor of the deal. What happens next? After the consummation of the merger on Monday, EQT CEO Steve Schlotterbeck said the company will immediately appoint a committee to look into…splitting the company. Yes, you read that right. Not splitting it back into EQT and Rice, but splitting it into upstream (drilling) and midstream (pipelines). Two companies will become one and then become two again. Go figure. A recommendation and decision about whether to proceed with a split will happen, according to Schlotterbeck, by “the end of the first quarter 2018.” There’s little doubt the decision will be “yes” on a split…
    Read More “EQT/Rice Shareholders Make it Official – Merger Happens Nov 13”

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    EXCO Resources Heading for Bankruptcy, Turnaround Expert Resigns

    In the end, not even turnaround expert John Wilder could turn around EXCO Resources. Wilder is the guy now Secretary of Commerce Wilbur Ross brought in two years ago to turn around the ailing company. At first it seemed like it might be working (see EXCO Resources Turnaround is Working, but Comes at a High Cost). EXCO Resources was once a sizable player in the Marcellus. They still have 184,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However the company, as we pointed out in March 2016, has abandoned the Marcellus/Utica at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). The company flirted with bankruptcy for some time, but in the end they effectively turned over control of the company to its creditors this past summer (see EXCO Issues 2.7M Shares of New Stock in Lieu of Paying $23M). However, the company has continued to struggle financially. Yesterday EXCO announced Wilder has resigned from his position as a member of EXCO’s Board of Directors and from his position as Executive Chairman of the Board, effectively immediately. Translation: He’s given up on trying to save the company. In the same announcement, EXCO said Wilder’s departure “was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.” In EXCO’s third quarter 2017 update, released on Tuesday, there is a section in which management says if they can’t make the interest payments on the company’s debt, “the Company may be forced to seek protection from creditors under the U.S. Bankruptcy Code.” They go on to say debt payments and other factors, “raise substantial doubt about the Company’s ability to continue as a going concern.” Ominous language. Here’s the announcement about John Wilder and company statements about possibly seeking bankruptcy protection…
    Read More “EXCO Resources Heading for Bankruptcy, Turnaround Expert Resigns”

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    Milestone: Construction Begins on Shell Cracker Plant Buildings

    A major milestone has been reached in the mighty Shell $6 billion ethane cracker facility project. Over the past year or so site preparation has been vigorous. Work at the site in Monaca (Beaver County), PA has included building bridges, relocating a state highway, improving existing interchanges, repositioning a rail line, and preparing foundations for the new complex. The prep work is now largely done–and this week begins construction of the buildings that will house four processing units–the ethane cracker itself and three polyethylene units. Also part of this next (final) phase of construction: a 900-foot long cooling tower, rail and truck loading facilities, a water treatment plant, an office building and a laboratory. Oh! And let’s not forget that Shell will also build a 250 megawatt electric generating plant that will provide all of the electricity needed at the facility–powered by Marcellus Shale gas, of course! Here’s an update from Shell, with a picture of the site as it is now…
    Read More “Milestone: Construction Begins on Shell Cracker Plant Buildings”

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    Plum, PA Officials Hold Hearing on New Restrictions for Fracking

    Nearly a month ago, local officials in Plum, PA (Allegheny County) approved a plan by Huntley & Huntley (H&H) to drill a series of Marcellus wells in their municipality (see Plum, PA Gives Huntley & Huntley Green Light for Shale Drilling). At that time, we told you about H&H plans to begin constructing a well pad in Plum in November (see Huntley & Huntley Starts Shale Drilling in Plum, PA Next Month). Plum’s leaders faced stiff opposition from some residents over their decision to conditionally approve H&H’s request. In Plum, fracking is allowed in any zone if a conditional use is granted. That’s what happened last month–the Plum Council issued a conditional use exception for H&H to drill on 92 acres near Coxcomb Hill Road in Plum. Fearing more requests will come from H&H, Plum officials have floated a proposed change to zoning ordinances (ordinances which haven’t been updated since 1993). The new change would only allow fracking in rural residential and industrial zones. H&H says the change is too restrictive. Some antis think it doesn’t go far enough. Last night Plum held a hearing about the proposed changes, with some 100 people showing up. According to press accounts, the crowd was about evenly split, for and against the proposed zoning changes. Here’s how it went down…
    Read More “Plum, PA Officials Hold Hearing on New Restrictions for Fracking”

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    Shell Taps Brit to Run the $6B Ethane Cracker Project in Monaca

    Shell’s $6 billion ethane cracker plant facility in Monaca (Beaver County), PA is about to ramp up construction of the numerous buildings that will house the equipment. Since 2014, Ate Visser, vice president of Appalachia petrochemicals at Shell Chemical, has been the guy in charge of the project (see Shell Exec Shares Inside Story of Why They Chose PA for Cracker). However, beginning now, Hilary Mercer, a native of Manchester, England (has worked at Shell for the past 30 years) is now the woman in charge of the project. Mercer is the new vice president of the cracker plant project. She has an interesting, globe-trotting history. Mercer says she likes to build “big projects.” Prior to landing in her role in PA, Mercer was in South Korea overseeing construction of the largest floating structure ever built. But building the huge cracker facility isn’t the only thing that jazzes Mercer about the project. She’s pumped at the prospect of building the commercial side–building a business from the ground up. Finding customers, branding, everything that comes with creating demand for the output from the mighty cracker facility. Here’s a look at the new leader of the Shell cracker plant project…
    Read More “Shell Taps Brit to Run the $6B Ethane Cracker Project in Monaca”

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    Enervest Pushes for Co-Tenancy in West Virginia

    In August MDN told you the West Virginia Oil & Natural Gas Association (WVONGA) plans to push, once again, for what MDN calls forced pooling lite in the next session of the legislature scheduled for early 2018 (see WVONGA Makes Plans to Push Forced Pooling Lite in 2018). Forced pooling legislation in West Virginia has been put forward five times in the past seven years–and each time it has failed to win enough votes in the WV legislature. This year, WVONGA changed tactics and renamed forced pooling as co-tenancy and joint development (see WV Won’t Push Forced Pooling, Will Push Joint Dev. & Co-Tenancy). The West Virginia Surface Owners Rights Organization refers to co-tenancy as “majority rules” and joint development as “invisible ink” (see Another Look at WV’s Co-tenancy & Joint Development Proposals). EnerVest, a shale (and conventional) driller with considerable acreage in West Virginia recently contributed a editorial to the Charleston Gazette-Mail which unsurprisingly supports WVONGA’s push–at least for co-tenancy. The article doesn’t mention joint development, but since the two are tied together in a single bill, we assume they also want to see joint development. Below is (once again) a brief explanation of the two concepts, along with EnerVest’s editorial/reasons for why the Mountain State needs them…
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    Corp Raider Jana Partners Admits Defeat Ahead of EQT/Rice Vote

    The guy who runs the investment firm Jana Partners, Barry Rosenstein, is a corporate raider. He invests millions in a company he’s targeted in order to get one or two people elected to the board of directors. Those people then agitate and force the company to lay off hundreds or thousands of employees, and sell off assets, in a bid to make the stock price jump. When the price does jump, corporate raiders like Rosenstein then sell their shares, making a profit on the new/higher price (buy low sell high). It may be legal, but we consider it immoral. In June, EQT, one of the biggest drillers in the Marcellus/Utica, announced a deal to buyout and merge in Rice Energy, another sizable M-U driller (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). A few weeks later Jana targeted EQT in an attempt to stop the deal (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Jana believes it could make a whole lot more money if the deal doesn’t go through, and instead if EQT splits itself in two–one half a drilling company, the other half a pipeline company (firing a bunch of people along the way). So Jana went on a smear campaign, making all sorts of wild accusations against EQT, including calling EQT management’s compensation structure “perverse,” and accusing the company of using “deceptive” maps of EQT and Rice acreage positions (see Corp Raider Continues to Trash Talk EQT/Rice Merger, Vote Set Nov 9). All the trash-talking and bullying didn’t worked. The deal will happen–this week–and Jana is now officially throwing in the towel. They will still vote against the deal with their shares, but they have withdrawn their proxy fight to enlist enough other shares to vote down the deal…
    Read More “Corp Raider Jana Partners Admits Defeat Ahead of EQT/Rice Vote”

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    Rice Energy 3Q17: Record High Production for “Shalennial Team”

    Rice Energy, while not the biggest, is certainly one of the best-operated drillers in the Marcellus/Utica. Rice issued their third quarter 2017 update last week. It will be the last quarterly update for the company as Rice shareholders will vote this week to sell out to larger competitor EQT. Because of the impending vote this Wednesday, Rice elected not to conduct an analyst phone call with the release of their 3Q17 update–we only have written statements to go by. The latest quarterly report shows Rice hit yet another record-high for production for natural gas and equivalents, producing 1.44 billion cubic feet equivalent per day (Bcfe/d). During 3Q17 Rice drilled 25 Marcellus wells and 7 Utica wells (32 total). The company lost $107 million during 3Q17, versus making a profit of $66 million in 3Q16. Rice is and always has been run by young guys (and gals). The Rice boys are Millennials. So in this last quarterly update, they displayed some of their trademark irreverent humor by coining a new word: shalennial. Dan Rice, CEO, said this in a quote in the release: “Our success is a testament to the core assets that we have acquired and developed with our shalennial team and I am highly confident that our operational momentum, as evidenced by our record third quarter results, will meaningfully contribute to EQT’s future success. We are excited to combine our core assets with EQT’s to create one of the most complete energy companies in the United States and derive even more long-term value for our shareholders.” A footnote next to the word shalennial defines the term thus: “Shalennial /SH?l?en??l/ noun: (1) an evolving, tech-driven leader of the shale generation; (2) an employee of Rice Energy.” We’ll sure miss Rice’s humor, and their go-get-em, can-do attitude, around the Marcellus/Utica shale patch…
    Read More “Rice Energy 3Q17: Record High Production for “Shalennial Team””

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    NFG 3Q17: Delayed Northern Access Pipe No Closer to Resolution

    Last week National Fuel Gas Company, headquartered in Western New York State with drilling subsidiary Seneca Resources and pipeline subsidiary Empire Pipeline, issued its fourth quarter (everyone else’s third quarter) 2017 update. In the accompanying analyst phone call, CEO Ronald Tanski blamed the delay of the Northern Access Pipeline project (delayed by the NY Dept. of Environmental Conservation) for lower earnings than the company would have otherwise realized. Thanks, business UNfriendly NY! You may recall in July NFG filed a lawsuit against the DEC for arbitrarily rejecting the project (see Northern Access Pipeline Court Case Further Threatens NY DEC). On the analyst call, Tanski said the case, filed in the Second Circuit Court of Appeals (in NY), will hold oral arguments on Nov. 16th. Tanski also said it’s “anyone’s guess” when NFG will get an answer about the project–either from the lawsuit or the Federal Energy Regulatory Commission (FERC). On the drilling front, Seneca Resources produced 40.4 billion cubic feet equivalent (Bcfe) last quarter, up a tiny 1% from the same quarter a year ago. After hedging, Seneca got $2.91 per thousand cubic feet (Mcf) for their gas–not too shabby. Below is the full update for NFG for last quarter (remember they also have a huge utility business, in addition to drilling and pipelines), along with excerpts from the analyst call and the latest slide deck…
    Read More “NFG 3Q17: Delayed Northern Access Pipe No Closer to Resolution”

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    Chesapeake Energy 3Q17: “Pleased” Production Declined, Loses $41M

    Yesterday the 800-pound gorilla in the natural gas space, Chesapeake Energy, issued its third quarter 2017 update. One of the highlights during the analyst phone call was CEO Doug Lawler’s bragging about the “world class” Marcellus Shale. During 3Q17 Chessy drilled and put online two Upper Marcellus wells in Susquehanna County, PA that turned in peak initial flow rates of 29.6 and 29.8 million cubic feet per day (Mmcf/d) of natural gas, which is 50% higher than previous Upper Marcellus wells drilled by Chessy. The company used 3,000 pounds of sand per foot in fracking the wells. On the down side, Chesapeake lost $41 million for the quarter after making $470 million in profit during the previous quarter. However, when compared with the same quarter last year (3Q16), losing $41M ain’t so bad. In 3Q16 Chesapeake lost $1.3 billion. The company’s stock price continues to be low, bumping along in the mid-$3 range ($3.66/share as of this morning when we checked). One odd statement from Lawler on the phone call. He said this: “I’m pleased to report our production has started to decline as forecasted following the previously announced weather-related operational delays experienced during the quarter.” He’s “pleased” production is down?! Yes, the company did previously forecast a drop in production–but how can you be “pleased” with that? Converting all hydrocarbons Chessy produces (natural gas, oil, condensate, NGLs) into barrels of oil per day, Chessy produced 542,000 barrels of oil equivalent per day (boe/d) in 3Q17, versus producing 638,000 boe/d in 3Q16–a drop of 15%. Combining the Marcellus and Utica, Chessy produced 246,000 boe/d in 3Q17 versus producing 261,000 boe/d in 3Q16–down 5.7%. The company currently operates 14 drilling rigs across all plays–two of them in the Marcellus/Utica. Below is the full 3Q17 update, including financials, select portions of the analyst phone call, an updated slide deck, and analysis by Reuters…
    Read More “Chesapeake Energy 3Q17: “Pleased” Production Declined, Loses $41M”

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    DOJ Ends Probes into Chesapeake Royalty Practices, Land Deals

    In September 2016, Chesapeake Energy filed disclosure forms with the Securities and Exchange Commission which says the U.S. Dept. of Justice (DOJ), a number of states, and even the U.S. Postal Service have served the company with subpoenas for information (see Everybody Just Subpoenaed Chesapeake Energy for Everything). The filing indicated that Chesapeake had received DOJ, U.S. Postal Service and state subpoenas “seeking information on our royalty payment practices. In addition, we have received a DOJ subpoena seeking information on our accounting methodology for the acquisition and classification of oil and gas properties and related matters.” An enterprising investigative reporter with Reuters noticed Chesapeake recently filed another disclosure form with the SEC–to say that the DOJ has now ended what was a three-year probe into the company’s royalty payment and land purchase practices–ended without taking any action…
    Read More “DOJ Ends Probes into Chesapeake Royalty Practices, Land Deals”

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    Antero 3Q17: Long Laterals & More Sand, Production Up 24%

    Antero Resources turned in their third quarter 2017 update earlier this week. On the ubiquitous analyst phone call, Antero CEO Paul Rady spoke at length about the company’s long laterals. Antero has been a leader in drilling long laterals with nearly 900 wells drilled at an average lateral length of 8,250 feet–with some 230 of those drilled with a lateral length longer than 10,000 feet. Of all the shale wells drilled in the Marcellus/Utica that are over 10,000 feet, Antero has drilled more than 30% of those wells. According to Rady: “Longer laterals at 9,000 plus feet generate materially higher well economics.” But long laterals aren’t the whole story. Antero is also bumping up the amount of sand they use in fracking. In 2016 they used 1,500 pounds per square foot. From there they moved to 1,875. Today? They use 2,500 pounds per foot. The company continues to be one of the best in the business with hedging, or pre-selling their gas on long-term contracts for prices higher than they would get on the day-to-day spot market. After hedging, Antero got $3.39 per thousand cubic feet (Mcf) for gas and equivalents (oil, NGLS) last quarter. Antero drilled and brought online 31 Marcellus wells and 6 Utica wells in 3Q17. Below is the full update, extracts from the analyst phone call, and the the latest slide deck…
    Read More “Antero 3Q17: Long Laterals & More Sand, Production Up 24%”