Energy Companies

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    Gulfport 3Q17: Production Up Whopping 63%, Turns a Profit

    Gulfport Energy, which has drilled the second-highest number of Utica wells in Ohio (331 so far, second only to Chesapeake Energy), issued their full third quarter 2017 update earlier this week. Gulfport, which drills mainly in the Utica (but also in Oklahoma and Louisiana), reported 3Q17 production was up an astonishing 63% over the same period last year, and up 16% from 2Q17. Gulfport produced an average of 1.2 billion cubic feet per day (Bcf/d) of natural gas equivalent in 3Q17. The vast majority of that production (82% of it) came from the Ohio Utica. You can safely say Gulfport has broken into the 1 Bcf/d Club in the Ohio Utica! On the financial front, the company swung into profitability during 3Q17 by making $18.2 million in profit, versus losing $157.3 million in the same quarter last year. The company has four rigs operating in the Utica, and they drilled 23 Utica wells in 3Q17. Below is the full 3Q17 update, excerpts from the analyst call, and the latest slide deck…
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    Corp Raider Supports EQT/Rice Merger, but Lawsuit Still Looms

    In something of a good omen ahead of a vote on Nov. 9 by shareholders of EQT and Rice Energy to approve a merger, one of two EQT-shareholding corporate raiders, D.E. Shaw, supports the merger. In point of fact, Shaw has not opposed the merger since it was announced in June. Shaw’s “issue” has been that the merged EQT/Rice should immediately split itself in two–into upstream (drilling) and midstream (pipelines). Shaw’s pressure seems to be one of the (main?) reasons why EQT moved up the timing to consider such a split (see Under Pressure, EQT Moves Up Timeline to Explore Splitting Co.). Last week EQT CEO Steve Schlotterbeck all but confirmed the company will split in two after a special committee formed to explore that option makes its final recommendation (see EQT CEO Signals Company Likely to Split in Two After Rice Merger). Evil corporate raider Jana Partners is still opposed to the merger and is fighting it tooth and nail. Jana may have some help. A flurry of lawsuits have been filed by shareholders opposing the merger–most of them going nowhere. However, one of the lawsuits, filed in Allegheny County Court, will go before a judge three days before the Nov. 9 vote. That lawsuit requests an emergency injunction against the vote. It’s possible the county judge could block the vote, giving Jana more time to whip up opposition…
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    H&H Drilling in Upper Burrell Gets Final Approval, Raucous Crowd

    Normally when you read about a raucous crowd at a public meeting dealing with shale gas, it’s raucous because of misbehaving antis. This time the shoe is on the other foot. Huntley & Huntley has plans to drill four shale wells in Upper Burrell Township (Westmoreland County), PA. As MDN reported in June, a landowner in Upper Burrell filed an appeal against Upper Burrell’s zoning ordinance that allows drilling in rural, agricultural districts (see Westmoreland Zoning Challenge Heads to Court, Delays H&H Drilling). H&H plans to drill a well near where the woman lives, and she’s arguing such drilling will violate the state’s environmental rights clause and “devalue her property.” The case was supposed to go to township’s Zoning Hearing Board, but all of the (many) lawyers involved agreed to instead move it to county court, making the process faster and less expensive. The same woman then sued the town claiming the town’s very right to issue conditional use permits in agricultural-residential districts is unconstitutional (see Frivolous Lawsuit Delays H&H Drilling in Westmoreland County, PA). Even though legal wrangling may prevent a final outcome any time soon, the town is moving forward anyway. The Upper Burrell Planning Commission voted two weeks ago to approve H&H’s drilling plans, passing it back to the board of supervisors for a final sign-off (see H&H Drilling Plan for Upper Burrell Still on Pause, Some Progress). Yesterday the supervisors voted–in favor of approving the wells. Supporters of H&H’s plan far outnumbered those against at the meeting–and they made themselves heard…
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    Monroeville Responds to Court Challenge re Seismic Testing Ord

    Monroeville, PA (Allegheny County, suburb of Pittsburgh) is hostile toward the shale industry and continues to display their hostility in court. In September, Monroeville Council voted to enact a super-restrictive seismic testing ordinance (see Monroeville, PA Passes Restrictive Seismic Testing Ordinance). The ordinance was meant to hassle Huntley & Huntley (H&H), which had wanted to conduct seismic testing in two rural areas of the municipality. The contractor doing the seismic work for H&H, Geokinetics, took Monroeville Council to court over their punitive seismic ordinance (see Monroeville Seismic Testing Ordinance Challenged in Court). In the complaint, Geokinetics said, “Monroeville’s intransigence is not motivated by any legitimate concerns for the health and safety of its citizens, but rather by its council’s concerns about November elections.” Claiming seismic testing will “potentially have a profound impact upon the environment,” the solicitor for Monroeville filed a rebuttal on Monday. The municipality is fighting an injunction of their junk seismic ordinance with wild claims that tapping the ground will damage the environment…
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    CONSOL Energy 3Q17: NatGas & Coal Companies to Split Nov 28

    Yesterday CONSOL Energy issued its third quarter 2017 update, along with a date for when the company will split in two–a coal company and a natural gas drilling company. The date is Nov. 28th. As of that date the CONSOL Energy name will belong to the coal company, and CNX Resources will be the new name of the natgas drilling company. According to Nick DeIuliis, CEO of CONSOL today and future CEO of CNX Resources, “Going into year-end, not only will our businesses be separated, but our E&P operations will be growing substantially.” One of the ways they intend to grow is by adding a third drilling rig to the two currently operating. Right now CONSOL is operating a rig in Greene County, PA and another in Monroe County, OH. The original plan was to add a third rig in 2018, but they are “moving it forward some” and will add it this year–somewhere in southwestern PA. During 3Q17 CONSOL drilled 10 wells–six of them in the Marcellus in southwest PA, and four in the Ohio Utica. The company continues to have a flirtation with the Utica–in PA. They have a program to drill dry Utica wells in both Indiana and Greene counties. The company said they plan to bring two Utica wells online in Westmoreland County by the end of the year–close to the first Utica well they drilled two years ago. Production was up slightly in 3Q17, to 101 billion cubic feet equivalent (Bcfe). By comparison, in 3Q16 CONSOL produced 96.4 Bcfe. Below is yesterday’s update, the current slide deck used on the analyst call, and excerpts from the analyst call…
    Read More “CONSOL Energy 3Q17: NatGas & Coal Companies to Split Nov 28”

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    Range Resources’ 10-Year Pipeline Strategy About to Pay Off

    Yesterday MDN received an email from subscriber Sandy R. who lives in southwestern PA. Her land is leased to Range Resources, and she recently read that Range “now has their own pipelines to carry Marcellus gas to better paying markets.” In our response to Sandy, we mentioned that although producers sometimes buy a share of a pipeline, they rarely own pipelines outright. More often they sign long-term (10-20 year) agreements with large midstream companies to reserve capacity along pipelines. We went looking for which pipelines Range might have reserved capacity on that are near where Sandy lives, and found two things that caught our attention. One is a recent statement from Range bragging (our word) about a strategy they put in place 10 years ago to get enough pipeline capacity to move Marcellus gas out of the region to better paying markets. The second thing is we located a list of major northeast pipeline projects with the pipelines Range has reserved capacity along highlighted in yellow. Cool! So below is an article mentioning some of the pipelines Range says will be a game-changer for them in the near-term, followed by that list of pipelines they have reserved capacity along…
    Read More “Range Resources’ 10-Year Pipeline Strategy About to Pay Off”

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    Need for SWPA Construction Workers: Shell Cracker, Other Projects

    An extensive article in the Pittsburgh Business Times calls attention to the developing shortage of qualified construction workers in southwest Pennsylvania. So far the need for workers has been met, but it’s not hard to predict that as Shell ramps up its “vertical construction” (building the buildings to house the cracker) this fall, that shortages will happen–not only for Shell’s project, but for other expansion projects in the area as well. Shell is the anchor. There are dozens (perhaps hundreds) of other businesses that will launch, relocate or expand to take advantage of Shell’s forthcoming supply of cheap plastics. All of those projects will create thousands of jobs in the construction industry. Various colleges and unions have launched training programs to meet the need for electricians, carpenters, iron workers, steamfitters, insulators and sheet metal workers. Question is, will it be enough?…
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    Former NY AG Accuses Current AG of Corruption re Exxon Witch Hunt

    It seems like forever we’ve been telling MDN readers that the Attorney General in the State of New York, Eric Schneiderman, is corrupt. We’ve written dozens of stories about Schneiderman (see them here). Schneiderman has targeted shale companies, pipeline companies, and his biggest gambit to date: ExxonMobil. Schniederman, in collusion with Big Green groups and several other far-left Democrat AGs, launched an investigation into Exxon last year, claiming Exxon “knew” that mythical man-made global warming is real and that their products (oil and gas) contribute to said global warming and that they (Exxon) have hidden their “research” from investors for years. Schneiderman has changed his story several times about why he launched the investigation–and what he’s looking for. He has demanded all sorts of internal documents from Exxon. In return, Exxon has demanded emails and documents from Schneiderman–to expose his collusion with Big Green. Schneiderman has refused such court orders. The man is an out-of-control menace. But it’s one thing for MDN to say it. “There goes Jim again, harping on an issue like Schneiderman, you know how Jim tends to exaggerate.” So if you don’t believe us when we say Schneiderman is corrupt, perhaps you’ll believe a former Attorney General of New York, Dennis Vacco, when he says Schneiderman is corrupt…
    Read More “Former NY AG Accuses Current AG of Corruption re Exxon Witch Hunt”

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    Cabot O&G 3Q17: Marcellus Production 2 Bcf/d, $32M Profit

    Cabot Oil & Gas, one of our favorite Marcellus drillers, released its third quarter 2017 update on Friday. Some of the things we learn from the report and the analyst phone call held by Cabot’s top brass: Production grew another 12% during 3Q17. In the Marcellus, Cabot’s natural gas production averaged just over 2 billion cubic feet per day gross (Bcf/d). If you use U.S. Energy Information Administration numbers from the most recent monthly drilling report, Cabot’s 2 Bcf/d equals 8% of all Marcellus production, and 3.3% of all shale gas production in the U.S! That’s truly amazing, considering it all comes from Susquehanna County (with a couple of wells in neighboring Wyoming County), in northeast PA. Profitability returned in 3Q17 with net income of $32 million, versus a net loss of $16.7 million in 3Q16. In the Marcellus, Cabot drilled and completed 13 net wells and placed online into production 15 net wells. They now have 49 “fourth generation” wells online and producing at an average of 4.4 Bcf per 1,000 feet. They also have 12 “fifth generation” wells online. One of the highlights for Cabot during 3Q17 was the announcement that Williams is now building their $3 billion, 198-mile Atlantic Sunrise natural gas pipeline project. Cabot says when the pipeline is done in mid-2018, Cabot will flow 1 Bcf/d of gas to new markets. Cha ching! New markets equal higher prices and more profitability for the company. Below is the full 3Q17 update, followed by remarks from CEO Dan Dinges made during the analyst call…
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    Southwestern 3Q17: Huge Swing to Profit, Drilled 43 Marc Wells

    Southwestern Energy, one of the biggest drillers in the Marcellus/Utica, delivered their third quarter 2017 update on Friday. Financially speaking the company displayed a remarkable turnaround. In 3Q15 Southwestern lost $1.8 billion! In 3Q16 Southwestern lost $735 million–trimming loses in half. In 3Q17, the company made a profit of $43 million, a swing of more than 3/4 of a billion dollars year over year and a swing of nearly $2 billion if you go back to 2015. Production in the Marcellus/Utica soared in 3Q17, up 26% over last year–to 153 billion cubic feet equivalent (Bcfe). That works out to 1.7 Bcfe per day. Southwestern has a lot of irons in the fire. They’ve drilled their second Utica well (happy with the results). They’re actively drilling in northeast PA, southwest PA and West Virginia. Overall, across the entire Marcellus/Utica patch, Southwestern drilled 43 wells, completed 25 wells and brought online into production 33 wells–in the past three months. The company also began work on a water infrastructure project–in the Panhandle area of West Virginia. The water project is expected to reduce well completion costs by $500,000 per well beginning in late 2018, and lower Southwestern’s break-even gas price by $0.25 per Mcfe. Yeah, a lot of irons. And they own a lot of acreage throughout the play. But the company does a good job in juggling all of the competing priorities. Below is the full 3Q17 update, followed by comments from Southwestern’s senior VP of E&P operations, John Bergeron…
    Read More “Southwestern 3Q17: Huge Swing to Profit, Drilled 43 Marc Wells”

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    EQT CEO Signals Company Likely to Split in Two After Rice Merger

    It looks like all of the agitating and nasty letters and lobbying by corporate raiders has had an effect on EQT. In June, EQT and Rice Energy announced that EQT will buy out and merge in Rice Energy, to create (in EQT) 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). A few weeks later, so-called “activist investor” (i.e. corporate raider) Jana Partners, in league with the Cohen family (Atlas Energy) started a proxy fight to block EQT’s takover/merger with Rice (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). A vote is scheduled for Nov. 9 on the merger deal–expected to pass. From the beginning, Jana has used bullying tactics to try and pressure EQT into abandoning the buyout/merger, and instead split itself into two companies–upstream (i.e. drilling) and midstream (i.e. pipelines). The language thrown around is called “sum of the parts”–as in if EQT splits apart into two separate companies (the parts) the two would be worth more to investors, each company’s stock would preform better, than continuing on as a single company. Other EQT investors, like corporate raider D.E. Shaw Group, have also lobbied for the same split. Under pressure, EQT announced in September that it will move up the timeline to consider such a split (see Under Pressure, EQT Moves Up Timeline to Explore Splitting Co.). Last week EQT issued their third quarter update and held an analyst phone call. In response to a question from an analyst, EQT CEO Steve Schlotterbeck all but said the company will split in two after a special committee formed to explore that option makes it final recommendation…
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    Federal Court Says Chesapeake Royalty Deductions Allowed in Ohio

    The U.S. District Court in Akron, OH has just made a major ruling that affects all Utica landowners and drillers. In 2015, the Ohio Supreme Court accepted a case that will sound familiar to readers of MDN. The case, known as Lutz v. Chesapeake Appalachia, is about whether or not drillers (Chesapeake in this case) are allowed to deduct certain post-production costs from landowner royalty checks. The Ohio Supremes were asked to decide whether Ohio follows the “at the well” rule, which permits the deduction of post-production costs, or if the state follows the “marketable product” rule, which limits the deduction of post-production costs under certain circumstances. The Supremes came down off Mount Olympus in November 2016 to render their verdict (see OH Supreme Court: Royalty Deductions Decided Case-by-Case). The court said, in so many words, “We’re not deciding.” In other words, each royalty case should be litigated individually, case-by-case, in a trial court. There is no one-size-fits-all with respect to deducting expenses from royalty checks. Each case will depend on how the contract is written, and the success of lawyers litigating it. The Supremes refused to tackle the ultimate issue, which is: What does “at the well” really mean? How is it defined? The U.S. District Court in Akron did tackle that issue. The federal court took up the Lutz case and has now defined what is meant by “at the well.” The court’s decision means that Chesapeake Energy (and by extension other drillers) CAN deduct post-production expenses from landowner royalty checks…
    Read More “Federal Court Says Chesapeake Royalty Deductions Allowed in Ohio”

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    EQT 3Q17: Profit $23.3M, 2.3 Bcfe/d Production, Rice Merger on Track

    Yesterday one of the biggest Marcellus/Utica drillers, EQT, issued their third quarter 2017 update. EQT will soon be THE biggest Marcellus/Utica driller, indeed the biggest shale gas producer in the United States (surpassing Chesapeake Energy), once a deal to buy Rice Energy consummates later this year. But what about just EQT in 3Q17? The company reports making a profit of $23.3 million during the quarter, versus losing $8 million in the same quarter last year. EQT produced 205.1 billion cubic feet equivalent (Bcfe) of natural gas during the quarter–which works out to be 2.3 Bcfe per day. Here are some interesting stats from the update: Since EQT began drilling shale wells, they have drilled (called “spud” in the industry) 1,288 shale wells. Of those wells drilled, 1,060 are online, making the company money. Below we have the full update, a copy of the transcript from the analyst phone call, the latest slide deck loaded with charts and graphs, and a bit of amusing analysis about the update/phone call…
    Read More “EQT 3Q17: Profit $23.3M, 2.3 Bcfe/d Production, Rice Merger on Track”

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    Mountain Valley Pipeline: “We Don’t See Any Major Obstacles”

    Yesterday EQT provided an update for both its drilling and midstream operations. On the midstream side, EQT had an interesting comment about it’s biggest project on the books–the Mountain Valley Pipeline (MVP). MVP is a $3.5 billion, 303-mile natural gas pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA. The Federal Energy Regulatory Commission (FERC) issued a final approval for the project two weeks ago (see FERC Approves Atlantic Coast, Mountain Valley Pipeline Projects). However, the West Virginia Dept. of Environmental Protection (WVDEP) which had issued a federal water crossing permit for the project in March, withdrew the permit in September (see Trouble for Mountain Valley Pipe: WV DEP Withdraws Water Permit). The permit process has now restarted in WV. Committed radicals in Virginia are pressuring the state’s Dept. of Environmental Quality to reject the project (see 19 Radicals Arrested for Blocking DEQ Building in Richmond, Va.). Apparently the absence of permits in WV and VA isn’t bothering the brass at EQT because yesterday they said this about the project: “We don’t see any major obstacles”…
    Read More “Mountain Valley Pipeline: “We Don’t See Any Major Obstacles””

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    Doddridge, WV Drilling & Processing is Marcellus-Central

    Doddridge County, WV

    There’s no question that Doddridge County is one of the most active counties in West Virginia, with respect to the Marcellus/Utica industry. Doddridge is home to MarkWest’s Sherwood complex, the single largest gas-processing complex in the Northeast with eight cryogenic processing facilities. Antero Resources, an active (really big) driller in Doddridge, is building a huge wastewater recycling facility in the county. As we reported in September, the tax base in the county has tripled over the past seven years (see Doddridge County, WV Tax Base Triples in 7 Yrs Thx to M-U Shale). Dominion Energy also has a large presence in the county with hundreds of miles of gathering and interstate pipelines. Yes, Doddridge is a happenin’ place when it comes to the Marcellus. We’d call it “Marcellus-Central” in WV…
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    Eureka Midstream Confirms MDN Article on New Ownership

    In late September MDN connected the dots and was the first to tell you that Blue Ridge Mountain Resources, the renamed Magnum Hunter Resources, had sold its ownership stake in Eureka Midstream (formerly Eureka Resources) to South Korean conglomerate SK Group (see Former Magnum Hunter Sells Remaining Stake in Eureka Midstream). Eureka Midstream was once a subsidiary of Magnum Hunter Resources. Magnum Hunter spun Eureka out into a standalone company prior to Magnum Hunter going through bankruptcy. Not long after Magnum Hunter exited bankruptcy, they changed their name to Blue Ridge Mountain Resources (see Magnum Hunter Changes Its Name, Leaves the Bankrupt Past Behind). The newly named Blue Ridge still owned a slice of Eureka–until a few weeks ago. In a press release issued on Tuesday, Eureka Midstream officially acknowledged that the company’s ownership has changed. Morgan Stanley is still a major shareholder in the company, but now SK Group is in the mix too. Whether Blue Ridge sold its shares directly to SK Group, or whether Blue Ridge sold to Morgan Stanley which then turned around and sold to SK, the result is the same. Blue Ridge is gone, SK is here, and Eureka now answers to a different board of directors…
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