Energy Companies

  • |

    CNX 4Q17 Results: Drilled 4 New Wells, Completed 19 Wells

    CNX Resources, the gas drilling part of what used to be CONSOL Energy (but now is it’s own separate company), issued their fourth quarter 2017 update earlier this week. What a difference a year can make, at least financially! In 4Q16 CNX lost $300 million. In 4Q17 CNX made a $282 million profit. That’s a swing of $582 million–over half a billion dollars. CNX used $103 million of that money to buy back some of the company’s outstanding shares of stock. CNX produced 118.9 billion cubic feet equivalent (Bcfe) of production during 4Q17, which translates to 1.32 Bcfe per day. That’s new record high production for CNX. Production costs fell to $2.17 per thousand cubic feet (Mcf). During most of 4Q17 CNX operated 2 horizontal shale drilling rigs, adding a third rig in late December. The company only drilled four new wells in 4Q17: one dry Utica Shale well in Monroe County, OH; one deep dry Utica Shale well in Greene County, PA; one deep dry Utica Shale well in Indiana County, PA; and one Marcellus Shale well in Greene County, PA. However, they kept the rigs busy by completing 19 wells–DUCs, or Drilled but UnCompleted wells, drilled prior to 4Q17. CNX proved they can walk and chew gum at the same time over the past three months. While they were drilling 4 new wells and completing another 19 wells, during that same time period they (a) split the company in two, separating the gas drilling business from the coal business, (b) bought and closed on Noble’s 50% share of what was CONE Midstream (now CNX Midstream Partners), and (c) bought back $103 million shares of the company’s common stock. Busy beavers! Here’s the full 4Q17 update from CNX Resources…
    Read More “CNX 4Q17 Results: Drilled 4 New Wells, Completed 19 Wells”

  • |

    Eclipse 2017 Update: Drilled 29 Utica Wells Avg 13,600 Ft Long

    Yesterday Eclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA, held an analyst day to share an operational/financial update for 2017. Net production in 2017 averaged 310 million cubic feet per day (nearly a third of a billion cubic feet)–a 36% increase over 2016. Proved reserves at the end of 2017–the gas in the ground that is feasible to extract using today’s technology at today’s prices–was 1.46 trillion cubic feet equivalent, more than double the end of 2016. In 2017 Eclipse drilled 29 wells with an astounding lateral (the horizontal part of the well) length averaging 13,600 feet! Eight of those wells have laterals OVER 19,000 feet!! That’s longer than 3.6 miles!!! Eclipse is the reigning champ/record-holder for drilling the longest onshore lateral in the WORLD. Below is yesterday’s 2017 update along with a whopping 84-page PowerPoint used to discuss the update, chock-full of great charts and graphs…
    Read More “Eclipse 2017 Update: Drilled 29 Utica Wells Avg 13,600 Ft Long”

  • | | | | | | | |

    Dominion Cove Point Begins Producing LNG – for Shell

    On Monday, Dominion Energy CEO Tom Farrell reported that the company’s Lusby, Maryland Cove Point LNG export facility will become operational and begin to export LNG in “early March” (see Dominion CEO Says Cove Point LNG Operational in “Early March”). Then yesterday, Dominion issued a press release to say Cove Point has now (as of this week) begun producing LNG! What gives? This “we’re now producing LNG” is part of the commissioning process which began back in December (see Dominion Cove Point LNG Export – Dress Rehearsal Begins). Feed gas is imported and used for testing purposes, and is the final step before the plant goes online into full production. The feed gas came from Shell (sourced from Nigeria), and Shell will take delivery of the LNG that results. When the initial commissioning is done, Marcellus/Utica gas will then begin flowing to the plant and the LNG produced will begin shipping (by “early March”) to Japan and India…
    Read More “Dominion Cove Point Begins Producing LNG – for Shell”

  • | | |

    Blue Ridge Mountain Res. Forms JV to Raise $92M for Drilling in OH

    In December 2015 Marcellus/Utica driller Magnum Hunter Resources filed for bankruptcy (see Sad Day: Magnum Hunter Files for Chapter 11 Bankruptcy). Five short months later, in May 2016, Magnum Hunter emerged from bankruptcy–without CEO Gary Evans (see Magnum Hunter Emerges from Bankruptcy with CEO Gary Evans Gone). Apparently the new owners of the company (the former debt holders converted into equity holders) didn’t want Evans running the company. So Evans departed to start a new drilling company not focused on the M-U. In January 2017, just one year ago, Magnum Hunter changed its name to Blue Ridge Mountain Resources (see Magnum Hunter Changes Its Name, Leaves the Bankrupt Past Behind). Since that time the only news we’ve heard about the former Magnum Hunter is that they sold their interest in Eureka Midstream (see Eureka Midstream Confirms MDN Article on New Ownership). That is, until now. Earlier this week, Blue Ridge announced it sold a “non-operating interest” in 21,000 undeveloped Marcellus/Utica acres to an undisclosed investor for $56 million, AND got the undisclosed investor to pony up another $36 million (total deal of $92 million) which Blue Ridge will use to fund an ongoing 2-rig drilling program in southeastern Ohio…
    Read More “Blue Ridge Mountain Res. Forms JV to Raise $92M for Drilling in OH”

  • | | |

    The Great Chesapeake Massacre III: Lawler Fires Another 400 People

    2/2/18 Update: Have we been unfair in our characterization of Doug Lawler? Perhaps. We don’t know Doug–have never met him. He started firing masses of people at Chessy before the downturn hit. He arguably inherited a troubled company. We intensely dislike Carl Ichan and other corporate raiders, so we attributed Doug’s actions to Carl’s influence. MDN received a very nice note from a subscriber who personally knows Doug Lawler and has a different perspective to offer, which we’re happy to pass along. He said: “Jim, regarding your article on CHK, Doug Lawler probably learned a lot from Carl Icahn, but knowing Doug the way I do, I can assure you it hurt him to release people at his home office or other areas of operations. He was left with a mess and will take him years to clean it up. Hopefully with oil & gas prices stabilizing and going up, CHK will become profitable.” We thank our subscriber for sending that along!

    Just like those 80s slasher movies that did so well at the box office that studios kept making more of them (Friday the 13th, Nightmare on Elm Street, Texas Chainsaw Massacre, etc.), Doug “the ax” Lawler, CEO of Chesapeake Energy, is back with part III of mass firings at the company. In October 2013 when Lawler was newly appointed as CEO (by Chesapeake’s board, which was under the influence of corporate raider Carl Ichan), he swung his ax and fired 800 people in one gory episode, promising that was the last of it (see The Great Chesapeake Massacre: Lawler Fires 800 People in One Day). It worked so well the first time, Lawler came back with a sequel two years later (see The Great Chesapeake Massacre II: Lawler Fires Another 740 People). It’s now a little over two years since the sequel, and Lawler is back for a third time, firing another round of people–400 this time, 13% of the workforce. The latest victims worked at HQ in Oklahoma City. When corporate raiders take control of a company, as Icahn did at Chesapeake, they pressure management to fire people and sell assets–in a bid to make the stock price jump higher so they can sell their shares of stock at a higher price, pocketing the profit. It’s disgusting to ruin people’s lives and pretend it’s “just business.” At any rate, Icahn is long gone from Chessy, but Lawler learned his lessons well by sitting at the feet of the master. This is rich: Lawler said because the company has sold so many of its assets, it no longer needs the people. Kind of a vicious cycle. Fire people, sell assets. Fire more people, sell more assets. Where does it end? Pretty soon Lawler will be able to cater the company’s office Christmas party with a personal pan pizza from Pizza Hut…
    Read More “The Great Chesapeake Massacre III: Lawler Fires Another 400 People”

  • | | |

    Gulfport Energy Continues Focus on Utica in 2018, No Borrowing

    On Monday Gulfport Energy (drills mainly in the Utica but also in Oklahoma and Louisiana) issued it’s fourth quarter and full year 2017 results, along with a preview of what they expect to do in 2018. Gulfport has drilled the second highest number of Utica wells in Ohio, second only to Chesapeake Energy. Gulfport’s production in 4Q17 averaged 1.26 billion cubic feet per day equivalent, up 5% from 3Q17 and up a whopping 61% from 4Q16. Gulfport brought 15 Utica wells online in 4Q17. What’s ahead in 2018? The company will spend $770-$835 million in 2018. Astonishingly, Gulfport will not borrow to spend that kind of cash! Their spending will be 100% funded by the cash flow they generate from selling gas and oil and NGLs. Gulfport figures production will average somewhere around 15-19% more in 2018 than in 2017. Using an “average of 2.5 rigs” (how does that work?), Gulfport will drill 36-40 new Utica wells this year with an average lateral length of 11,200 feet. Gulfport plans to bring online 33-37 Utica wells with an average lateral length of 8,000 feet. Here’s the update of what happened in 2017, and what to expect in 2018, for one of the most important players in the Ohio Utica…
    Read More “Gulfport Energy Continues Focus on Utica in 2018, No Borrowing”

  • | | | | |

    Impressive 2018 Marcellus Growth Not So Impressive Because of DUCs?

    Our lead story today is about Gulfport Energy which highlights some exciting news: This year (in 2018) Gulfport will fund their entire drilling budget out of the cash flow the company generates from selling gas/oil/NGLs (see Gulfport Energy Continues Focus on Utica for 2018, No Borrowing). Thing is, Gulfport isn’t the only Marcellus/Utica driller to advertise the fact that this year they are “living within their means” and not borrowing. Others include Range Resources, EQT and Antero Resources. Wow! We’re finally profitable!! Or are we? MDN spotted some analysis by a hedge fund manager. Writing on the Seeking Alpha investor’s website, Josh Young says (in our words) “hold on a minute” with respect to M-U drillers appearing to be able to grow production without borrowing. Why is Josh not convinced with this good news? Because when you dig deeper into the numbers, you find that “organic growth within cash flow is further from reach” because drillers are using DUCs to spend less on drilling, and grow production, than they otherwise would be. A DUC is a Drilled but UnCompleted well. Many times drillers will drill the initial hole in the ground, but then not “complete” (or frack) the well. Why do that? For a variety of reasons. The biggest reason is usually because the commodity price of gas (or oil, depending on the well) is not favorable. Rather than lose the lease (an expensive proposition), drillers will begin the process by drilling, and then leaving, the well, returning later to complete it when prices go up again. Josh’s thesis is that by using DUC inventory drillers aren’t really funding the entire budget from current year cash flow, because some of the money was spent in a previous year to drill the well. They are, in essence, still borrowing–from a different year. Josh estimates an average of 20% of the “new” wells coming online are DUCs and not truly new wells funded by current year dollars–meaning these companies aren’t as “profitable” as they may seem. Does he have a point? Is it all just financial mumbo jumbo? You decide…
    Read More “Impressive 2018 Marcellus Growth Not So Impressive Because of DUCs?”

  • |

    Antero Res. Tells Stockholders: We’re Working on Low Share Price

    Antero’s stock price performance last 12 months – click for larger version

    We spotted a press release from Antero Resources which says, in essence, “We’re working on it.” What are they working on? Antero’s leadership is working on a way to boost the stock price. The press release begins this way: “Antero Resources announced today that the Company and its Board of Directors are working with its financial and legal advisors to evaluate various potential measures to address the discount in trading value of Antero’s stock relative to some of the premier U.S. large capitalization upstream independents that have a similar profile in terms of leverage, capital efficiency, production growth and free cash flow generation.” Translation: We know our stock price isn’t has high as other companies in our league. We’re working on ways to fix it.” What might those ways be? They don’t say. It has been our observation that companies with a perceived “discount in trading value” are often targets of corporate raiders, aka “activist investors,” who buy up 6-7% of a company’s outstanding shares and proceed to bully the company into laying off people and selling assets in an effort to make the stock price pop. We suspect Antero is positioning itself to fend off such an effort. You know, “He who gets there with the bad news first, wins” kind of thing. Antero is admitting there’s a problem and that they’re working on it (and they don’t need the help of someone like Carl Ichan, thank you very much)…
    Read More “Antero Res. Tells Stockholders: We’re Working on Low Share Price”

  • | | | | | | | |

    Landowners Who Negotiate with Shell Ethane Pipeline Get More $

    In February 2016, MDN exclusively broke the news that Shell had begun to sign leases with landowners for a 97-mile ethane pipeline (two branches) to feed their mighty cracker plant (see Exclusive: Shell Leasing Land for 2 Pipelines to PA Cracker Plant). Since that time we’ve tracked any news we could find that reveals what Shell is paying landowners in Beaver County (and elsewhere) for the right to run the ethane pipeline (called the Falcon Ethane Pipeline) across their land. So far, we’ve seen rates as high as $75 per foot, and as low as $43 per foot. We just spotted another mention. An extensive (and well written) article in the Pittsburgh Post-Gazette interviews a number of landowners who have dealt with Shell, signing leases to allow the ethane pipeline across their land. The article opens with the story of a couple and their attempt to negotiate with Shell. If you play too hard to catch, Shell might route the pipeline around your land, onto your neighbor’s land instead. But sign too early, and maybe you’re leaving money on the table. It’s a fine line–causing stress and strain. In reading the article we really perked up when we read about Ed Bilik, founder of Greensburg-based Western Pennsylvania Gas Leasing Consultants. Ed was the first guy to sniff out the eventual path of the pipeline–which he did by knocking on doors to see where Shell landmen had already visited. Bilik eventually got 41 landowners to sign with him, allowing Bilik to help them with negotiations. According to Bilik, “Shell started out offering $40 per foot for the right to lay two pipelines.” Bilik would not say how much his clients eventually got from Shell, but he did say this: “We exceeded that [amount] multiple times,” meaning his clients got a whole lot more than $40/foot when they signed. Here’s a portion of this enlightening article…
    Read More “Landowners Who Negotiate with Shell Ethane Pipeline Get More $”

  • | | | | |

    Range Res. 2018 Budget & 5 Yr Outlook: Focus on SWPA Marcellus

    Yesterday Range Resources released a pair of press releases. One outlines a high level overview for what the company will spend in 2018 and beyond, for the next five years. The other release trumpets Range’s “proved reserves.” As for 2018, Range says they are reducing the amount of money they will spend to drill this year versus what they spent last year. Range previously said they would spend $1.15 billion this year. That’s now been reduced to $941 million. Last year Range spent $1.27 billion, so this year’s spending is down 26% over last year. That’s a pretty hefty decrease. The good news is that Range will spend 80% of this year’s budget on drilling in the Marcellus, mainly in southwestern Pennsylvania. Even though Range will spend and drill less this year, they predict production will grow another 25%. As for the 5-year outlook, Range says almost all growth will come in the Marcellus (not the Louisiana Haynesville, their other drilling location). Range still has some 3,200 locations where they can drill new wells. Range CEO Jeff Ventura says shale has entered a “new era” of shale development where companies (like Range) have “captured the most prolific resources” and will now switch to focus on returns for shareholders. Translation: We won’t be drilling as much as we did in the past so we can concentrate on bottom line profitability. Which explains why Range is spending less this year than last. In the release Range calls the Marcellus its “flagship asset” and clearly signals the company will keep its focus here, in our region. As for proved reserves (how much gas and oil is in the ground, retrievable with today’s technology and at today’s costs), Range says proved reserves as of December 31 increased by 26% from the prior-year, now at 15.3 trillion cubic feet equivalent (Tcfe). That’s alotta gas! We have the Range announcements below, along with an updated PowerPoint slide deck chocked full of useful information…
    Read More “Range Res. 2018 Budget & 5 Yr Outlook: Focus on SWPA Marcellus”

  • | | | | | |

    PA AG Not Backing Down re Chesapeake Energy Royalty Lawsuit

    At the end of last year Chesapeake Energy offered a $30 million olive branch to Pennsylvania landowners to settle claims the company had screwed them out of royalty money by artificially inflating post-production costs in an elaborate scheme to pocket more money at landowners’ expense (see Chesapeake Agrees to $30M Royalty Settlement for PA Landowners). Chesapeake’s proffered deal would give the average PA leaseholder (some 14,000 of them) a one-time $2,140 payment–adjusted up or down for the size of their acreage. Frankly, it’s chump change. The big concession by Chesapeake in the proposed deal is that it gives landowners the right to reset the terms of their leases going forward. The catch is that Chesapeake won’t pull the trigger on the deal unless/until PA’s Attorney General, who has an ongoing, separate lawsuit filed against Chesapeake over the same issue, settles as well. PA AG Josh Shapiro has fired back saying he will not cave to Chesapeake’s “pressure tactic” and settle. PA landowners are caught in the middle. Some of them want the Chesapeake $30M chump change deal saying a bird in the hand is better than two in the bush. That is, the AG may eventually lose his case–and it will take years to play out. Why not take the money and run now, especially if we can reset the lease terms to prevent any more gouging by Chesapeake? But other landowners, including National Association of Royalty Owners (PA Chapter) President Jackie Root say PA landowners “deserve better” than the deal offered by Chesapeake. Here’s the latest in the royalty wars…
    Read More “PA AG Not Backing Down re Chesapeake Energy Royalty Lawsuit”

  • | | | | | |

    PA Supremes to Consider EQT Request to Drill Well in Jefferson Hills

    In December 2015 MDN told you about EQT’s application to drill a single shale well in Jefferson Hills (Allegheny County), PA (see Jefferson Hills, PA Antis Oppose EQT Well Near Future School Site). The well would be drilled “near” where a new school is due to be built, which generated vigorous local opposition. As part of the a conditional use permit, EQT agreed to (a) not use Borough roads during construction, (b) use a pipeline from a local water company instead of trucks for the water needed to drill and frack, greatly reducing the amount of truck traffic, (c) pledged the project would not impact local streams and wetlands, (d) comply with local lighting regulations, and (e) install sound walls if needed. In other words, EQT bent backwards, forwards, sideways, jumped through numerous hoops and turned itself inside out to comply with requests from the town. The Borough Planning Commission unanimously approved the conditional use permit request. But then the town, bowing to pressure from residents, rejected the request in December 2015, saying the proposed project would endanger local health and the environment. EQT sued and won in the Court of Common Pleas of Allegheny County in June 2016. Jefferson Hills appealed and in May 2017, the Commonwealth Court of Pennsylvania upheld the EQT verdict saying the town arbitrarily rejected the permit and EQT should be allowed to drill (see PA Appeals Court Clears Way for EQT to Drill Jefferson Hills Well). Jefferson Hills appealed it all the way the PA Supreme Court and on Monday the court agreed to hear the case…
    Read More “PA Supremes to Consider EQT Request to Drill Well in Jefferson Hills”

  • | | |

    Flaring Marcellus Wells in SWPA Light Up Night Sky, 911 Called

    Residents in western Lawrence County, PA had a bit of a scare when they noticed a red glow in the sky Saturday night. They took to social media to speculate what it might be. Some called 911 to report what may be a big fire. Turns out it was flaring from a couple of Hilcorp Energy Marcellus Shale wells. The wells are already drilled and producing, so why did they flare? Flaring–or burning of natural gas at the wellhead, is a safety precaution to prevent explosions from too much pressure in the well. A Hilcorp rep said what likely happened is that compressors that compress and send the gas down the pipeline sometimes get moisture in them, and with the freezing cold temperatures, that moisture can freeze and lock up the compressors. Instead of gas building up to dangerous pressures because it can’t flow on down the pipe, the automatic flaring mechanism kicked in to burn off some of the gas–creating the red glow in the night sky. It’s good to see technology–especially safety technology–working as designed…
    Read More “Flaring Marcellus Wells in SWPA Light Up Night Sky, 911 Called”

  • | | | | | | |

    PA DEP Invites Public Comment on Shell 60-Mile Ethane Pipeline

    Falcon Ethane Pipeline proposed route – click for larger version

    The Pennsylvania Dept. of Environmental Protection (DEP) is taking a close look at Shell’s proposal to build an ethane pipeline to feed the $6 billion cracker plant now under construction in Beaver County, PA. In fact, the DEP wants public input on the ethane pipeline–by Feb. 20th. Brief history: In February 2016, MDN brought you exclusive news that Shell had begun approaching landowners in Beaver County to get them to sign easements for two ethane pipelines to feed the mighty cracker plant they plan to build in the county (see Exclusive: Shell Leasing Land for 2 Pipelines to PA Cracker Plant). At that time Shell had still not fully committed to building the cracker–something they finally did in June 2016 (see Breaking: Shell Pulls the Trigger, PA Ethane Cracker is a Go!). NGI’s Shale Daily broke a story in August 2016 that shed new light on the project–news that Shell is working on an ethane “pipeline system” with two “legs” to feed the cracker, confirming the tip we received in February (see Shell Working on 94-Mile Ethane Pipeline to Feed PA Cracker). Last October Shell filed an application with the PA DEP for the PA portions of the pipeline (see Shell Files PA Application for Ethane Pipe to Feed Cracker Plant). The DEP is now considering those portions–some 60 miles running through the state. Here’s how you can comment on/support the project…
    Read More “PA DEP Invites Public Comment on Shell 60-Mile Ethane Pipeline”

  • |

    New Marc/Utica Driller Salt Fork Resources Gets Upsized Investment

    It’s not often MDN gets to write about a brand new driller (i.e. exploration & production company) arriving on the scene in the Marcellus/Utica region. This is one of those happy days! Salt Fork Resources, started in March 2017 and headquartered in Canonsburg, PA, was started by three men with extensive experience in the Appalachian region. The company was/is backed by Riverstone Holdings, an investment firm focused on power and energy. The reason that Salt Fork appeared on our radar screen is because of a press release from Riverstone announcing they have “upsized” their backing of Salt Fork–that is, they are giving Salt Fork more money to lease more acreage and drill. How much money? The release does not say. We do know that Salt Fork has, so far, amassed a very respectable 20,000 acres “in the core of the dry gas window of the Utica Shale.” We also know, from their website, that Salt Fork is targeting the Utica in both Ohio and West Virginia. Salt Fork is a portfolio company of Riverstone (i.e. Riverstone owns it). The money Riverstone is giving to Salt Fork is equity, not debt–meaning Salt Fork hasn’t had to borrow a dime, a minor miracle for any oil and gas company. Does Riverstone sound familiar? It should. We’ve previously written about their other Marcellus/Utica region investments a number of times (see our Riverstone stories here). Let’s roll out the red carpet for Riverstone’s Salt Fork Resources and welcome this new company to the club!…
    Read More “New Marc/Utica Driller Salt Fork Resources Gets Upsized Investment”

  • | | | | | | |

    Mercer County, PA Gears Up to Benefit from Shell Cracker

    “One word: Plastics” (The Graduate) – Mercer County, which is two counties and 50 miles north of Beaver County (located along the border with Ohio) is making plans now for how their county to grab some of the “low hanging fruit” that will appear when the Shell ethane cracker in Beaver County goes online in the early 2020s. You read that right. NOW is the time for counties in the region to make plans and set those plans in motion to attract some of the numerous businesses that will set up shop to be close to the cracker plant. Mercer County officials recently attended a forum where the topic was ancillary development that will happen because of the cracker plant. What is the low hanging fruit that will magically appear with the cracker? Manufacturing–and the jobs that go with it. In particular, manufacturing and jobs in the plastics industry. A regional trade organization–Penn-Northwest Development Corp.–is planning to hit the plastics industry trade shows this year. Penn-Northwest is working with counties like Mercer to help them market themselves to plastics manufacturers…
    Read More “Mercer County, PA Gears Up to Benefit from Shell Cracker”