Southwestern Energy Floats $1.15B in New IOUs to Pay Off Old IOUs
In a pair of announcements made this morning, major Marcellus/Utica driller Southwestern Energy said they are floating $1.15 billion of new IOUs (i.e. “notes”) that are unsecured and due to be repaid in 2026 and 2027. Part of the money will be used to pay off a 2015 loan for $327 million. It appears another part will be used to pay off up to $800 million of notes (a buyback or repurchase of the notes) due in 2020, 2022, and 2025. That is, Southwestern is swapping one form of debt for another. We’ve often observed this behavior in the energy industry–issuing new debt to pay off old debt. Bit of a shell game in our book, but then we’re not high finance people. Apparently this is not an unusual circumstance with large corporations, and nothing to be alarmed about…
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Eureka Midstream, which was once called Eureka Hunter (a subsidiary of Magnum Hunter Resources) has popped back up on the radar screen. Eureka, which operates exclusively in the Marcellus/Utica with ~200 miles of local gathering pipelines, announced yesterday it has expanded its line of credit from $225 million to $400 million, with an “accordion” option to further expand it to $500 million. Last time we wrote about Eureka (in December 2015), parent Magnum Hunter was looking to sell it off (see 
Antero Resources is back in the market looking to raise more money for their Antero Midstream subsidiary. It was only April that Antero floated an initial public offering (IPO) for Antero Midstream with hopes of raising $930 million (see 
As part of a general announcement issued yesterday, CONSOL Energy provided an update on their best guesstimate (called “guidance” in the business) of how much natural gas production the company will achieve in 2017. The latest guidance reveals that production will be LOWER than previously thought. Earlier in the year CONSOL said they should see on the order of 420-440 billion cubic feet equivalent (Bcfe) of natural gas production this year. The number will be more like 405-415 Bcfe. Why the drop? Ceramic beads. When completing a well, a driller fracks the well with small charges, creating cracks (fractures) in the rock. Into those cracks the driller flows water with sand–or alternatively ceramic beads instead of sand. When the water washes out (or gets absorbed into the rock), the sand or ceramic beads stay in place, keeping the rock propped open so gas and oil can escape out into the well. That’s why sand and ceramic beads are called “proppant.” CONSOL, at least for some of its wells, uses ceramic beads. And according to yesterday’s announcement, completion designs using the beads is taking longer than they thought, slowing down progress on completing and bringing wells online. Hence the lower overall output for this year…
British banking powerhouse Barclays is holding its annual Barclays CEO Energy-Power Conference this week in New York City (at the Sheraton in Times Square). Media is not allowed–we’ve tried to score a pass in the past and were turned down flat. The top brass for many different types of energy companies show up to brief investors on the latest goings on within their companies. Some of the companies showing up have a major presence in the Marcellus/Utica, including the largest natural gas producer in the U.S.–Chesapeake Energy. Chessy CEO Doug Lawler provided an update at the Barclays event yesterday. The interesting thing is, Lawler’s talk was recorded and transcribed for all the world to read, on the Seeking Alpha investor’s website. Looks like someone from the media was admitted to the event (sour grapes). Lawler spoke about the company’s accomplishments over the past few years. He also spoke about each of the major shale plays where they operate, including both the Marcellus and Utica. Among Lawler’s statements: He called the M-U, “a very, very strong producing area for the Company.” He went on to say this about the Marcellus: “When you think about the Marcellus, the stability of that asset, the cash flow it generates, it’s world class.” Thanks Doug! We (in the Marcellus) appreciate the compliment. He said the Utica is a “potential growth” area for the company. Below is the portion of Lawler’s remarks where he talks about our region…
This morning Carrizo Oil & Gas announced it has sold “substantially all” of its Utica Shale assets, located primarily in Guernsey County, OH, for a grand total of $62 million. The Carrizo website says the company owns 25,900 acres in the Utica. Do the math, and if they sold all 25,900 acres for $62 million it works out to a relatively low $2,394 per acre–essentially a fire sale compared with lease prices in that area which are double that amount. Once upon a time Carrizo had big plans for the Utica. They (wisely) sold off their northern Utica acreage and retained their southern acreage in 2012 (see 
When a driller sinks a hole in the ground looking for one hydrocarbon–like natural gas–other hydrocarbons also come out of the ground. Sometimes its oil. Sometimes condensate. Sometimes natural gas liquids (NGLs), including ethane, propane, butane, pentane, etc. In northeast and central Pennsylvania where the Marcellus Shale is prolific, most of what comes out of the ground is just methane–or natural gas. However, in the southwestern portion of PA, and in the northern panhandle of WV and on into eastern OH, it’s a different story. They are considered “wet gas” areas because (depending on the county) the wells are prolific NGL producers. Most NGLs, like propane, fetch much higher prices than plain old methane. Typically ethane is the NGL that mostly comes out of the ground, but for many drillers ethane can’t (yet) be sold, so it’s considered a “waste” product, mixed into the methane stream to get rid of it. But that’s changing. There are now pipelines to carry ethane to facilities in both Philadelphia and to a cracker plant in Canada. There’s even a pipeline for ethane (and other NGLs) that goes all the way to the Gulf Coast (ATEX, Appalachia to Texas). Some of the largest Marcellus/Utica drillers now have markets for their NGLs, so they are ramping up production and selling more NGLs. In fact, six of the eight largest M-U drillers increased their NGL production in the second quarter of 2017 compared to 2Q16. Which six increased, and which two decreased NGL production last quarter?…
Earlier this week MDN reported that Shell had settled an action brought by Big Green groups against an air permit issued for their now under construction ethane cracker plant in Beaver County, PA (see 
Yesterday MDN brought you the news that Range Resources and the Pennsylvania Dept. of Environmental Protection (DEP) have officially “settled” something we thought was already settled–alleged methane migration from a well Range drilled in 2011 (see 
An effort by Fayette County, WV to ban injection wells in the county has gone down to a final defeat. In January 2016, three liberal Democrat county commissioners from Fayette County, with the backing and help of the radical WV Mountain Party, voted to ban injection wells in the county (see 
Range Resources and the Pennsylvania Dept. of Environmental Protection (DEP) have officially “settled” something we thought was already settled–alleged methane migration from a well Range drilled in 2011. In June 2015, then-Secretary of the DEP, John Quigley, slapped Range with an $8.9 million fine–the largest such fine ever levied by the DEP (see 
Exactly two years ago, two Big Green groups–the Philadelphia-based Clean Air Council and the Washington, DC-based Environmental Integrity Project (both disgusting litigation factories)–filed a complaint against Shell to block the air quality permit needed to build the $6 billion ethane cracker in Monaca, PA (see 
Exactly one week ago MDN brought you the exclusive news of WHO is selling a bunch of conventional wells and leases (and pipelines) located in West Virginia, Ohio and Virginia to Carbon Natural Resources (see 
As the mighty $6 billion Shell ethane cracker begins construction in Beaver County, PA, plenty of local (and regional) businesses are asking the question: How can we get in on the action? How can we win contracts for goods and services? The Beaver County Chamber of Commerce aimed to help answer that question yesterday at a 3-hour event held at the Club at Shadow Lakes. The “Doing Business in the Era of Shell” seminar drew a crowd of 300+. Some of the speakers were from Louisiana–where they went through a similar process when SASOL built an $11 billion petrochemical project there. Here is some of the wisdom passed along to those who attended…
A radical activist “closely aligned” with the #ExxonKnew campaign to try and bankrupt the oil giant has admitted the campaign is not really about a “cover-up” by Exxon that it “knew” global warming is real and that its oil/gas is contributing. In a bombshell admission, Naomi Oreskes says the #ExxonKnew campaign is actually about punishing Exxon for arguing against specific Big Green climate policies–not about what the company “knew”. That is, she admits it is about removing Exxon’s right to free speech. Shutting them up. Bullying them into silence. This is how free speech dies folks–when the fascist left demands nobody says anything they don’t like. Thankfully, Exxon is sticking up for free speech and our First Amendment rights…