Rice Energy Paid $180M for LOLA Energy; CEO Didn’t Want to Sell
In July MDN brought you the news that Rice Energy had bought out the assets of LOLA Energy (see LOLA Energy Sells Out to Rice Energy, Deal Kept Hush-Hush). NGI’s ace reporter Jamison Cocklin was the first to break the news. Since that time, neither Rice nor the company buying Rice, EQT, have talked about it. In fact, they have refused to comment on it. Last week other news sources observed that Rice Energy’s quarterly update contains information about purchasing LOLA Energy (although even the quarterly update doesn’t use the name LOLA). The interesting thing is that the quarterly update pegs the amount. Rice Energy paid $180 million for the assets of LOLA Energy. LOLA was birthed near the end of 2015, by former EQT executives using $250 million of private equity money from Denham Capital (see New Marcellus/Utica Drilling Company is Born – LOLA Energy). Hmmm. Investors put up $250 million, but two years later the company sells for $180 million. We don’t pretend to be high finance experts, but it sure looks to us like a negative ROI on the transaction. Yet we read claims that “everybody who put in money made money.” How does that work?…
Update: see a note in the comments. It appears that although $250M was promised by investors, not all of it is paid up front. Thx to MDN reader Venture Energy for enlightening us!
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Last week Eclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA that drills mostly in Ohio, released their second quarter 2017 update. Eclipse has been on a roll, drilling a series of longest-ever onshore lateral wells–in the world. It began last year when Eclipse drilled what they call their first “super lateral” Utica well in Guernsey County, OH–the Purple Hayes, at 18,500 feet long (see 
Last week Rice Energy turned in their second quarter 2017 update. The company reports during 2Q17 they turned to sales 18 net Marcellus wells with an average lateral length of 9,200 feet and 7 net operated Utica wells with an average lateral length of 10,500 feet. 2Q17 development costs per lateral foot were under budget and averaged $805 in the Marcellus and $1,105 in the Utica for wells drilled and completed. As we report today in our story “Rice Energy Paid $180M for LOLA Energy; CEO Didn’t Want to Sell” the company also announced they paid $180 million for core acreage in PA and WV from “an undisclosed seller”–which we know is LOLA Energy. The Rice boys gave an update on a conference call about 2Q17 and the impending sale to/merger with EQT. However, because of the upcoming merger, they took no questions from analysts. So it was a quick call–done in less than 15 minutes. The Rice 2Q17 update shows the company hit new record production and throughput, significantly reduced operating costs, increased their core acreage position by almost 20,000 net acres and divested a non-core asset in the Barnett Shale. Here’s Rice’s 2Q17 update, beginning with portions of the conference call…
It’s not often these days we get to announce a new driller in the Marcellus/Utica. Today is one of those days. Actually, this company has been around since early 2015, but we’re only now becoming aware of them. Pin Oak Energy Partners, headquartered in Akron, OH, is an exploration and production company engaged in both conventional and unconventional oil and natural gas wells and the operation of associated assets (like pipelines). Pin Oak currently operates 363 wells producing nearly 5.7 MMcfe/d (32% liquids) across more than 32,000 acres in the Marcellus/Utica region. The company is also involved in midstream, field services and operations through its affiliate companies. Pin Oak is on an aggressive acquisition binge of shale AND midstream assets, as well as leasing new acreage. Who is Pin Oak? According to CEO Chris Halvorson, Pin Oak is comprised of folks who were formerly with AB Resources. You may recall that AB Resources built a position in the southwestern “core” of the Marcellus and sold out to Chevron several years ago. Pin Oak is “what’s next” for for the former AB folks. Their target: the Appalachian basin. In July, Pin Oak bought 9,300 acres of leases and 8 Utica wells from EQT in Guernsey, Muskingum, and Columbiana counties (Ohio). Earlier this week Pin Oak announced they’ve purchased another 7,700 acres of leases and 10 Utica wells from an undisclosed seller in Trumbull, Tuscarawas and Mahoning counties (in Ohio) and Mercer, Crawford and Venango counties (in Pennsylvania). Below are two recent announcements. Pin Oak can be summed up in one word: aggressive. Keep a close eye on this company in the coming months and years…
Just when you thought we’d heard the last of “Dimock” and “fracking poisons water” nonsense, the storyline as pushed by mainstream fake news has come roaring back to life–thanks to the Trump Administration. Dimock, Pennsylvania was made famous in Josh Fox’s faux documentary Gasland, which aired on HBO a bizillion times. It was Fox’s 15 minutes of fame. He lied about fracking, painting it as an evil practice that polluted water wells around Dimock. His lies were later exposed by a real documentary called 
Range Resources, the very first driller to sink a Marcellus (back in 2004), released its second quarter 2017 results and held a conference call yesterday to discuss it. Range had a great 2Q17, with record production of close to 2 billion cubic feet per day (up 37% from 2Q16). Range’s Marcellus/Utica gas production was up 9% year over year. Range continues to drill impressive wells. One pad with seven wells drilled in the wet gas Marcellus area saw initial production (IP) rates averaging 29.1 million cubic feet equivalent per day (MMcfe/d), while a set of four wells on another pad in the Marcellus dry gas area say IP rates of 30.0 MMcfe/d. By the end of 2017, Range plans to have drilled and turned in line (TIL) 113 new wells in the Marcellus/Utica, and 56 new wells in the Louisiana Haynesville Shale. Yes, Range continues to ramp up its Haynesville program after buying Memorial Resource for $3.3 billion last year, spending money in Louisiana rather in Pennsylvania–which is a warning to the severance taxers in PA that companies can and will leave the state. On yesterday’s conference call Range CEO Jeff Ventura was asked a question about his views on Marcellus/Utica companies merging, like EQT/Rice. He responded: “If you think about it at a very high level, fewer companies I think in the Basin drilling is probably a positive thing. It’s probably a more pace development, a more prudent and more rational development. So I think that’s a good thing for the macro.” Range CFO Roger Manny hinted that Range may be looking to unload their considerable acreage position in northeastern PA when he responded this way to a question about more asset sales: “So we still have assets in the Mid-Continent that would be deemed non-core. One can make the case that the stuff we have in Northeast Pennsylvania, although it’s high quality, is away from that core blocky stacked pay position we have in the Southwest. So there’s other assets we have that we could sell.” Sounds like Range intends to concentrate on SWPA and LA moving forward…
Shell officials held the fourth (so far) public meeting in Beaver, PA to talk with local residents about the mammoth, $6 billion ethane cracker plant the company is building in their midst. For the most part, the event was uneventful. More than 150 people came out to hear what the petrochemical giant had to say. A table at the event held polyethylene pellets–the stuff that will be manufactured by the plant. Also on the table were a variety of products made from those pellets, including bottles, food packaging and more. One local resident opposed to the plant told a reporter she had to restrain her potty mouth because Shell officials would not answer her questions from the floor–in front of the crowd. Shell (and others in the o&g industry) have wised up. They post representatives at tables who are happy to answer private questions privately, but they don’t throw open the floor to antis who want to bleat and blat in front of an audience. We think it’s a wise precaution. The woman could get her questions answered, and express her unhappiness–but she wanted to do it in front of a crowd and in front of cameras and microphones. No thanks. Organize your own meeting if you want to do that…
Good news if you’re a welder, or interested in a welding career, and you live in southwestern Pennsylvania. Shell needs you. Shell is in the process of building a massive, $6 billion ethane cracker plant in Beaver County, PA (northwest of Pittsburgh). Cracker plants have lots of pipes that need to be welded as the plant goes up. While these jobs are not long-term, as in “the rest of you career,” they’re long enough, likely lasting several years. Steamfitters Local 449 is right now recruiting new apprentices, offering a free 17-week apprentice training program. Local 449 is holding an open house this Saturday…
A recent ruling from Ohio’s Seventh District Court of Appeals has the potential to affect conventional and unconventional (shale) leases. As with most legal rulings, this one is a bit complex. We’ll do our best to summarize. In Ohio, most oil and gas leases have both a primary term and a secondary term. The primary term is that period of time a driller has to locate and drill for oil or gas–typically five years. The secondary term is that period of time (which can last for decades) under which oil and gas is produced from the well. In most lease contracts, as long as the well is producing in “paying quantities” the lease remains in effect. But when the well does not produce in paying quantities, the lease is terminated and the landowner can seek a new lease. Of course, the definition of “paying quantities” is key. In a previous case, the Ohio Supreme Court defined paying quantities. However, the recent Seventh District Court case, Paulus v. Beck Energy Corp., added to, or should we say “refined” the definition provided by the Supreme Court by providing guidance on what items may be considered when determining paying quantities and lack of production in Ohio…
CONSOL Energy released its second quarter 2017 update yesterday, along with a conference call to discuss results in 2Q17 and what’s ahead for the rest of 2017 and even a hint of what’s coming in 2018. Perhaps the biggest news coming from yesterday is that CONSOL had problems with two well pads in the Ohio Utica during last quarter–problems which slowed them down and resulted in a rare decrease in natural gas production year over year. CONSOL production was down 7% due to problems with drilling out frack plugs at two well pads in Monroe County, OH. According to CONSOL COO Tim Dugan, they were “one-time” events and unusual. Dugan said, more or less, CONSOL is experimenting and hey, sometimes the experiments go wrong. But the “operational improvements” the company has made by experimenting have far outweighed any temporary problems like those in Monroe County. CONSOL will spend more and drill more in 2017 than previously forecast–spending $620-$645 million to drill 34 wells this year (which works out to close to $19 million/well on the high end). In 2018, CONSOL will add a third drilling rig, although they’re not yet saying where it will get deployed (PA Marcellus or OH Utica). Here’s the latest from a company that will soon split in two (coal and gas) and rename itself…
Yesterday Gulfport Energy released the company’s second quarter 2017 operational (not financial) update. Gulfport is one of those companies that teases by separating the two. Normally we’d wait and report both together, but there is some interesting news coming from the operational side. Gulfport, which drills mainly in the Utica (but also the SCOOP, in Oklahoma) reports production is through the roof, mainly due to bringing online 29 new Utica wells during 2Q17. Gulfport said in a statement that 2Q17 for the Utica Shale was “the most active quarter from a tie-in line perspective the Company has experienced since entering the play in 2011.” Meaning some (many?) of the wells were already drilled, but they all got completed and hooked up to production in 2Q17. When you add all of Gulfport’s production together across the Utica (the majority) and the SCOOP and tiny bit in Louisiana, the company joined the 1 billion cubic feet per day (Bcf/d) club in 2Q17. If you look only at Utica production, Gulfport averaged 867 million cubic feet (MMcf) per day of production, which is getting close to the 1 Bcf mark–in just the Utica. That is a massive amount of production in the Utica…
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 
In early April of this year the 2017 AAPG (American Association of Petroleum Geologists) Annual Convention & Exhibition was held in Houston, TX. During one of the sessions, William Zagorski and Taylor McClain delivered a talk called “Discovery of the Utica Shale: Update on an Evolving Giant.” The interesting thing is that Zagorski and McClain work for Range Resources–the first driller in the Marcellus, not the Utica. We don’t have a transcript of that talk, but we do have an abstract and the slide deck used during the talk (below). The slide deck is fascinating. It begins with a history of the Utica. Did you know that the earliest Utica discoveries were in Ontario, Canada? And that the earliest drilling done in the play here in the U.S. was done in Upstate New York–near the Watertown area? No, we didn’t realize that either. In fact, a large swath of the Utica Shale layer underlies New York State–what a pity we can’t explore it because of a corrupt dictator by the name of Andrew Cuomo. At any rate, below is the slide deck, with slides outlining where the “wet gas” and “dry gas” zones are in the Utica. And exploring how Ohio became synonymous with the term Utica Shale…
Late last week Cabot Oil & Gas, one of our favorite big Marcellus drillers, released their second quarter 2017 update. And man oh man, was it full of interesting items! Daily natural gas production was up 14% over the same period last year. During 2Q17, Cabot averaged 1.77 billion cubic feet (Bcf) per day of net Marcellus production (2.1 Bcf/d gross operated production). Also during 2Q17, Cabot drilled 13.7 net Marcellus wells, completed 8.0 net wells and placed 6.0 net wells on production. Financially, the company continues to be a cash-making machine, generating positive free cash flow for the fifth consecutive quarter. During the first half of this year, it cost Cabot an average of $2.01 per thousand cubic feet (Mcf) to extract and sell the gas. That’s all expenses. And Cabot made an average of $2.51/Mcf selling that gas. That’s a profit of $0.50/Mcf (or 20% profit). If we could invest $1 and get back $1.20 for every dollar invested, we’d be happy to do that all day long! Cabot is currently operating two drilling rigs and one completion crew in the Marcellus. One of the most interesting (and underreported) parts of the Cabot conference call last Friday is CEO Dan Dinges’ comments on the long-delayed Constitution Pipeline. He said, “we feel more optimistic about this project coming online in the next few years than we did say a year ago.” It seems Cabot (and Williams, the builder of the Constitution) are closely watching what happens with the Millennium Pipeline and Millennium’s request to FERC to override the New York Dept. of Environmental Conservation (DEC), which is blocking the Millennium(and the Constitution). Although the Constitution awaits a court decision from the U.S. Second Circuit Court, they are planning other strategies. Dinges also addressed the PennEast Pipeline project, now stalled in New Jersey. Below is last week’s update, excerpts from the conference call, and the Cabot slide deck full of good information…
My how times change. Just last October EQT indicated that in the not-too-distant future the company would be primarily a Utica Shale driller (see