Energy Companies

Energy Companies | Gulfport Energy

Gulfport CFO Leaves Suddenly to “Pursue an External Opportunity”
January 3, 2017January 3, 2017

In the closing days of 2016, Gulfport Energy, an Oklahoma City-based independent oil and natural gas exploration and production company (“driller”) that is a “top 5” driller in the Ohio Utica Shale, announced that its chief financial officer (CFO) has up and left. Just like that. Aaron Gaydosik, Gulfport CFO, is leaving “to pursue an external opportunity.” While defections in the top ranks of big drillers like Gulfport are not unheard of, they do give investors the jitters. And it makes one wonder what’s going on at the company, given that Gaydosik had only been in that job for the past 2.5 years. Was he pushed out? Did he find a better gig? Inquiring minds want to know…
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Energy Companies | EQT Corp | Industrywide Issues | Lease & Royalty Payments | Litigation | Statewide WV | West Virginia

WV Supreme Court Rules EQT Can’t Deduct P-P Costs from Royalties
December 23, 2016December 23, 2016

A significant court case was decided last week in West Virginia. The WV Supreme Court ruled in a gas royalty case that not only has significant implications for WV landowners (and drillers), but also may reverberate across the border into neighboring Pennsylvania where the same issue has been a long and contentious fight–what we call a civil war between landowners and drillers. Like all such cases, this one is complicated and not easy to summarize, but we’ll do our best. The WV Supremes have just handed down a decision that says, in essence, that EQT (and by extension other drillers) cannot deduct post-production expenses when calculating royalty payments to landowners. Specifically, the justices in their ruling said that drillers can “not deduct from that (royalty) amount any expenses that have been incurred in gathering, transporting or treating the oil or gas after it has been initially extracted, any sums attributable to a loss or beneficial use of volume beyond that initially measured or any other costs that may be characterized as post-production.” Yikes! That is fantastic news for landowners who now have a case to recoup money deducted from their checks–and really bad news for drillers who will owe that money. The big winners are, of course, the lawyers who will litigate this for years to come. However, hold on to those briefs–EQT has just appealed the decision, asking the WV Supreme Court to reconsider their decision, gently chiding the court for erring in their interpretation of state law on royalties…

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Energy Companies | Stone Energy

Stone Energy Says Prepackaged Bankruptcy Plan on Way to Adoption
December 23, 2016December 23, 2016

Yesterday MDN updated you on the situation with Stone Energy and their filing for bankruptcy (see Stone Energy’s Largest Shareholder Caves, Agrees to Bankruptcy). As we reported, Stone’s largest shareholder, who stands to take the biggest screwing under a bankruptcy plan, decided to negotiate a truce and allow the bankruptcy to proceed. Immediately Stone filed and then issued an update. The first court date is always critical, and according to Stone, it went well with the bankruptcy court ruling that Stone can pretty much do what it filed to do…
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Chesapeake Energy | Energy Companies | Industrywide Issues | Regulation

Trump Taps Corp Raider Ichan as Adviser on Regulatory Matters
December 23, 2016December 23, 2016

Carl Ichan – corporate raider and living fossil

You know we find corporate raider Carl Icahn detestable. Corporate raiders buy just enough stock in a company to throw their weight around. Raiders pressure management to offload important assets, and fire scads of people, all in an attempt to make the company “meaner and leaner” which is a euphemism for boosting the price of the stock so they can turn around and sell that stock and line their own raider pockets–as Ichan did with Chesapeake Energy, Cheniere Energy and others. We find it disgusting. You also know we have, from the beginning, supported Donald Trump for the presidency. We’ve made no secret about it. So we found it somewhat distressing that yesterday the Trump team announced that Icahn will be an unofficial adviser to Trump “on matters of regulatory reform.” Trump and Icahn have been friends for years, which explains the pick. Look, no one is perfect. We’re not ready to dump Trump. We’re sure this won’t be the last time we disagree with The Donald. We’re just expressing our displeasure in Trump’s pick of the odious fossil Icahn to advise him. The problem is, Ichan will advise Trump on reducing regulations that have the potential to personally benefit Ichan’s own investments. We secretly hope this is the one time biased mainstream fake media pressures Trump enough to change his mind…
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Alta Resources | Anadarko | Energy Companies | Lycoming County | Pennsylvania

Anadarko Sells All Marcellus Assets for $1.24B to Alta Resources
December 22, 2016December 22, 2016

One of the country’s largest oil drillers is calling it quits in the Marcellus natural gas play. Earlier today Anadarko announced it has cut a deal to sell all of its Marcellus acreage and wells to Alta Resources for $1.24 billion. The deal is big, including 195,000 acres and daily production from wells that averages 470 million cubic feet per day (MMcf/d). That’s the news you’ll get everywhere else. Here’s the part of the story you’ll read exclusively here on MDN: Anadarko has a partner in the Marcellus–Mitsui–which is also selling their interest in the PA Marcellus to Alta, for $207 million. Also, background on the deal you won’t read anywhere else: Alta was an early investor in the Marcellus, but sold out all of their acreage in 2010. Now they’re back. Anadarko and Mitsui sold for far less than the acreage was valued at in 2010–we’d call it getting taken to the cleaners. MDN sorts it all out below…
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Energy Companies | Stone Energy

Stone Energy’s Largest Shareholder Caves, Agrees to Bankruptcy
December 22, 2016December 22, 2016

Stone Energy, an independent oil and natural gas exploration and production company (E&P) headquartered in Lafayette, Louisiana drills mainly in the Gulf of Mexico but also has (or rather had) a presence in the Marcellus/Utica Shale with 90,000 acres of leases. In October Stone announced (a) it is selling its Marcellus/Utica assets to Tug Hill for $350 million, and (b) the company is preparing to file for bankruptcy (see Stone Energy Enters Bankruptcy, Sells Marc/Utica Assets for $350M). Stone needs the bankruptcy court’s permission to sell the acreage. However, Stone’s bankruptcy plans are facing a challenge from it’s biggest shareholder. Investor Thomas Satterfield, who now owns 9.9% of the company’s stock, doesn’t want to see that stock turned into toilet paper by handing the keys over to debtholders, as is the typical route E&Ps have taken with bankruptcy filings over the past year or so (see Stone Energy’s Largest Shareholder Opposes Current Bankruptcy Plan). Last week the company announced it is pushing ahead with its plan to file for bankruptcy including seeking permission to sell its Marcellus/Utica assets, over the objections of Satterfield who said he would see them in court (see Stone Energy Files for Bankruptcy, Largest Shareholder Opposes). It’s been a fast and furious week. Satterfield has struck a bargain with Stone, figuring half a loaf is better than no bread at all…
Read More “Stone Energy’s Largest Shareholder Caves, Agrees to Bankruptcy”
Beaver County | Energy Companies | Ethane | Industrywide Issues | Pennsylvania | Processing Plants | Shell | Statewide PA | Wastewater

Shell Cracker Wastewater Discharge Becomes an Issue
December 22, 2016December 22, 2016

Environmentalists are accusing Shell of using a loophole to discharge wastewater at their future ethane cracker that will exceed state limits for TDS (total dissolved solids). The issue may sound familiar. In 2011 Pennsylvania “requested” that municipal sewage treatment plants without specially outfitted equipment stop accepting and processing Marcellus wastewater (see PA DEP, Marcellus Shale Coalition Admit Drilling Wastewater Likely Contaminating Drinking Water). Almost immediately, it stopped, which was a good thing for the environment. The problem with shale wastewater (i.e. produced water) is its high TDS content, including bromide. When bromide combines with chlorine used in wastewater treatment plants, it combines to produce trihalomethanes, which (in some studies) indicate increased levels of cancer in humans (see MDN In-depth: Marcellus Wastewater Discharges via Municipal Sewage Treatment Plants into PA Waterways). Nasty stuff. While the Shell ethane cracker will not process shale wastewater, it will produce water with TDS as part of its process. Shell plans to use a permit from the plant it is replacing, an old zinc smelting plant, to discharge a certain volume of water with TDS. Environmentalists say the volume they will discharge is too much and if the plant were not using a pre-existing permit (swapping ethane cracking for zinc smelting) the volume of wastewater they want to discharge would not be approved. That is, Shell is leveraging a loophole, a permit grandfathered in, and the volume of wastewater it will discharge may endanger humans downriver. Legit? Not legit?…
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Energy Companies | Rice Energy

Rice Energy Board Member Exits to Become CEO of Tapstone Energy
December 21, 2016December 21, 2016

Steve Dixon

Steven Dixon, who had been a member of the board of directors at Rice Energy since 2014, has resigned from the Rice board in order to become CEO of Tapstone Energy, which drills in shale plays in Oklahoma, Texas and Kansas. Dixon is a geologist by training. He worked at Chesapeake Energy for a number of years. In 2006 Dixon was named chief operating officer (COO) in 2006. He was upgraded to vice president of operations and geoscience in 2010. And after Carl Icahn booted Aubrey McClendon from the company he had co-founded, Dixon was acting CEO of the mighty Chesapeake for a period of time in 2013. While a single board member departing won’t negatively affect a company like Rice (financially), we’re sure his presence and deep experience will be missed. Here’s the announcements from both Rice about Dixon leaving, and Tapstone about Dixon arriving…
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1st NRG | Energy Companies | Utica Shale

1st NRG Pops Back Up 2 Years Later – Still in Love with the Utica
December 21, 2016December 21, 2016

Going all the way back to 2012, MDN has chronicled, from time to time, the myriad press releases issued by a small driller headquartered in Denver called 1st NRG Corp. They’ve been saying since that time that they really really really really want to drill in the Utica Shale–on a small 7,000 acre leasehold they own (see our stories about 1st NRG here). Ever hear of the boy who cried wolf? Eventually they did participate in drilling a Utica well, in 2014 (see 1st NRG Begins Pushing Dirt on First Utica Well Pad). That was the last time we wrote about 1st NRG–until today. Turns out the well they drilled, which was supposed to be a horizontal Utica “test” well, turned into a vertical Beekmantown Dolomite well. But 1st NRG hasn’t given up. In a “corporate update 2016” press release issued yesterday, the company said “these are exciting times” for the company, and that they are on a “growth trajectory for 2017.” What has the company so jazzed? They expect that Dolomite well to get hooked up to production in January. Although they still love the Utica, the company will focus on the reviving activity in the Clabaugh Ranch field in Wyoming in 1Q17 (coal bed methane, not shale drilling). Finally, the company is working on the purchase of a 364-mile natural gas gathering pipeline system, which they “hope” to close in 1Q17. The company cagily does not identify where the gathering system is located. Here’s the recent update from 1st NRG, along with a slightly older announcement about the pipeline gathering system they “hope” to buy…
Read More “1st NRG Pops Back Up 2 Years Later – Still in Love with the Utica”
Eclipse Resources | Energy Companies | Monroe County | Noble County | Ohio

Eclipse Sells 9,900 “Non-Core” Acres in OH for $6,444/Acre
December 20, 2016December 20, 2016

Eclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA that drills mostly in Ohio, announced yesterday they sold 9,900 net acres in eastern Noble County and western Monroe County, OH for $63.8 million to an undisclosed buyer. That works out to be $6,444 per acre. The assets are in areas that are (currently) undeveloped, according to the company, and not in the “core” of where Eclipse wants to drill. Here’s the company announcement…
Read More “Eclipse Sells 9,900 “Non-Core” Acres in OH for $6,444/Acre”
Eclipse Resources | Energy Companies | Flat Rock Development | Gulfport Energy | Lease & Royalty Payments | Ohio | Statewide OH

OH Wayne National Forest – List of Auction Winners
December 20, 2016January 6, 2017

As we previously noted, last week the Bureau of Land Management (BLM) proceeded with an online auction for BLM-controlled land in Ohio’s Wayne National Forest (see BLM Auction Leases 17 Parcels, 719 Acres in OH Wayne Natl Forest). The BLM plan was to auction 33 parcels totaling 1,600 acres. As it turns out, only 17 parcels totaling 719 acres actually got auctioned. At the last minute the BLM withdrew 881 acres (16 parcels) because there are remaining issues with ownership title of the mineral rights. Who purchased and how much? Just four drillers won the bids, which totaled $1.7 million. Three of the four have active drilling programs in the Utica Shale. Here is who won, and how much they paid (by parcel)…
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Chesapeake Energy | Energy Companies

Chesapeake Energy Out of Bankruptcy Danger, Hedges for 2017
December 20, 2016December 20, 2016

In a rare sit-down interview, Chesapeake Energy’s CEO, Doug “the ax” Lawler told reporters the company is stable, strong and growing, and that is will not need to file for bankruptcy, as many had predicted would happen. Through hard work (and axing thousands of employees) Chesapeake has managed to cut an astonishing $10.9 billion worth of debt and leverage from its balance sheet. Hats off to Lawler. Total debt for the company has gone from $21 billion to $9 billion. At its height, Chessy employed 13,000 people. Today? Just 3,500 people. Hence our moniker for Lawler of “the ax” (see Chesapeake’s Doug Lawler Gave Himself a Raise After Firing 1,500+). As part of the “new” Chesapeake, the company recently dumped its old logo and replaced it with a butt-ugly new logo (see Chesapeake Energy Gets New Logo – Dumps Blue NatGas Flame). Chessy plans to stay out of the bankruptcy woods. They’ve cut deals to sell 2017 estimated production at pre-arranged prices (called hedging). Chesapeake has hedged 63% of its estimated 2017 natural gas production for a sale price of $3.07 per thousand cubic feet (Mcf). They’ve hedge 50% of their estimated oil production at $49.68 per barrel. Here’s an update on Chesapeake Energy’s exit from bankruptcy woods…
Read More “Chesapeake Energy Out of Bankruptcy Danger, Hedges for 2017”
CNG/LNG | Energy Companies | Exporting | Industrywide Issues | Total

French Supermajor Total Buys 23% Stake in Tellurian LNG
December 20, 2016December 20, 2016

Charif Souki

Total, a French multinational integrated oil and gas company and one of the six “Supermajor” oil companies in the world, has just purchased a 23% stake in Tellurian Investments for $207 million. Tellurian is building the Driftwood LNG export facility in southern Louisiana (see Fired Cheniere Energy CEO Charif Souki’s Revenge: Driftwood LNG). Tellurian CEO Charif Souki was fired one year ago this month by Carl Icahan from Cheniere Energy, the LNG exporting company he co-founded (see Evil Corporate Raider Carl Icahn Claims Another CEO Scalp). We used to feel bad for Souki, but no more–not since he made an ass of himself by saying in a CNBC interview he would reconsider his American citizenship if Donald Trump won the presidency (see Will Charif Souki Renounce His American Citizenship?). We’re still waiting for Souki to go back to his native Egypt–or perhaps now, to France. That would be fitting. At any rate, here’s the details on Total investing in Souki’s Tellurian investments, which is a play to get in on the hot LNG export action in the U.S….
Read More “French Supermajor Total Buys 23% Stake in Tellurian LNG”
Air Quality | Beaver County | Energy Companies | Ethane | Industrywide Issues | Pennsylvania | Processing Plants | Regulation | Shell | Statewide PA

Shell Seeks to Horse Trade Air Pollution Credits for Cracker Plant
December 19, 2016December 19, 2016

In June 2015, a full year ahead of Shell’s final investment decision (FID) to build a multi-billion dollar ethane cracker plant complex in Beaver County, PA, the PA Dept. of Environmental Protection issued the project air quality permits–which was a “critical” requirement for Shell before making their decision (see Shell Receives Air Quality Permit from PA DEP for Cracker Plant). Two months later, two litigious Big Green environmental groups with deep pockets–the Philadelphia-based Clean Air Council and the Washington, DC-based Environmental Integrity Project–tried to scuttle the project by appealing the DEP’s issuance of the air quality permits (see Big Green Groups File to Block Shell Cracker Air Quality Permit). Fortunately the DEP blew off the Big Green appeal. However, the issue of air pollution is not yet totally resolved. In order for Shell to build the plant–a plant that will have a fair amount of emissions–they need to buy pollution credits from other plants. That is, if other plants are installing new air pollution controls, or shutting down, Shell can buy their emissions allotments, and use them for the cracker project. In the end, it’s all about controlling how much of the nasty stuff, like volatile organic compounds (VOCs) gets pumped into the air in a given region. But there’s a problem. Shell can’t find enough VOC credits to buy, so they’re proposing a deal with the DEP to buy a different kind of credit instead–NOx or nitrogen oxides. Will the DEP allow Shell to horse trade NOx for VOCs? That’s the billion dollar question…
Read More “Shell Seeks to Horse Trade Air Pollution Credits for Cracker Plant”
Energy Companies | Gulfport Energy | Industrywide Issues | Pipelines | Utica Shale

Analyzing Gulfport’s Decision to Diversify Away from the Utica
December 19, 2016December 19, 2016

Last week MDN told you about Gulfport Energy’s deal to buy 85,000 acres of leases with 48 horizontal wells in Oklahoma’s SCOOP shale play in a $1.85 billion deal (see Gulfport Energy Expands into SCOOP, New Stock & IOUs to Pay $1.85B). At the time we said, “we jealously wish they were investing that money here [in the Utica] and not there.” Looks like we’re not the only ones questioning Gulfport’s strategy of “diversifying away from the Utica.” None other than energy analyst Richard Zeits, our favorite Seeking Alpha author, did a deep dive into the deal. He found that Gulfport paid $27,000 per acre and although they paid for it with a fair amount of equity, they also increased their debt load “significantly.” Zeits said, “The move into a new core area raises questions with regard to the company’s macro outlook for the Utica/Marcellus region.” Hmmm. Here’s what else the oracle of energy had to say about Gulfport’s SCOOP deal…
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Energy Companies | Seneca Resources

Former CEO of Piedmont Natural Gas Joins National Fuel Gas Board
December 16, 2016December 16, 2016

Thomas Skaines

National Fuel Gas Company (NFG) is a large Buffalo-based utility with subsidiaries active in drilling and midstream. NFG is the parent of Marcellus driller Seneca Resources and midstream company Empire Pipeline. NFG announced earlier this week that they have a new independent board member–Thomas E. Skains–who is the former Chairman, President, and Chief Executive Officer of Piedmont Natural Gas Company. Must be Mr. Skains is looking for things to do. Last year he sold Piedmont to Duke Energy for $6.7 billion. As part of the deal, he got a $14.4 million golden parachute (see Piedmont Natural Gas CEO’s Pure Gold Parachute – $14.4M). The merger closed in October of this year. It’s been a few months, so Skains is beginning to land on various boards, including Duke Energy’s board, and now, NFG’s board…
Read More “Former CEO of Piedmont Natural Gas Joins National Fuel Gas Board”