Energy Companies

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    Range Resources – Lost $521M in 2016; 1/3 of 2017 Budget for LA

    Range Resources released its 2016 update on Wednesday and held an earnings call yesterday to discuss it. In what should be a big red warning flag for Pennsylvania Gov. Tom Wolf, Range CEO Jeff Ventura said, “2016 was a significant year for Range, as we completed the acquisition of Memorial Resource Development in September, providing Range operational and geographic diversity with wells that rival our prolific Marcellus wells.” The Memorial purchase provides Range with 220,000 acres on which to drill–in Louisiana (see Range Resources Buys Louisiana Driller in Deal Worth $4.4B). No, Range isn’t leaving the Marcellus–yet. But if Wolf persists with an idiotic plan to enact the highest severance tax in the country, Range now has options–and they won’t hesitate to use those options. In 2016, Range reported natural gas production of 375.81 billion cubic feet (Bcf), which works out to 1.03 Bcf/d. That’s up 3.6% versus 362.69 Bcf, or 994 MMcf/d, in 2015. For 2017, Range will split its drilling budget. The company is spending $1.15 billion on drilling this year: two-thirds will be spent in the Marcellus and one-third (disappointingly) will be spent in Louisiana. Pay attention Gov. Wolf–already we’re seeing a shift! As for top line numbers, Range lost $521 million in 2016, vs. losing $714 million in 2015. Losses in 4Q16 were down a lot from the previous year: Range lost $161 million in 4Q16 vs. losing $322 million in 4Q15. Below is the Range update, along with a portion of the earnings call (interesting comments by Range’s COO Ray Walker), the latest PowerPoint slide deck and Range’s SEC 10-K report…
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    Rice Energy Spending $1.5B in M-U, Leasing 15K Acres in 2017

    Rice Energy turned in it’s 2016 update this week, along with a look at what’s coming in 2017. As for top line financial numbers, Rice lost about the same in 2016 as they did in 2015: A loss off $298 million in 2016 vs. a loss of $291 million in 2015. Although Rice owns and drills on a small acreage position in the Texas Barnett Shale, the vast majority of their focus continues to be in the Marcellus/Utica. The company plans to spend $1.5 billion in 2017, broken out as follows: $1.035 billion for drilling and completion activity in the Marcellus/Utica shale plays; $225 million for land purchases; and $315 million spent by Rice Midstream ($255 million for gas gathering and compression and $60 million on water services). With that money, Rice expects to drill 75 new wells and complete another 55 wells in the Marcellus in 2017. In the Utica, Rice plans to drill 20 new wells and complete 20 wells in 2017. Land acquisition will happen in three counties: Greene and Washington Counties (in PA), and Belmont County (in OH). How much will they pay, on average, to lease new acreage? We have an answer for that…
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    Carrizo Actively Considering Sale of Marcellus/Utica Assets

    Carrizo Oil & Gas, a Houston-based driller, actively drills in the Eagle Ford Shale in South Texas, the Delaware Basin in West Texas, the Niobrara Formation in Colorado, and until mid-year in 2015, they did have an active drilling program in the Ohio Utica and Pennsylvania Marcellus. No more. They haven’t drilled in Appalachia since 3Q15. According to Carrizo’s latest quarterly update for 4Q16 (and full year 2016), the situation continues. However, there is new news: On an earnings call yesterday, Andy Agosto, vice president of business development for Carrizo, fielded a question about the company’s Marcellus/Utica acreage. He said they get offers to sell their acreage “all the time” and in fact have had discussions with their bankers about the value of their Appalachian assets and about whether or not they should sell. It sounds to us, from the exchange, like Carrizo is actively considering a sale of their Marcellus/Utica acreage–some of it, if not all of it…
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    Anadarko Indicted for Killing 165 Salamanders in Lycoming County

    BREAKING NEWS, BREAKING NEWS: Anadarko well pad site leaks wastewater and kills 165 salamanders. Funeral services are being arranged. This would almost be funny, if it wasn’t real. No, not funeral services for salamanders (although it’s not beyond believable in this day and age). In 2014 Anadarko drilled a shale well in Lycoming County, PA. In February 2015, a storage tank at the well pad–used to temporarily store produced water coming from the well (wastewater storage happens at ALL shale well sites)–either experienced a leaky valve, or was overfilled, depending on whom you ask. About 1,000 gallons of produced water leaked out of the tank and subsequently out of containment and into a drainage ditch (i.e. “unnamed tributary”) and found its way into a local creek, killing 165 (or 169, depending on the source) salamanders. And now (no lie), the Environmental Crimes Unit of the PA Attorney General’s office is hauling Anadarko and their contractor into court, charging them with environmental crimes. A PA Fish and Boat Commission biologist estimates the dead salamanders were worth $6,156–or ~$37 each. Careful where you step! If you step on a salamander in PA and accidentally kill it, the state will charge you $37 and somebody from the AG’s office will pay you a visit. It can get expensive walking along a creek in PA….
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    Ultra Petroleum 2016 Update – Will Exit Bankruptcy by April

    Ultra Petroleum, based in Houston, TX, is an independent exploration and production (E&P) company mainly focused on drilling in the Green River Basin of Wyoming. Ultra also drills for oil in the Uinta Basin/Three Rivers area in Utah. In addition, Ultra maintains a position in the Pennsylvania Marcellus shale with leases on 184,000 gross (91,000 net) acres–no small amount. They aren’t currently drilling on their Marcellus acreage, but if prices change, they likely would. At the end of April Ultra filed for Chapter 11 bankruptcy (see Ultra Petroleum (with 184K Marcellus Acres) Files for Bankruptcy). Shareholders tried to get an official equity committee approved to protect their interest (see Update on Ultra Petroleum Bankruptcy). That effort failed–the trustee denied the motion. So equity holders (stockholders), with the aid of Ultra’s management (who happen to be stockholders themselves) adopted a new strategy: wait them out. Management asked for an extension to file their bankruptcy plan, which would put a plan filing date out to spring 2017 (see Ultra Petroleum Trying to Force Debtholders to Deal re Bankruptcy). It seems that management is using time against debtholders as a tactic to force them to the table to deal–and they did it. Ultra announced in November it has a deal supported by a full two-thirds of outstanding debtholders and plans to move forward (see Ultra Petroleum Gets 67% Debtholders to Agree to Bankruptcy Plan). Yesterday Ultra issued an update for 2016 and regarding the bankruptcy–they are on track to emerge from bankruptcy by early April…
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    Chesapeake Energy Turns Corner After Wild Ride in 2016

    wild ride

    Last year was a wild ride for Chesapeake Energy, with respect to the company’s finances. At one point early in the year, betting money said Chessy would have to declare bankruptcy (see Chesapeake Energy: We’re Not Filing for Bankruptcy…Yet). However, as the year wore on, Chesapeake CEO Doug “the ax” Lawler not only continued selling assets here and there as he could, he also figured out how to refinance major portions of the company’s debt–pushing out repayment into the far future, giving the company breathing room. Although Chesapeake doesn’t release it’s fourth quarter and full year 2016 numbers until later this week, one analyst predicts the company is now out of the woods and once again on firm footing. Unfortunately (for the northeast) Chesapeake’s new direction involves less drilling in the Marcellus/Utica and more drilling elsewhere…
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    Shell Launches LNG Outlook 2017 – Rapid Growth Ahead

    Click for larger version

    On Monday, Shell launched its first-ever “LNG Outlook,” an assessment of the global liquefied natural gas (LNG) market. Shell, you may recall, purchased BG in 2016 (announced in 2015), the largest such deal (at $69.7 billion) since Exxon bought Mobil and merged it in. The reason for the purchase? LNG (see LNG Love Story: Shell Makes Play to Buy BG in $69.7B Megamerger). According to the outlook released by Shell yesterday, global demand for unliquefied natural gas is expected to increase by 2% a year between 2015 and 2030, while LNG demand will rise at twice that rate–4 to 5% per year. The outlook says that while many expected a big increase in new LNG supplies that would outpace demand in 2016, something unexpected happened. Demand for LNG kept pace with supply due to a spike in demand coming from Asia and the Middle East. Two of the fastest growing buyers are China and India, growing their imports at a steep clip. Add to that, six new countries began importing LNG last year: Colombia, Egypt, Jamaica, Jordan, Pakistan and Poland. What it all spells is that even with more LNG supplies coming online in the U.S. (and other countries, like Australia), the demand is there to sop up the supply. Here’s the Shell LNG Outlook, first edition…
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    DEP Says Fracking at PA Utica Wells “Likely” Caused Earthquakes

    On Friday, the Pennsylvania Dept. of Environmental Protection held a hastily-called webinar to discuss findings that, frankly, aren’t all that newsworthy or surprising. After 10 months of study, the DEP has concluded that zipper fracking activities by Hilcorp in Lawrence County, PA “likely” caused a series of earthquakes in April 2016 so minor that nobody could feel them. And the DEP concluded this after 10 months of study, when a week before the DEP itself issued the permits to drill in Lawrence County, Hilcorp drilling was shut down about seven miles away, across the border in Mahoning County, Ohio, for potentially causing low-level earthquakes there (see Hilcorp Awarded Permits to Drill 7 New Wells Near Earthquake Zone). It wasn’t exactly rocket science to connect the dots and speculate that fracking over top an active fault had caused the low-level earthquakes on the PA side of the border, as it had on the OH side of the border. As we’ve stressed multiple times here on MDN, earthquakes related to shale are almost always connected with injection wells–when large amounts of liquid are injected near a fault. Earthquakes from fracking activities are rare–like under 10 times, ever, out of millions of fracked wells. Statistically zero. Still, let’s not let a good “crisis” go to waste. The DEP, in releasing a report about the incident (full copy below), said they will work up new regulations to detect and prevent such statistically zero occurrences from happening again…
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    Mountaineer Keystone Renames Itself Arsenal Resources

    In October 2014, Mountaineer Keystone, a pure play Marcellus/Utica driller headquartered in Pittsburgh, bought out PDC Mountaineer for half a billion dollars, creating a company with 181,000 net acres totally focused on the northeast (see Major New Player in the Marcellus Emerges: Mountaineer Keystone). Mountaineer Keystone got its start in 2010 when founder/CEO Rob Kozel formed the initial management team from former Texas Keystone people. In 2011 the company took a boatload of money from First Reserve, an energy investment firm. We don’t have the back story, but in November 2015, Mountaineer announced that Kozel was out as CEO, and in his place the board has selected David Wood, the current Chairman of the Board at Mountaineer Keystone (see Shake-up at the Top of Marcellus Driller Mountaineer Keystone). Last Friday Mountaineer changed its name–to Arsenal Resources…
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    DEP Concludes Hilcorp Drilling Caused Minor Earthquakes in W PA

    In April of last year (2016), MDN brought you the story of earthquakes so minor nobody could feel them in Lawrence County, PA were likely caused by fracking (see PA DEP Investigates Hilcorp Fracking in Earthquake Nobody Felt). However, seismic monitoring equipment could detect them. We have to stress that earthquakes caused by fracking is rare–like this is one of five instances we’re aware of. Far more common are earthquakes caused by deep injection wells. But fracking itself? Statistically zero percent of the time earthquakes are caused by fracking. So when it happens, it’s noteworthy. The conditions must be just right–fracking immediately overtop a fault in the rock layers. The driller in this case, Hilcorp, was ordered to stop all fracking and drilling activity at the well site, which they did. The Pennsylvania Dept. of Environmental Protection (DEP) says they have concluded their investigation and will today (on a webinar) disclose their results. Here’s the kicker: the DEP could have avoided this. Two years earlier the same driller, Hilcorp, caused minor earthquakes seven miles away–just across the border in Ohio. At that time Ohio officials stopped Hilcorp from drilling in that region. A week after the Ohio earthquakes that stopped Hilcorp, the PA DEP issued permits to drill in the same area (see Hilcorp Awarded Permits to Drill 7 New Wells Near Earthquake Zone). MDN was the only source to make that observation. We waved our little red flag and said maybe it’s not such a wise decision to grant those permits. Someone at the DEP needs to read MDN! At any rate, below is the news, as much of it as we currently know. By the time you read this, the DEP earthquake webinar will be over, but we’ve included the webinar notice as (so far) it’s the only information we have to indicate the DEP now concludes Hilcorp drilling was at fault for the earthquakes in Lawrence County…
    Read More “DEP Concludes Hilcorp Drilling Caused Minor Earthquakes in W PA”

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    Top 20 Marcellus Drillers in Southwest Pennsylvania

    The sharp folks over at the Pittsburgh Business Times have been looking through data from the Pennsylvania Department of Environmental Protection (DEP) and have compiled a list of 20 drillers who have at least a dozen shale wells in the southwest PA region. And they ranked them from lowest to highest. We’ve grabbed the list below. The interesting thing for MDN is that there is one name in the list not familiar to us, and we’ve been watching this space since 2009. Always fun to learn something new. Here’s the list of southwest PA’s “Top 20” Marcellus drillers…
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    Bankruptcy Court Approves Stone Energy’s Reorg Plan

    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 86,000 acres of leases. In December Stone filed for bankruptcy protection (see Stone Energy Files for Bankruptcy, Largest Shareholder Opposes). The plan, like most of these types of plans, hoses existing shareholders and hands the ownership keys of the company over to debtors instead, which Stone’s largest shareholder objected to. But apparently that shareholder getting something was better than getting nothing, and he worked out a deal with Stone, dropping his objection (see Stone Energy’s Largest Shareholder Caves, Agrees to Bankruptcy). Last week the bankruptcy court approved the sale of Stone’s Marcellus/Utica assets to EQT (see EQT Wins Bankruptcy Auction for 86K Stone Energy M-U Acres, $527M). Now comes word that the court has approved the rest of Stone’s plan…
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    Chesapeake Energy 2017: Less New Drilling in M-U, More DUC Work

    Yesterday Chesapeake Energy provided a glimpse into their plans for 2017. In Chessy’s “gudiance” for 2017, we learn that the company plans to up the number of active drilling rigs (nationwide) from 10 to 17. We also learn that last year Chessy spent ~$1.75 billion to drill 213 new wells, and place 428 wells into production–the difference between the two numbers being they finished up already-drilled wells, or DUCs. This year? They will spend ~$2.5 billion to drill ~400 new wells–essentially doubling the number of wells drilled–and place ~450 into production. The only problem (from our perspective) is that most of the drilling will happen in places other than the Marcellus/Utica. Of the new wells they plan to drill, only 10-15 new wells will get drilled in the Marcellus, and 40-50 new wells in the Utica. Chessy says they will complete and turn into production 50-60 Marcellus wells in 2017, and 70-80 Utica wells. Translation: Not a lot of new drilling in our neighborhood, with more of an emphasis on completing already-drilled wells…
    Read More “Chesapeake Energy 2017: Less New Drilling in M-U, More DUC Work”

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    Important Shell Ethane Cracker Webinar on Feb 27

    We want to alert you to an upcoming webinar that will be worth your time. On Feb. 27 at 2 pm, NGI (Natural Gas Intelligence) will host a webinar titled, “Cracking the Ethane Code in Appalachia,” all about the Shell ethane cracker. NGI’s ace reporter Jamison Cocklin (MDN editor Jim Willis knows Jamison and has the highest regard for his reporting and writing) will moderate. On the call will be an all-star cast: Don Rush, VP of CONSOL Energy; Jim Cooper, American Fuel & Petrochemical Manufacturers; Denise Brinley, PA Department of Community and Economic Development; and Danielle Sandusky, Level 2 Energy. The webinar will help answer questions about the size and scope of the cracker, whether (and how) the cracker will impact drilling decisions, what about competition from other crackers along the Gulf Coast, and more. Below is more information, and a link to register for this FREE webinar…
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    Noble Energy 2017: Even with 363K Acres, No New Marcellus Drilling

    Noble Energy, a driller with a significant presence in the Marcellus but with a bigger presence in other shale plays, (and operations in other countries and offshore), announced in February that of the four shale plays they operate in onshore in the U.S.–the DJ Basin, Eagle Ford, Delaware and Marcellus–in 2016 they plan to focus on the first three and scale back in the Marcellus, limiting their Marcellus activity to completing previously drilled wells (see Noble Energy Loses $2.4B in 2015; Marcellus Scale-Back in 2016). They followed through on that promise. In November 2016 Noble ended its joint venture deal with CONSOL Energy, with Noble getting 363,000 Marcellus Shale acres in the divorce settlement (see Divorce: CONSOL & Noble Dissolve M-U Joint Venture). Yesterday Noble issued their fourth quarter and full year 2016 update, along with a preview for 2017. What we learned can be summed up as this: No new Marcellus drilling in 2016, and none planned for 2017. However, Noble does plan to complete previously drilled but uncompleted (DUC) wells it has in inventory in the Marcellus…
    Read More “Noble Energy 2017: Even with 363K Acres, No New Marcellus Drilling”

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    Gulfport Energy’s 2016 Financial Update – Lost Nearly $1B

    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, released their fourth quarter 2016 and full year 2016 operational update in mid-January (see Gulfport Energy 2016 Operational Update – Production Up 31%). Gulfport is part of the growing trend to drop one shoe first, then the other. The first shoe is almost always production and operational information (the good news). That doesn’t mean that the financial information is bad news–but sometimes that’s the case. Gulfport dropped the second shoe yesterday, issuing a full report for fourth quarter and full year 2016–operational and financial. On the financial front, Gulfport lost $980 million in 2016, versus losing $1.2 billion in 2015. So the loss was less, but not by much. In addition to looking back, Gulfport issued some forecasts for 2017, including a drilling budget of $1-$1.1 billion…
    Read More “Gulfport Energy’s 2016 Financial Update – Lost Nearly $1B”