Energy Companies

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    High-Priced PA Strippers Go Back to Court, Impact Fee Semantics

    In 2014 we brought you the interesting story of strippers in the Marcellus–stripper wells, that is (see High-Priced Strippers in PA: Semantic Gymnastics with Impact Fee). Synder Brothers is an oil/gas producer in Pennsylvania. Most of the wells they drill are vertical-only wells. Among them are 24 wells from 2011 and 21 wells from 2012 that are vertical only–but all targeting the Marcellus. According to the definition of a stripper well under the Act 13 law passed in 2012, a well qualifies as a stripper well if it doesn’t produce over 90 thousand cubic feet (Mcf) of natural gas per day. Synder Bros. says their wells don’t, ergo their wells are stripper wells and not liable to pay an impact fee. The PA Public Utility Commission (PUC), charged with evaluating what does and does not qualify, says nope–your wells target the Marcellus formation and produced above 90 Mcf for at least one month out of the year, therefore must pay the impact fee. So the PUC sued Snyder Bros., intending to collect $500,000 in unpaid fees PLUS a $50,000 fine for inconveniencing the PUC (see PA PUC Sues Snyder Bros to Collect $500K in Unpaid Impact Fees). Now, more than a year after first hearing the case, PA Commonwealth Court wants to hear it all over again. Can’t enough of those strippers…
    Read More “High-Priced PA Strippers Go Back to Court, Impact Fee Semantics”

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    EQT Urged by Major Investor to Merge with Either Range or Antero

    A kerfuffle erupted yesterday when Chapter IV Investors, a Charlotte, NC-based investment firm with investments in EQT, Range Resources and Antero Resources, announced it had sent a letter to EQT urging the company to consider merging with either Range Resources or Antero Resources. Chapter IV, which is essentially two big-money investors (W. Barnes Hauptfuhrer, Managing Partner and Portfolio Manager, and Ryan J. Jack, Partner), does not own enough stock in any of the companies (less than 1% in each) to throw its weight around like a corporate raider. Rather, it appears to be two investors attempting to grab the attention of these companies and their shareholders by issuing a press release (full copy below) with a plan they say would create a new Marcellus/Utica driller worth more than $25 billion. Obviously the value of investments for Chapter IV would go up under such a scenario–so there is self-interest at work here. However, we don’t detect any kind of bullying on the part of Chapter IV, like that of a raider Carl Icahn (successful takeover of Chesapeake Energy & Cheniere Energy) or Keith “Mini-Me” Meister (unsuccessful attempt to takeover Williams). Rather, it appears to be a couple of investors who believe there is an honest and good case for a combination of EQT with another company, and were willing to spend $500 on a press release to make their case. Are they right?…
    Read More “EQT Urged by Major Investor to Merge with Either Range or Antero”

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    Mgmt Musical Chairs at Eclipse, “Gen-3” Utica Wells Go Online

    Two members of Eclipse Resources’ top management team are playing musical chairs as part of the company’s plan to “accelerate growth” in 2017. Tom Liberatore, currently executive VP and COO is dropping the COO title and becoming executive VP of corporate development and geosciences. Meanwhile, Oleg Tolmachev, currently senior VP of drilling and completions is becoming executive VP and COO. Tolmachev’s star is clearly rising and he is now the man running the Utica/Marcellus drilling program for the company. In the same press release, the company said it has now completed and brought online five Utica wells in Monroe County, OH. The wells are the first dry gas Utica wells to use Eclipse’s new “Gen-3” completion design. What is Gen-3? And what does the musical chairs at Eclipse have to do with Gen-3?…
    Read More “Mgmt Musical Chairs at Eclipse, “Gen-3” Utica Wells Go Online”

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    Radicalized Kids Suing Over Global Warming to Depose Tillerson

    In August 2015, MDN told you about a lawsuit brought by a group of left coast radicalized children who want to force the federal government to become communist and “force action” on mythical climate change (see Group of Kids Sues U.S. Govt to Force Action on “Climate Change”). In January 2016, we brought you an update, telling you that radicalized, fringe Catholic groups had joined the cause with the ignorant children (see Climate Change Lawsuit by Radicalized Children Gets Interesting). Now comes word that this silly (and sick) effort continues. The radicalized children, and the lawyers abusing them, will get to depose Rex Tillerson under oath on Jan. 19 about his knowledge of mythical man-made global warming. Yep. The lawyers will put Tillerson on the hot seat the day before Donald Trump is inaugurated. Tillerson is Trump’s pick to become the next Secretary of State–and man oh man do we need a good one after the twin disasters of John Kerry and Hillary Clinton. The deposition will be more about attempting to give Trump a black eye than it will about so-called global warming…
    Read More “Radicalized Kids Suing Over Global Warming to Depose Tillerson”

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    Explosion & Fire at Rice Energy Drill Pad in Washington County, PA

    What a way to ring in the New Year. Some 16 different fire departments were called out to a 4-alarm fire at Rice Energy’s Papa Bear well pad in Somerset Township (Washington County), PA, on January 1st. Rice contractors were in the process of fracking the Papa Bear well pad on Sunday afternoon (yes, gas workers work on Sundays and holidays!) when one of the 20 pumps being used experienced “equipment failure.” Fortunately, no one was injured. The blaze ended up ruining six of the 20 pumps, and damaging four pumper trucks. When nearby neighbors heard an explosion and saw black smoke, they “self evacuated” and got out of Dodge quick. Smart neighbors! The Pennsylvania Dept. of Environmental Protection (DEP) is on the scene investigating and Rice does not yet have an estimate for when operations will resume at Papa Bear…
    Read More “Explosion & Fire at Rice Energy Drill Pad in Washington County, PA”

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    FERC Approves Atlantic Sunrise Pipeline! Cabot Grabs More Capacity

    1/4/17 Update: Williams finally issued its own press release about this, which we’ve included below.

    On the last business day of 2016, the Federal Energy Regulatory Commission (FERC) issued a favorable final environmental impact statement (EIS) for one of the major pipeline projects in the Marcellus/Utica: the $3 billion Williams Atlantic Sunrise Pipeline project. The FERC EIS for Atlantic Sunrise (full copy embedded below) said that although there may be some adverse environmental effects from the project, those effects can be “reduced to less-than-significant levels” by Williams via the plans submitted. FERC considered five alternative routes and chose to stick with the preferred route proposed by Williams. However, FERC did ask Williams two make minor tweaks to four locations along the route of the pipeline. Cabot Oil & Gas, the main customer for the 1.7 billion cubic feet of capacity, was positively giddy with the announcement. Cabot released their own press release to say that although they previously gobbled up 850 million cubic feet (MMcf) of capacity along the new pipeline, they are adding another 150 MMcf to that number, giving the company a grand total of 1 billion cubic feet (out of 1.7 Bcf) of capacity along the pipe when it’s built. Holy moly! That will be 1 Bcf per day of Cabot’s gas going from Susquehanna County, PA to other states, outside the region. VERY smart move by Cabot. Below we have the news and feedback/analysis about the announcement…
    Read More “FERC Approves Atlantic Sunrise Pipeline! Cabot Grabs More Capacity”

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    Marcellus Biggest Drillers Lock in 2017 Gas Prices at $3+ per Mcf

    In September, MDN brought you research on 10 of the largest Marcellus/Utica drillers that have “hedged” their 2017 production (see Hedging Gas Prices in Marcellus/Utica – Who Hedges & How Much?). Hedging is a concept of pre-selling the gas you produce at a price you agree to now, in advance. Although that may sound risky, it’s actually an exercise in risk avoidance. It’s less risky to lock in favorable prices now rather than wait and potentially get far less. How do drillers know what the price of gas will be six months or a year from now? They don’t know, for sure, but there is something called the forward market, that predicts what prices will be at future dates. In fact, traders create contracts now based on prices in the future, and those contracts are reported by various news and data services, like NGI’s Forward Look publication. The company that provided the research back in September, S&P, is back with an update. The latest research shows that all of the top 10 drillers have hedged at least some of their production–and some of them have hedged most or even all of their production. What prices have each of these 10 drillers locked in and for how much production?…
    Read More “Marcellus Biggest Drillers Lock in 2017 Gas Prices at $3+ per Mcf”

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    Gulfport CFO Leaves Suddenly to “Pursue an External Opportunity”

    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…
    Read More “Gulfport CFO Leaves Suddenly to “Pursue an External Opportunity””

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    WV Supreme Court Rules EQT Can’t Deduct P-P Costs from Royalties

    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…

    Read More “WV Supreme Court Rules EQT Can’t Deduct P-P Costs from Royalties”

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    Stone Energy Says Prepackaged Bankruptcy Plan on Way to Adoption

    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…
    Read More “Stone Energy Says Prepackaged Bankruptcy Plan on Way to Adoption”

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    Trump Taps Corp Raider Ichan as Adviser on Regulatory Matters

    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…
    Read More “Trump Taps Corp Raider Ichan as Adviser on Regulatory Matters”

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    Anadarko Sells All Marcellus Assets for $1.24B to Alta Resources

    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…
    Read More “Anadarko Sells All Marcellus Assets for $1.24B to Alta Resources”

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    Stone Energy’s Largest Shareholder Caves, Agrees to Bankruptcy

    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”

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    Shell Cracker Wastewater Discharge Becomes an Issue

    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?…
    Read More “Shell Cracker Wastewater Discharge Becomes an Issue”

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    Rice Energy Board Member Exits to Become CEO of Tapstone Energy

    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…
    Read More “Rice Energy Board Member Exits to Become CEO of Tapstone Energy”

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

    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”