Halcon Resources Exits Bankruptcy in Just 1.5 Months
Getting a pre-packaged bankruptcy today is like ordering a McDonalds Happy Meal–just order and drive up to the window and pick it up. Simple. In July Halcon Resources, a Utica Shale driller that “guessed wrong” by leasing 140,000 Utica Shale acres in the northern part of the play (in Ohio) and currently doesn’t drill on any of that acreage, filed for a pre-packaged bankruptcy (see Halcon Resources Files for “Pre-Packaged” Bankruptcy). Less than a month and a half after first filing, Halcon has emerged from bankruptcy court with $1.8 billion worth of debt magically erased. When Halcon filed back in July, they listed $3.12 billion in debt and $2.85 billion in assets. In August the company’s market capitalization, calculated as the number of outstanding shares of stock times the per share price, otherwise know as the company’s “worth” or “value”–was under $50 million (see Halcon’s Market Cap Falls Below $50M, NYSE Threatens to De-List). When debtors have no other choice than to accept a plan turning their debt into equity (shares of stock), it doesn’t take long to file the paperwork and be on your way. Here’s Halcon’s news that they now live again to fight another day–just not in the Utica…
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Last Thursday Antero Midstream, the wholly-owned midstream subsidiary of powerhouse Marcellus/Utica driller Antero Resources, announced it is floating a round of “senior notes” (otherwise known as IOUs) to help the company pay off older debt. New debt for old debt. Not a game we enjoy playing, but Wall Streeters dig it. Antero Midstream first said they hoped to get $500 million for the notes, but later issued a second announcement “upsizing” the offering (like supersizing your fries at McDonalds) to $650 million. Such upsizing is typical (we’ve seen it dozens of times before). Here’s the announcements from Antero from last week…
CONSOL Energy, which was once upon a time a coal company, is thanking its lucky stars it transitioned to being a mostly-natural gas drilling company instead. Yesterday the company’s stock hit a 52-week high. The reason? Because of CONSOL’s Marcellus/Utica drilling program. In a Zacks analyst note (below), we get an update on the aggressive moves CONSOL has been making in leasing new acreage. The company has now amassed 436,000 acres in the Marcellus and a whopping 622,000 acres in the Utica Shale. Here’s that update…
PDC Energy, a driller in the Wattenberg Field in Colorado and the Utica in Ohio, paused their Utica drilling program in 2015 (see 
Yesterday MDN reported that Wilmot Township, located in one of the most-drilled counties in Pennsylvania (Bradford County) has taken the unusual step of demanding that drillers (in particular Chesapeake Energy) stop flowing natural gas from drilled wells unless/until they start paying landowners a minimum 12.5% royalty for the gas produced (see 
In April 2015 Kinder Morgan’s Tennessee Gas Pipeline (TGP) subsidiary filed an application with the Federal Energy Regulatory Commission (FERC) to build 8.2 miles of new looping pipeline in Tioga County, PA and beef up two compressor stations in Bradford County, PA. The $142 million project is called the Susquehanna West Project. The project will increase capacity along a section of the TGP, bumping it up by 145 million cubic feet per day (Mmcf/d). All of the extra capacity is spoken for by Statoil and the wells they’ve drilled in NEPA. Good news: On Tuesday FERC issued their approval for the project, which means construction will begin in January 2017…
Residents in Wilmot Township (Bradford County), PA are mad as hell over shorted royalty checks–and they aren’t taking it anymore. Yesterday Wilmot Township’s three supervisors passed a resolution demanding, “production be discontinued from wells where landowners are having their royalty checks diminished to nothing or nearly nothing.” That is, they want to block natural gas production from existing shale wells drilled in a town smack in the middle of one of the most-drilled places in Pennsylvania. We’ve long chronicled the fight between landowners and some (certainly not all) drillers who are screwing them out of royalty payments by claiming inflated post-production costs. The issue first came to prominence with claims by landowners signed with Chesapeake Energy, who claimed Chessy had cut a sweetheart deal with its former midstream company (Access Midstream) whereby Access bumped up its charges for piping gas which Chesapeake claimed as an expense and deducted from royalty checks, and then Access turned around and invested big money into the old mothership company (see 
Antero Resources, one of the biggest drillers in the Marcellus, released their second quarter 2016 update in August (see 
In July MDN reported that Atlas Resource Partners (ARP), a publicly-traded exploration and production master limited partnership (“MLP”) with operations in basins across the United States including the Marcellus and Utica Shale plays, filed for a bankruptcy (see 
A great article in Investor’s Business Daily explores the link between shale gas and the “explosive expansion” of the U.S. petrochemical industry. Part of the petchem supply chain is finding a cheap source of ethylene, the raw material used in making all sorts of plastics products. Manufacturers get ethylene from ethane cracker plants. The article discusses that link, and the reasons why Shell chose to locate their new multi-billion dollar ethane cracker plant near Pittsburgh. As you can guess, economics play a major role in such a decision. Here are the specific economics that convinced Shell that PA is a good bet…
One of the lowest cost producers that gets some of the highest prices for its natural gas in the Marcellus/Utica is Rice Energy. The difference between what it costs Rice to produce gas ($0.90/thousand cubic feet, or Mcf) verses what they sell it for (an average $3.12/Mcf) means Rice makes a whopping 247% internal rate of return, or IRR–which is THE most profitable driller among 10 of the largest Marcellus/Utica drillers surveyed (see today’s companion post on Hedging Gas Prices in the Marcellus/Utica). The Rice boys’ stellar performance has not gone unnoticed by analysts at investment and research firms. In fact, one such analyst, from Wolfe Research, says Rice “could be” a target for takeover/buyout by a larger competitor. Which competitor? Let’s name names…