Energy Companies

Energy Companies | Rice Energy

Rice Energy 3Q16: Everything’s Up (That Should Be)
November 3, 2016November 3, 2016

Yesterday one of our favorite drillers in both the Utica and Marcellus, Rice Energy, released their third quarter 2016 update. It can be summarized in one, short phrase: “Everything that should be up is up.” Production is up for the quarter–by a big 23%. Net income is up, by 40%. The company’s line of credit is up to $1 billion (was $875 million). In addition, during 3Q16 Rice floated new stock to help them buy Vantage Energy, for a whopping $2.7 billion. Also during 3Q16 Rice drilled and completed 10 new Marcellus wells, along with drilling and completing 2 Utica wells. In addition they brought another 11 Utica wells online. There’s lots happening at Rice Energy. Here’s the update…
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Energy Companies | EXCO Resources

EXCO 3Q16: Turns a Profit! Marcellus Production Continues to Fall
November 3, 2016November 3, 2016

EXCO Resources was once a sizable player in the Marcellus. They still have 145,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However, EXCO, as we pointed out in March, has pretty much abandoned the Marcellus at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). The company was able to slow the bleeding in 2Q16 (see EXCO Still Hammering Midstreamers re Contracts, Bleeding Slowed). What about 3Q16? EXCO finally turned a profit, going from losing $355 million in 3Q15 to making $51 million in 3Q16. Really, an astonishing turnaround for a company razor close to bankruptcy. However, EXCO’s Marcellus/Utica operations are essentially nil. They still produce from their wells, but because they haven’t drilled any new wells, production is steadily declining in the northeast–just 33 million cubic feet per day (MMcf/d), down 23% from 2Q16 and down 30% from 3Q15…
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CONSOL Energy | Energy Companies

CONSOL Energy 3Q16: In the Black, Production Up, Utica Focused
November 2, 2016November 2, 2016

Coming on the big news yesterday that CONSOL Energy is calling it splitsville with Noble Energy on their 2/3 of a million acres joint venture in the Marcellus (see Divorce: CONSOL & Noble Dissolve M-U Joint Venture), CONSOL released its third quarter 2016 update. The company reports making $25 million in 3Q16, which is better than many who remain in the red. Production was up 12% for the quarter, year over year. They reactivated two rigs in August, both of which began drilling Utica wells in Monroe County, OH. They ended up drilling two Utica wells during the quarter. In the update, CONSOL crowed about the impressive Gaut 4IH well in Westmoreland County, PA. That well (a Utica well) produced 6.04 billion cubic feet (Bcf) even though it wasn’t brought online until the end of 3Q16…
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Energy Companies | Noble Energy

Noble Energy 3Q16: Aside from Marcellus JV Divorce, Not Much
November 2, 2016November 2, 2016

As we pointed out yesterday in our story about CONSOL Energy and Noble Energy deciding to end their Marcellus joint venture (see Divorce: CONSOL & Noble Dissolve M-U Joint Venture), Noble Energy has decided to cool it with regard to new Marcellus drilling. Noble is focused on other (oily) shale plays. They issued their third quarter 2016 update yesterday, and the section about the Marcellus was pretty short. Noble completed 6 previously-drilled wells, but isn’t drilling any new Marcellus wells…
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Energy Companies | Energy Services | EQT Corp | Industrywide Issues | Pipelines | WGL Holdings

WGL Midstream Buys More of Mountain Valley Pipeline
November 2, 2016November 2, 2016

Mountain Valley Pipeline revised route – click for larger version

The Mountain Valley Pipeline is a $3.5 billion, 301-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA. The project, which filed an official application with the Federal Energy Regulatory Commission in October 2015, is being built by EQT, NextEra Energy and several other partners (see Mountain Valley Pipeline Files FERC Appl, Now Just Matter of Time). One of those “several other partners” is WGL Midstream–the midstream arm of Washington (DC) Gas. Some of the 2 billion cubic feet per day (Bcf/d) of natural gas that will flow through Mountain Valley Pipeline will head in Washington Gas’ direction–hence their interest. On Monday WGL announced they are increasing their ownership in the Mountain Valley Pipeline project–from 7% to 10%. That 10% interest will cost WGL around $326 million…
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CONSOL Energy | Energy Companies | Noble Energy | Pennsylvania | Statewide PA | Statewide WV | West Virginia

Divorce: CONSOL & Noble Dissolve M-U Joint Venture
November 1, 2016November 1, 2016

Yesterday CONSOL Energy and Noble Energy issued a joint press release to announce they are “separating” their Marcellus/Utica joint venture. We view it more like a divorce. This isn’t a “maybe we’ll get back together at some point” kind of agreement. It is an agreement for CONSOL to take one child (acreage in Pennsylvania) and Noble to take the other child (acreage in West Virginia) and permanently go their separate ways. That’s a divorce. The two companies stressed that their third child together–CONE Midstream–would remain in joint custody for the duration. CONSOL gets 306,000 acres and Noble gets 363,000 acres. Why the break up? The two were joined at the hip and had to agree on spending money to drill on some 669,000 jv acres. CONSOL wants to drill more, Noble wants to drill less. The break up lets each of them do what they want to do. CONSOL has big plans to drill more Utica wells, and Noble has big plans to drill in other shale plays. The net net appears to be expect more CONSOL drilling in the Utica in both PA and WV (where it will retain Utica rights), and less Marcellus drilling by Noble in PA/WV…
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Energy Companies | Energy Corporation of America | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

PA Landowners Win $1.1M Lawsuit Against ECA re Royalty Deductions
November 1, 2016November 1, 2016

On Monday, October 24, 2016, the Third Circuit Court of Appeals (in Western Pennsylvania) ruled that Marcellus driller ECA (Energy Corporation of America) did not prove a need for a new trial in the case it previously lost. Pennsylvania landowners sued ECA in federal court beginning in 2010, saying their royalty checks were shorted because ECA was improperly deducting post-production costs. Sound familiar? In February 2013 a federal judge upheld a split decision that said most of what ECA was deducting was OK, but the one thing they can’t deduct from royalty checks are charges for interstate pipeline transmission (for the full story, read our post Federal Judge Upholds Split Decision in PA Royalty Case). More legal wrangling ensued after that decision and a jury trial convened in March 2015. The trial was to determine whether or not the landowners were shorted royalty payments because ECA was deducting charges for transportation and marketing. The jury found for the landowners and against ECA, awarding the landowners a $1.1 million judgment. ECA asked for a new trial and they have now been denied…
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Coterra Energy (Cabot O&G) | Energy Companies

Cabot O&G 3Q16: Record Production, 2018 an “Inflection Point”
October 31, 2016October 31, 2016

One MDN’s favorite Marcellus drillers, Cabot Oil & Gas, released their third quarter 2016 update on Friday. Production once again set a new record with Cabot producing 144.4 billion cubic feet (Bcf) of natural gas in 3Q16 (up from 133 in 3Q15). The number of wells drilled decreased from 27 new wells drilled in 3Q15 to 11 new wells drilled in 3Q16. However, Cabot has/had plenty of drilled but uncompleted wells (DUCs). In 3Q15 Cabot completed 21 wells and in 3Q16 they completed 23 wells. Once again the company treaded water financial, losing $10 million in 3Q16 (down from losing $15.5M in 3Q15). Frankly, $10M is chump change in the o&g business. The biggest news (for us) in the Cabot update from Friday is their strategy announcement. It can be summed up in one slide from their analyst presentation (see it below) which is titled: INFRASTRUCTURE UPDATE: 2018 IS AN INFLECTION YEAR FOR CABOT. On that slide is a list of six infrastructure projects that are critical to the future of Cabot–all of them expected to go online in 2018. Yes, the Constitution Pipeline is one of the six. Can you guess the others?…
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Energy Companies | Industrywide Issues | Litigation | Pennsylvania | Range Resources Corp | Washington County | Wastewater

PA Court Says Range Impoundment Did NOT Contaminate Water Well
October 31, 2016December 2, 2016

You may recall that for some time we’ve been following the back and forth between Range Resources and their (former) wastewater impoundments in Washington County, PA. The PA Dept. of Environmental Protection (DEP) fined Range a whopping $4.15 million for violations in September 2014 (see PA DEP Fines Range Resources $4.15M for Wastewater Impoundments). Some of the nearby neighbors claimed that Range’s leaky impoundments (a quarter of a mile away) contaminated their water wells. One of those landowners was Loren Kiskadden, who is suing Range in civil court. The problem is, the DEP found that the nearby Yeager impoundment had not contaminated Kiskadden’s well, which led to allegations that the DEP had bungled the investigation (see Did DEP Mishandle Range Wastewater Impoundment Investigation?). Kiskadden had to press on, because if the DEP doesn’t reverse its finding, he has no civil case against Range. Press on he did (see Hearing on Range Yeager Impoundment/Water Contamination Continues). The matter was heard by the DEP’s Environmental Hearing Board (EHB). The EHB found that Kiskadden didn’t have a case–his well was not contaminated by Range’s impoundment. So Kiskadden and his lawyers asked for a re-hearing. The result of that re-hearing came back in December and (we thought) closed the door, once and for all, on the case (see DEP Final Determination: Range Didn’t Pollute Kiskadden Water Well). But no, that was not the end. Kiskadden appealed again. Last week a Commonwealth Court appeals panel affirmed the EHB’s 2015 dismissal of Kiskadden’s appeal of the DEP 2011 ruling that Range’s Yeager site operations did not contaminate Kiskadden’s well water. Have we finally reached the end of this drawn-out saga?…
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Energy Companies | Energy Services | EQT Corp | Equitrans/EQT Midstream

EQT 3Q16: Company will Soon be Primarily a Utica Driller
October 28, 2016October 28, 2016

EQT issued its third quarter 2016 update yesterday. The company reports losing money on its drilling operations ($22 million), but making money on midstream operations ($133 million), so they ended the quarter in the black. Highlights include production zooming up 26% higher over the same period last year. EQT drilled 24 wells in 3Q16, which breaks down as 21 Marcellus wells, 2 Upper Devonian wells and 1 Utica well. However, the biggest news coming from yesterday’s update came from the analyst phone call when EQT president Steve Schlotterbeck said, “We continue to make solid progress on both the cost and recovery efforts and we’re encouraged that the Deep Utica can compete with or surpass our core Marcellus economics in the near future.” That is, although they just got done drilling a bunch of Marcellus wells, it is the Utica that has turned EQT’s head in a major way. Why? Schlotterbeck also said he thinks Utica drilling will end up costing the company half as much as Marcellus drilling (due to higher production in Utica wells). The company sees itself as primarily a Utica driller in the not-too-distant future. Here’s the update, along with a select portion of yesterday’s analyst phone call…
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Energy Companies | EQT Corp

EQT CEO David Porges Retiring Early 2017, Schlotterbeck New CEO
October 28, 2016October 28, 2016

David Porges

Along with the big news yesterday that EQT believes the Utica Shale is where the company’s future lies (see EQT 3Q16: Company will Soon be Primarily a Utica Driller), came more big news that current EQT CEO David Porges will retire early next year. Porges will stick around as Chairman of the Board. Current EQT president Steve Schlotterbeck will step up to become the new CEO. Here’s the announcement…
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Belmont County | Energy Companies | Gulfport Energy | Lease & Royalty Payments | Monroe County | Ohio

Coal Co. Murray Energy Sells 5,900 OH Utica Acres – Who Bought?
October 27, 2016October 27, 2016

Yesterday Murray Energy, which operates coal mines in Ohio, Illinois, Kentucky, Utah, and West Virginia, announced it had sold the leases for 5,900 of the acres it owns in Belmont and Monroe counties (in eastern Ohio) to an unidentified shale driller for $63.6 million. That works out to be ~$10,800 per acre. According to Murray officials, the sale will allow the company to focus on its core activity–coal mining. The money will also help the company stay out of bankruptcy court. The sale, which is slated to close “in the coming weeks” doesn’t ID the buyer. But we have a guess as to who bought…
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Antero Resources | Energy Companies

Antero Resources 3Q16: Production Up 25%, Averaged $3.96/Mcf
October 27, 2016October 27, 2016

Antero Resources, one of the biggest drillers in the Marcellus, released their second quarter 2016 update in August which showed natgas production was up 19% over 2Q15 (see Antero Resources Production Up 19% in 2Q16, but Loses $596M). However, the company also reported production was essentially flat (the same as) production during the first quarter of 2016. But in September the company revised its 2016 production estimates–up–because they are using more sand in their fracking (see Antero Feels Good, Increases Production Estimates for 2016). How’s that working out? Yesterday Antero released their third quarter 2016 results. Production is up 25% in 3Q16 over 3Q15, and up 6% over 2Q16. In other words, more sand is working. The other important thing to note about Antero is that the company is perhaps the top Marcellus/Utica driller that makes use of hedging–locking in long-term prices for the gas it produces. Instead of having to sell its gas at whatever the daily market price is (right now averaging $1.35 per thousand cubic feet, or Mcf, in the Marcellus/Utica), they sell it at a locked-in price that’s much higher. For 3Q16, Antero’s average sale price was a whopping $3.96/Mcf! Smart financial folks working at Antero. Here’s the full Antero update…
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Energy Companies | EQT Corp | Trans Energy

Analysis: EQT Paying $9K-$10K per Acre for WV/PA Acreage
October 27, 2016October 27, 2016

Yesterday MDN reported that EQT is buying another 60,000 Marcellus/Utica acres (along with buying out Trans Energy) in transactions totally $683 million (see EQT Buys Trans Energy + 60K Marc/Utica Acres in 2 Deals for $683M). One of our favorite Seeking Alpha analyst/authors, Richard Zeits, has done a deep dive into the deal. Zeits reports the deal works out to be $9-$10,000 per acre on average, which is in line with other recent deals of this type. Here is some of Zeit’s insightful research commentary…
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Blue Ridge Mtn Res/Magnum Hunter | Energy Companies

Magnum Hunter Rebuilds Executive Team, Gets New CFO
October 27, 2016October 27, 2016

Magnum Hunter Resources Corporation (MHR), a driller 100% focused on the Marcellus/Utica emerged from bankruptcy in May, less than five months after filing (see Magnum Hunter Emerges from Bankruptcy with CEO Gary Evans Gone). As we observed at the time, we were surprised to read that MHR’s flamboyant CEO, Gary Evans, was gone from the company. In his place MHR named two of Evans’ lieutenants to serve as co-CEOs while the new board of directors looked for a permanent replacement for Evans. The search ended with the hiring of John K. Reinhart in September (see Magnum Hunter Finds New CEO to Replace Forced-Out Gary Evans). Reinhart and the board have continued to rebuild the company. Their latest addition will come next Monday when Michael R. Koy will join the company as Executive Vice President and Chief Financial Officer. Koy was most recently CEO of Denali Energy…
Read More “Magnum Hunter Rebuilds Executive Team, Gets New CFO”
Energy Companies | EQT Corp | Greene County (PA) | Industrywide Issues | M&A | Marion County | Marshall County | Pennsylvania | Trans Energy | Washington County | West Virginia | Westmoreland County | Wetzel County

EQT Buys Trans Energy + 60K Marc/Utica Acres in 2 Deals for $683M
October 26, 2016October 26, 2016

Yesterday EQT announced a pair of deals that will net the company another 60,000 Marcellus/Utica acres including 44 Marcellus wells producing a collective 44 million cubic feet equivalent per day (MMcfe/d) of natural gas. Most of the acreage (42,600) is in three West Virginia counties, with another 17,000 acres in three Pennsylvania counties. EQT is paying a total of $683 million for the two deals. In the first deal, EQT is buying Trans Energy, Inc., which will become a wholly-owned subsidiary of EQT. EQT is also buying Trans Energy joint venture partner Republic Energy’s share in their Marcellus jv. The land is located in Marion, Wetzel and Marshall counties (WV). In the second deal, EQT is buying 17,000 acres from an unidentified third party in southwestern PA, in Washington, Westmoreland and Greene counties. EQT describes the purchases as adding acreage to their “core development area.” You may recall that EQT closed a deal in July, just three months ago, to purchase 62,500 acres from Statoil in WV for $407 million (see Statoil Completes Sale of WV Marcellus Assets to EQT). So why is EQT once again spending money? Analysts speculate it’s because of EQT competitor Rice Energy’s recent deal to buy Vantage Energy with its 85,000 acres in Greene County (see Vantage Energy is No More – Rice Energy Completes $2.7B Buyout). Here’s the particulars about EQT’s latest acquisitions…
Read More “EQT Buys Trans Energy + 60K Marc/Utica Acres in 2 Deals for $683M”