Stone Energy in Talks to Sell 90K Acres of Marcellus Leases/Wells
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 a presence in the Marcellus/Utica Shale with 90,000 acres of leases. Last year Stone quit drilling in the northeast and actually shut-in part of their production due to low prices (see Stone Energy 3Q15: Shut Down 110 Mmcfe/d of Marcellus Production). In June Stone cut a new midstream gathering agreement with Williams to return some of their shut-in Marcellus wells to full production (see Stone Energy Opens Marcellus Spigots Again; New Midstream Deal). Although threatened with de-listing by the New York Stock Exchange and under threat of bankruptcy, Stone has (so far) managed to avoid both fates. Earlier this month MDN reported that although the company still faces stormy weather, they had committed to ramping up their Marcellus program again (see Stone Energy Ramps Up Marcellus Again in 2Q16, Loses $196M). Perhaps that was just marketing? Or perhaps Stone has been backed into a corner? Word has leaked, via a Securities and Exchange Commission (SEC) 8-K filing (full copy below), that Stone has “commenced negotiations to sell its Appalachian assets to a third party” as part of restructuring talks. That is, Stone is trying to stay out of bankruptcy, or if they have to declare bankruptcy, get a deal in place first–and as part of that process, they’ve disclosed they are actively trying to sell their 90,000 acres of leases and existing drilled wells in the Marcellus to help pay down debt…
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The Pennsylvania Department of Environmental Protection (DEP) has fined two CONSOL Energy subsidiaries, CNX Gas (the drilling division) and CONE Midstream (co-owned by CONSOL and Noble Energy) for coloring outside the lines when they built some gathering pipelines in four western Pennsylvania counties. CNX was fined $139,000 and CONE was fined $45,000 for veering off the path officially filed with the DEP. According to DEP spokesman John Poister, the numskulls didn’t pay attention and were sloppy (our words, his sentiment). Here’s the official announcement from the DEP, along with comments from Poister…
We suppose we should have known, but we didn’t. We didn’t know that Pennsylvania has a Department of Community and Economic Development (DCED). In fact, the DCED has its own cabinet-level Secretary–Dennis Davin–appointed by Democrat Gov. Tom Wolf in January 2015 when Wolf assumed office. Davin has stayed largely under the radar–until now. Wolf has sent Davin out on a road show to promote the forthcoming Shell ethane cracker plant. Davin is conducting roundtable discussions in various communities around PA to generate ideas on how local businesses can benefit from the cracker. So far he’s visited Beaver County (where the cracker will be built), Lawrence County and Washington County. The DCED is flooding the airways with press releases about Davin’s cracker road show…
In June MDN reported the news that Rex Energy had cut a deal to sell its Illinois Basin acreage for $40 million to Campbell Development Group (see 
Ratings agency giant Fitch Ratings maintains and periodically issues a “Loans of Concern” list. It is a list of companies Fitch considers to have “material, near-term default risks.” That is, the companies will likely default on repaying loans, which may lead to nastier things, like a bankruptcy. As of last week when Fitch issued the list, there were 53 companies on it. Of those 53 companies, some 49% of them (26 in all) are energy companies. You must be a Fitch subscriber in order to see the full report/list of companies. Alas, we are not. However, Argus got a look and lists a few of the names in the list. One of those names stood out for us: American Energy-Marcellus, which is one of the American Energy subsidiary companies founded by former Chesapeake Energy CEO Aubrey McClendon. American Energy’s Marcellus/Utica division later changed its name to Ascent Resources in June 2015 (see 
In August 2015, MDN told you that one of the biggest drillers in the Marcellus/Utica, Antero Resources, floated the idea of building a $275 million state-of-the-art frack wastewater treatment plant in Doddridge County, WV (see 
This one has us scratching our heads. Landowners Damon and Kendra Baker, in Tioga County, PA, signed a lease with Shell’s SWEPI in 2006. We’re guessing the signing bonus was peanuts because at that time the Marcellus was still in its infancy in PA. SWEPI constructed a well pad on their property in 2010 but had drilled no wells by the time the lease expired in 2011. The Bakers wanted a healthy re-signing bonus to allow SWEPI to lease their land again. SWEPI’s final offer was $150,000 (not sure for how many acres). The Baker’s, according to SWEPI, wanted half a million dollars. SWEPI said “no thanks” and therefore, according to state Dept. of Environmental Protection standards, needs to restore the property to its original state and be done with it. But the Bakers won’t let them re-enter the property. So SWEPI is suing and the clock is ticking–they only have until December to put it back to original condition or the company will be fined $500/day until it’s done…
In January, three liberal Democrat county commissioners from Fayette County, WV, with the backing and help of the radical WV Mountain Party, voted to ban injection wells in the county (see 
Everyone loves a Top 5 or Top 10, including MDN. Who are the Top 5 drillers in the Utica Shale? It depends, of course, on your criteria for selecting such a list. One of MDN’s favorite writers on The Motley Fool website, Matt DiLallo, has just published what he calls “The 5 Companies Dominating the Utica Shale Play.” In other words, the Top 5 Utica drillers. Matt points out that in the span of five short years the Utica has become the nation’s second largest shale gas play, behind only the Marcellus. Matt uses a combination of acres-under-lease and number-of-wells-drilled to come up with his list of five drillers who are leading the charge in the Utica. It won’t surprise you to learn that Chesapeake Energy, which was the first company to drill in the Utica under then-CEO Aubrey McClendon, is head-and-shoulders above the rest as the #1 Dominator in the Utica. Some of the others in the Top 5 list may, however, surprise you. Here’s Matt’s excellent roundup of the Utica…
There’s certainly more than one way to make money on fracking in the Marcellus/Utica. Billionaire hedge fund manager David Tepper (Appaloosa Management) has found such a way. Tepper knows a good company, or four, when he sees them. In the fourth quarter of 2015, when Marcellus/Utica company stocks were at one of their lowest points, Tepper loaded up, buying stock in four leading northeast drillers. Half a year later he turned around and sold that stock, for a 100%+ return on his investment. He doubled his money. Smart man. Which drillers’ stocks did Tepper buy and then sell?…
In May MDN told you that the Penn Township (in Westmoreland County, PA) zoning board voted to refuse to grant a permit to Apex Energy to build a DEP-permitted well pad in the town (see 
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. That is, if they make it through bankruptcy. At the end of April Ultra filed for Chapter 11 bankruptcy (see 
PDC Energy, a driller in the Wattenberg Field in Colorado and the Utica in Ohio, paused their Utica drilling program in 2015 (see 
Last December Pennsylvania’s felony-indicted Attorney General, Kathleen Kane, brought a lawsuit against Chesapeake Energy, Anadarko and Williams accusing them of, among other things, royalty fraud (see 
All the way back in February MDN brought you exclusive news that Shell had begun approaching landowners in Beaver County to get them to sign easements for two ethane pipelines to feed the mighty cracker plant they plan to build in the county (see 
Yesterday Chesapeake Energy, the secon largest natural gas producer in the United States (and the largest Marcellus producer, by far) issued three press releases. The first release said the company is working to obtain a five-year bank loan for a staggering $1 billion. The second two releases outlined what they will do with that money: pay off older IOUs. We also spotted commentary on the company’s $1B plan. One analyst predicts Chesapeake is heading for a pre-packaged bankruptcy, similar to what other o&g companies have done, and this massive loan/debt repayment is proof. Another analyst says Chessy CEO Doug Lawler is brilliant and that this move will strengthen Chessy’s stock in the long-term and make the company more solvent. Which one is right? They both can’t be right…