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Rice Energy CEO Dan Rice Says 5 Utica Wells Producing 80Mmcf/Day

CORRECTION: In the original version of this story MDN incorrectly stated Rice’s 5 Utica wells were producing $80 million per day instead of 80 million cubic feet of natural gas. A dumb mistake. We relied on an inaccurate transcription of what was said (see it below). The transcription lists the quantities as dollars–the person transcribing got it wrong. We should have known! Our apologies. The 5 wells are still awesome in producing 80 Mmcf/d–but not as awesome as $80 million per day! 🙂

In addition to releasing their fourth quarter and full year 2014 update yesterday, Rice Energy also held an analyst phone call to share the results. Rice’s top management was on the call and shared some fascinating insights. Among them: In 2014 and early 2015 Rice brought five Utica Shale wells online–Bigfoot 9H, Blue Thunder 10H and 12H, and Gold Digger 1H and 3H. (Just an aside, we love how Rice names their wells. Their newest well pad just completed in Belmont County, OH is the “Son-Uva-Digger” pad. Love it!) Anywho, the five Utica wells completed in 2014 and early 2015 collectively are producing, according to CEO Dan Rice, 80 million cubic feet of gas PER DAY. Truly astonishing. In addition to the Utica in Belmont County, Rice is eyeing the Utica underneath their Marcellus assets in southwestern PA–in Washington and Greene counties. This company is smart and focused and one to keep an eye on. Below is a transcript of the comments from yesterday’s analyst call. We’ve added our yellow highlighter to point out some items that caught our attention…
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Gastar’s Marcellus/Utica Production Goes DOWN in 2014 – Why?

Gastar Exploration is an independent oil and gas driller with active drilling programs in the Hunton Limestone horizontal play, the Woodford Shale and the Meramec Shale–all three of which occupy roughly the same acreage in the Mid-Continent area. Of interest to MDN is Gastar’s program in West Virginia and Pennsylvania, where they drill in both the Marcellus and now the Utica Shale layers. At last check-in Gastar owns 58,900 acres of leases in the northeast. As we reported in February, Gastar plans to spend a minimal amount drilling in the northeast in 2015–essentially just completing a few wells already drilled (see Gastar Finishing 5 Wells, Then Idling Rigs in Marcellus/Utica). In their 2014 year-in-review, Gastar reports year over year production in the Marcellus/Utica went down–a story we don’t often see. Usually production goes up. Why down for Gastar? They drilled and brought fewer wells online in the Marcellus/Utica in 2014 than in previous years. Here’s the Appalachin Basin section from Gastar’s 2014 update…
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EQT Midstream Swims Against the Tide, Issues Units Instead of Notes

As we’ve commented a number of times, we don’t pretend to understand all of this high finance stuff when it comes to oil and gas companies and how they decide to fund future development. Sometimes they sell shares of stock. Sometimes they sell “units”–which are the equivalent of shares of stock for companies organized as a master limited partnership (or MLP). Sometimes they borrow money in a revolving loan (line of credit). And sometimes they float notes, what we tongue-in-cheek call IOUs. Lately there have been a rash of companies, many of them midstream (pipelines and processing plants) floating notes to get more cash through the door. We spotted one that’s different (different always stands out). EQT Midstream, a subsidiary of driller EQT but a company (on paper) that’s independent, just announced they’re issuing 8.25 million new units (i.e. like shares of stock), with an option of issuing an additional 1.2 million units. Issuing units (or shares of stock) is equity financing–selling ownership in the company, whereas notes and lines of credit is debt financing. Which is better? Ask a CFO. We have a built-in bias to avoid debt, but that’s just us…
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PA Grand Jury Finds Anti-Drilling AG Kathleen Kane Lied Under Oath

Kathleen Kane, the anti-drilling Attorney General of Pennsylvania–lied under oath–according to a PA grand jury. That’s called perjury and it’s a crime. She should be removed from office immediately but she’s fighting the charge using Lanny Davis–the same lawyer who kept Bill Clinton in office after he lied under oath. She’s hoping lightening will strike twice and Davis will be able to restore her damaged-beyond-repair credibility as the state’s top law enforcement officer, even though she herself has committed high crimes against the state. Why do we care? Because she’s lied in at least two other cases that affect the Marcellus Shale industry: XTO Energy (see PA AG Abuses Her Authority, Files Criminal Charges Against XTO) and Minuteman Environmental Services (see Minuteman Sues AG Kane’s Office for $20M + Punitive Damages). She’s vicious and relentless when it comes to smearing the Marcellus industry and she needs to go because of her own crimes…
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2 Men Indicted by Feds for Vandalizing Chevron Wells in SWPA

handcuffsA Green County man–Heath A. Rankin, 33, of Carmichaels, PA–was indicted earlier this week by a federal grand jury on a felony charge of damaging a shale well (or wells) on the Burchianti Pad in Greene County in March 2014. The pad is owned by Chevron, which is, according to one news source, planning to seek restitution for damages exceeding $5,000 allegedly caused by Mr. Rankin. Another man, Brian Harbarger, 34, of Cumberland, PA–was indicted for the same thing in December 2014. It’s too early to jump to any conclusions. Are they environmentalists that tipped over the line? Are they former/disgruntled employees? Drunk and out for a joy ride? We simply don’t know. Here’s what we do know…
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Chesapeake Tries Waterless Fracking at OH Utica Shale Well

Big NewsSomething we consider pretty big news: Chesapeake Energy is running an experiment with waterless fracking. They’ve contracted with Canadian waterless fracking company GASFRAC to attempt what is the second (that we’re aware of) waterless frack job on a Utica Shale well–in Tuscarawas County, OH. The first waterless frack job done by GASFRAC was for EV Energy Partners on a Utica well also in Tuscarawas County (see Details on GASFRAC’s Waterless Frack Test in OH Utica). We consider it a good sign that Chessy thinks its worth a few million bucks to try it out for themselves. Chessy stresses this is still very preliminary…
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Mountain Valley Pipeline Picks Up 2 New Investors/Partners

Yesterday we told you that some landowners in West Virginia are not happy with what they call threatening letters coming from the Mountain Valley Pipeline (see WV Landowners Say They’re Bullied by Mountain Valley Pipeline). MVP is a 330-mile pipeline from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA. It’s a joint venture between EQT and NextEra US Gas Assets. At least it was a jv between the two until yesterday when MVP announced two more partners/investors: WGL Midstream and Vega Midstream. Who’s on top? EQT owns 55% (and manages) the jv, NextEra owns 35%, WGL will own 7% and Vega 3%. Here’s the announcement from yesterday…
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Columbiana Landowners Win Right to Renegotiate Some Lease Terms

In 2008, before the word “Utica Shale” was on people’s lips and in their consciousness, landmen from Patriot Energy Partners “smiled and dialed” calling up landowners in Columbiana County, offering them a whopping $10 (yes 10 bucks) an acre to sign gas and oil exploration leases. Patriot mailed them the contracts, the landowners signed and sent them back, and then got pennies on the dollar for what those leases were actually worth. Patriot then flipped the leases, selling the deep exploration rights to Chesapeake Energy–for $1,100 an acre. Patriot claimed the practice (of hoodwinking landowners and flipping leases) is legal. The landowners wised up and in 2011, 25 landowner families sued to have their leases dissolved. Four years later the case, after going to arbitration, is resolved…
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Range Re-Opens 2 of 3 Water Impoundments in Washington County, PA

Last September Range Resources was fined $4.15 million for a series of violations at eight water impoundments they operate in southwestern PA (see PA DEP Fines Range Resources $4.15M for Wastewater Impoundments). As part of the deal worked out with the PA Dept. of Environmental Protection (DEP) under then-Sec. Chris Abruzzo, Range agreed to shut down five of the eight impoundments. Actually, all eight of the impoundments ceased operation either during or prior to last September. Two of the remaining three impoundments–the “Carter” and “Carol Baker” impoundments–are now back up and running. The Carter impoundment is handling only fresh water these days, while the Carol Baker impoundment has been upgraded and once again handles wastewater. The remaining “Jon Day” impoundment is being upgraded to begin handling wastewater again, when the weather breaks…
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WV Landowners Say They’re Bullied by Mountain Valley Pipeline

Last June EQT and NextEra US Gas Assets formed a joint venture to build a 330-mile pipeline from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA to deliver abundant, cheap Marcellus and Utica Shale gas to markets throughout the southeast (see EQT Announces New Marcellus/Utica Pipeline to Southeastern US). The new pipeline was dubbed the Mountain Valley Pipeline (MVP) project. Since that time, MVP has filed paperwork with the Federal Energy Regulatory Commission (FERC), which has jurisdiction on whether or not to build it because the pipeline crosses state lines (see EQT’s WV to VA Pipeline Open Season a Success, FERC Filing in Oct). In February, rumors began to bubble that the pipeline is changing its route (see WV to VA Mountain Valley Pipeline Changing Routes?). There has been some resistance, as there always is, on the part of some landowners who refuse to let surveyors on their property. So MVP sent letters to landowners threatening to sue them if they don’t allow the surveyors access. How can they sue? Using the power of eminent domain–but FERC hasn’t yet approved the project which would trigger the right to use eminent domain…
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EQT Sells WV Pipeline Gathering System to Itself for $1B

We’re always somewhat amused by these stories. Sometimes a company will spin off a division into its own company–a subsidiary–and later transfer or “sell” certain assets to the subsidiary. On paper the subsidiary is its own company with its own set of investors, its own board, and its own management. But the primary investor with controlling interest remains the mother company. For all practical purposes, the subsidiary IS the same company as the mother company. Midstream companies tend to do this with some regularity. Back in 2012 we noted that Kinder Morgan did it (see Kinder Morgan Sells Tennessee Pipeline to Itself). This week it’s EQT–selling its Northern West Virginia Marcellus Gathering System, along with a “preferred interest” in another EQT subsidiary, for $1.05 billion to the company’s pipeline subsidiary, EQT Midstream Partners…
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Who’s Still Leasing Land and Where in WV?

Who’s leasing land for drilling–and where? Perhaps the bigger question is, are drillers still leasing land?! The answer to that would be a resounding “yes, they are still leasing.” We don’t have a comprehensive overview of where people are leasing, but we spotted a list of leases filed with the clerk in Wetzel County, WV and found it interesting. Here’s who leased, how much acreage, and which energy company they signed with (sorry, no lease terms with signing bonuses and royalties, just acreage & driller)…
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WV “Landowner” Wins $4.8M in Lawsuit for Failure to Drill

By Andy Leahy

court gavelOn March 3, a federal judge awarded a Tyler County, WV mineral owner $4.8 million in present and future royalties (plus interest) as damages in a dispute involving the operator’s failure to follow through on some unusually generous lease terms. The operator, Cunningham Energy LLC of Charleston, WV, had promised to horizontally drill eight wells to and through the Marcellus Shale formation within three years, but was unable to do so–largely because the leaseholds were far too small to develop as stand-alone units, and the surrounding lands turned out to be already under lease to other drillers…
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Another Impressive Utica Well Pops Up…in Pennsylvania!

whisperingTioga County, PA is getting a reputation. No, not THAT kind of reputation silly! Tioga County, PA is getting a reputation for impressive Utica Shale wells. Last September MDN told you that Shell had drilled a pair of Utica wells in Tioga County (see Shell Drills 2 Successful Utica Wells in NEPA Marcellusland). Shell’s “Gee” Utica well produced a respectable 11.2 million cubic feet of natural gas per day (Mmcf/d). However, their “Neal” Utica well had an initial production rate of 26.5 Mmcf/d–a top-tier well. The current reigning champ for Utica wells is Range Resources’ Claysville Sportsman’s Club No. 1 well in Washington County, PA which initially produced a mind-blowing 59 Mmcf/d (see Range Resources Drills Highest-Ever Initial Producing Utica Well). Back to Tioga County. Yesterday Seneca Resources, a division of National Fuel Gas, reported drilling a Utica well in Tioga with an initial production rate of 22.7 Mmcf/d. VERY respectable–placing it in the top tier of Utica wells. Oh! And the well is located on PA state-owned land. Isn’t this news delicious–coming after Gov. Tom Wolf has signed an executive order preventing any new leasing of state-owned land…
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Eclipse Resources has “Transformative” 2014, Cutting Back in 2015

Eclipse Resources released their full year and fourth quarter 2014 update on Wednesday. Eclipse is a small but rapidly growing driller headquartered in State College, PA but doing most of its drilling in eastern Ohio. The company reports last year they drilled 57 gross (41 net) operated wells, completed 36 gross (27 net) operated wells and placed 28 gross (22 net) operated wells into sales. The vast majority of wells they’ve drilled are condensate producers. Last year was, as CEO Ben Hulburt said, a transformative year for the company. They went from producing an average 4.5 million cubic feet equivalent per day (Mmcfe/d) in 2013 to producing 73.5 Mmcfe/d in 2014. The company spent $809 million last year–but this year they’re whacking that, perhaps in half. In December they planned to spend $640 million in 2015, down 38% from last year. On Wednesday they didn’t put a number to it, but Eclipse said they were lowering it even more. Ouch. Here’s the low down on what happened in 2014, and what Eclipse has planned for 2015…
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Eclipse Resources March Analyst Phone Call + Slides

It doesn’t happen often (with other companies), but yesterday on an analyst/investor phone call, Eclipse Resources top management, including CEO Ben Hulburt, EVP/COO Tom Liberatore and EVP/CFO Matt DeNezza conducted a well-organized dog and pony show (and we say that affectionately) by talking through the company’s latest PowerPoint presentation. Slide by slide they give us the rundown. So we thought we would bring you a transcript of their explanations, along with a copy of the slide deck so you can look at the slides and read through their comments. Eclipse, drilling in the Marcellus/Utica of eastern Ohio, is a smart operator and a company to keep an eye on. It was founded by several top people who left Rex Energy, another small company we like…
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