Energy Companies

Economic Impact | Energy Companies | Ethane | Industrywide Issues | Ohio | Pennsylvania | Processing Plants | Shell | Statewide OH | Statewide PA | Statewide WV | West Virginia

Shell Cracker Plant Will Spur Real Estate Deals 150 Miles Away
June 10, 2016June 10, 2016

Gentlemen, start your engines! Your economic engines, that is. The news earlier this week that Shell has made the commitment to move ahead and build an ethane cracker plant in Monaca, PA has, as we knew it would, set the region buzzing (see Breaking: Shell Pulls the Trigger, PA Ethane Cracker is a Go! and Shell PA Cracker Plant Project a Lot Bigger Than First Thought). With the decision now made, those in the real estate community are salivating over how that decision will reverberate throughout the region. There is now an effort underway to lure manufacturers in Texas and along the Gulf Coast area to consider setting up in the western PA (and eastern OH and northern WV) area instead–to take advantage of being that much closer to the biggest market in the country–the East Coast. One real estate pro says commercial real estate for up to 150 miles away is likely to be impacted by the decision to build the cracker plant in Monaca…
Read More “Shell Cracker Plant Will Spur Real Estate Deals 150 Miles Away”
Beaver County | Economic Impact | Energy Companies | Ethane | Industrywide Issues | Jobs | Pennsylvania | Processing Plants | Shell | Statewide PA

Shell PA Cracker Plant Project a Lot Bigger Than First Thought
June 8, 2016June 8, 2016

Artist’s rendering of Shell Monaca Ethane Complex – click for larger version

Yesterday MDN was one of the first to bring you the fantastic news that Shell has decided to move forward with building their multi-billion dollar ethane cracker plant (see Breaking: Shell Pulls the Trigger, PA Ethane Cracker is a Go!). Shell mentioned their positive final investment decision (FID) as part of a larger, wide-ranging announcement on their plans for the next few years and beyond. They were slow off the mark, but Shell finally issued a separate press release about the FID for the Monaca, PA ethane cracker plant complex. As usually happens with a story this big, more details have come out after the initial announcement. For example: Shell’s initial estimate for the cost of the project, more than four years ago, was “$2-$3 billion.” Now? They won’t say. But some news sources are reporting it will be closer to a $6 billion investment. One even goes as high as $11 billion! What Shell *is* saying is that construction on the main part of the facility will begin in 18 months, with production expected to flow beginning “early in the next decade”–which we take to mean sometime around 2020 or 2021. Shell says the project will provide work for 6,000 temporary construction workers while it’s being built, and 600 permanent, full-time employees to operate the facility once it is built. Needless to say, local economic and government leaders in the Pittsburgh region are ecstatic with the news. Here’s more details about the Shell ethane cracker coming to PA, along with select reaction and comments…
Read More “Shell PA Cracker Plant Project a Lot Bigger Than First Thought”
Beaver County | Energy Companies | Ethane | Industrywide Issues | Pennsylvania | Processing Plants | Shell | Statewide PA

PA Gov Wolf Attempts to Take Credit for Shell Cracker Decision
June 8, 2016June 8, 2016

Former PA Gov. Tom Corbett – the reason Shell decided to build a cracker

You know what’s really sleazy about politicians? When they take credit for something they had NOTHING to do with. Like Pennsylvania Gov. Wolf is doing with the fantastic news that Shell will build an ethane cracker plant in the state (see yesterday and today’s stories). The reason Shell even considered PA in the first place is because of Wolf’s far more able and talented predecessor, Gov. Tom Corbett. Corbett fought tooth and nail to get Shell to locate the cracker in the Keystone state. Part of Corbett’s fight included getting $1.7 billion in tax breaks approved, to lure the plant to PA (see Gov. Corbett’s PR Campaign for $1.7B Cracker Plant Tax Break). The cracker decision kept getting delayed during Corbett’s tenure, something he took a lot of heat over. If Shell had committed sooner, PA may have had a different election result (re-electing Corbett instead of the disastrous Wolf). Anywho, that was yesteryear, and today, Tom Wolf is taking credit for something Tom Corbett did. Typical…
Read More “PA Gov Wolf Attempts to Take Credit for Shell Cracker Decision”
American Energy Partners | Chesapeake Energy | Energy Companies

Police Find No Evidence of Suicide in Aubrey McClendon’s Death
June 8, 2016June 8, 2016

Aubrey McClendon

We spotted an interesting article from Oklahoma about Aubrey McClendon’s death (God rest his soul). Everybody, including MDN, read the tea leaves and thought McClendon had committed suicide by vehicle (see McClendon’s Biggest Backer Backed Away the Day Before Car Cras). However, there has always been some doubt (see Aubrey McClendon’s Death Still a Mystery – Suicide or Distracted Driving?). A new report from the police investigating Aubrey’s death have pronounced they can’t find “any evidence” that it was actually suicide…
Read More “Police Find No Evidence of Suicide in Aubrey McClendon’s Death”
Beaver County | Energy Companies | Ethane | Industrywide Issues | Pennsylvania | Processing Plants | Shell

Breaking: Shell Pulls the Trigger, PA Ethane Cracker is a Go!
June 7, 2016June 7, 2016

This is the biggest of big news. We’ve been waiting for this day a LONG time. Earlier today Shell held a “Capital Markets Day” (in the Netherlands) and provided an extensive update on “reshaping” the company–for 2020 and beyond. As part of the update, hidden part of the way through their press release, we get this statement from Shell: “In Chemicals, the company already has brownfield growth projects underway on the US Gulf Coast and in China. Today we are announcing the final investment decision on a new, 1.5 million tonnes per annum (mtpa) cracker and polyethylene plant in Pennsylvania, USA, which will use natural gas from shales production as its feedstock. Once these projects are on stream, early in the next decade, Shell’s ethylene capacity should reach around 8 mtpa, compared with 6.2 mtpa today.” The implication is that the FID (final investment decision) is “yes, we’re building it” as evidenced by the phrase “once these projects are on stream…” MDN predicted it (see More Evidence that the Shell Ethane Cracker Plant in PA is a Go). You don’t spend half a billion (out of $2-$3 billion) and not move forward. Still, it’s fantastic to have Shell finally, after five years, say “Yes, we’re building it.” Another fascinating bit of news from today: Shell says shale will be very important to the future of the company, after 2020…
Read More “Breaking: Shell Pulls the Trigger, PA Ethane Cracker is a Go!”
Carrizo Oil & Gas | Energy Companies

Carrizo O&G Top Management Dumps Another $646K in Company Stock
June 7, 2016June 7, 2016

Carrizo Oil & Gas, a Houston-based driller, actively drills in the Eagle Ford Shale in South Texas, the Delaware Basin in West Texas, the Niobrara Formation in Colorado, and until mid-year in 2015, they did have an active drilling program in the Ohio Utica and Pennsylvania Marcellus. No more. They haven’t drilled in Appalachia since 3Q15 (see Carrizo O&G 1Q16: Still Not Active in the Marcellus, Prod. Down). However, we expect at some point Carrizo will return to northeast drilling–so we keep track of the company. Last year we noted that Carrizo’s top mangement was engaged in dumping the company’s stock (see What’s Up with Carrizo Top Mgmt Continued Selling of Co. Stock?). They’re at it again. Three of Carrizo’s top managers, including the CEO, COO and a VP, along with a board member, have just sold off a collective 17,082 shares worth $646,280. Hey, we have absolutely no issue with those who help a company succeed, in profiting from that success. Top managers are often awarded stock bonuses and it’s not uncommon to cash them in. But we get nervous when we see the people running a company selling large tranches of stock, repeatedly. Makes us wonder what they know that we don’t!…
Read More “Carrizo O&G Top Management Dumps Another $646K in Company Stock”
Energy Companies | Warren Resources

Warren Resources Files for Bankruptcy, Wiping Out Stockholders
June 6, 2016June 6, 2016

Warren Resources, a small driller that drilled and brought online their first two Marcellus Shale wells last year, is based in Houston and operates in California, Colorado, Wyoming and Pennsylvania. In February MDN told you that Warren missed an important $7.5 million payment, the first ominous signal of what was to come (see Warren Resources Misses $7.5M Debt Payment, 30-Day Clock Ticking). The next week the company announced no new drilling, anywhere, in 2016–hinting they might have to file for bankruptcy (see Warren Resources: Potential Bankruptcy, No Drilling in 2016). In March the New York Stock Exchange threatened to de-list Warren’s stock (see Pretty in Pink? Warren Resources Put on Notice for Stock Delisting). In April, the board changed the definition and role of the company’s CEO to become CRO–Chief Restructuring Officer–a sure sign of what was ahead (see Warren Resources Preps for Bankruptcy, New Role for CEO). Indeed, this one was pretty easy to predict. Last week Warren filed for Chapter 11 bankruptcy protection and has worked out a deal to transfer ownership of the company to two debt-holders: 82.5% of the company will now be owned by GSO Capital (owed $248 million), and the rest will go to Claren Road Asset Management (owed $57 million). Claren isn’t happy with the deal. Current/existing stockholders? They get zip. Wiped out. Screwed. That’s how it works in our great country–debt-holders get to take over and equity-holders (i.e. owners) get taken to the cleaners…
Read More “Warren Resources Files for Bankruptcy, Wiping Out Stockholders”
Energy Companies | Halcon Resources

NYSE Threatens Halcon Resources with De-Listing of Stock
June 3, 2016June 3, 2016

The bad news just keeps coming for Halcon Resources, a 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 its Utica acreage. Earlier this month we reported that Halcon has cut a deal to file for bankruptcy (see Another One Bites the Dust: Halcon Resources Filing for Bankruptcy). In January the company quit paying dividends on its preferred stock (see Halcon Resources Suspends Dividend Payments for Preferred Stock). Last December, in a bid to keep the price of the stock from slipping below $1 per share, Halcon did a 1-for-5 reverse stock split, combining 5 shares into a single share (see Halcon Resources Announces 1-for-5 Stock Split to Avoid De-Listing). Oops. That strategy didn’t work out so well. Halcon has just received notice from the New York Stock Exchange that unless the company can get the share price above $1 for 30 consecutive days, the stock will be de-listed from the NYSE…
Read More “NYSE Threatens Halcon Resources with De-Listing of Stock”
Beck Energy | Energy Companies | Industrywide Issues | Litigation | Ohio | Regulation | Summit County

Munroe Falls Won’t Let it Go: Files New Lawsuit Against Beck Energy
June 2, 2016June 2, 2016

“Unbelievably dense” is how we would describe the “leaders” of Munroe Falls, Ohio. Going back to 2012, Monroe Falls–a “city” with a population of 5,000–has been attempting to stop legally permitted wells from being drilled on private property within city limits. Munroe Falls ordered Beck Energy to cease and desist drilling activity claiming the driller had not secured permits from the city first (Mother May I?). The object was to never let Beck drill, to deny them the permits they would need to seek, so Beck took them to court and an Ohio appeals court struck down Munroe Falls’ “home rule” zoning ordinances as illegal (see OH Appeals Court Strikes Down Home Rule for Drilling). The case was appealed to the OH Supreme Court and the supremes ruled in favor of Beck Energy (see OH Supreme Court Strikes Down Home Rule in Gas Drilling Case). For normal people that would be the end of it. However, it was a close decision (4-3) and the supremes left lots of wiggle room from municipalities to continue making life miserable for drillers (see Some Options Still Available After OH Court Strikes Down Home Rule). So even though Munroe Falls went all the way to the top and lost–once again they’ve just filed another zoning lawsuit against Beck Energy. Do they never learn?…
Read More “Munroe Falls Won’t Let it Go: Files New Lawsuit Against Beck Energy”
Energy Companies | Stone Energy

Stone Energy’s Play to Stay on NYSE: 1-for-10 Reverse Stock Split
June 2, 2016June 2, 2016

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 75,000 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). As we pointed out in April, the company is in financial trouble and inching toward bankruptcy (see Stone Energy Appoints Special Liaison, Inches Toward Bankruptcy?). Earlier this month the New York Stock Exchange threatened the company with de-listing its stock, which would not bode well for a company trying to attract and hold on to investors (see Stone Energy Threatened with De-listing by NYSE). One of the strategies companies use to remain listed on an exchange is to combine together shares of stock, called a reverse stock split. Stone has just announced they will do a 1-for-10 reverse split–meaning an investor who owns 10 shares will see those 10 shares magically combined into a single share…
Read More “Stone Energy’s Play to Stay on NYSE: 1-for-10 Reverse Stock Split”
Energy Companies | Rex Energy

Rex Energy Swapping $631M in Private IOUs for Public IOUs
June 2, 2016June 2, 2016

Rex Energy, a small Marcellus/Utica driller headquartered in State College, PA, is trying to keep its head above the financial waterline. It’s struggling, but making progress. In April Rex became the latest driller to convert outstanding debt in the form of notes (what we call IOUs) into equity, or stock ownership (see Rex Energy Converts IOUs into Common Stock, Avoids Bankruptcy?). But not all outstanding notes/IOUs got converted. Rex still has $631 million worth of IOUs hanging out there. Rex announced yesterday they are swapping out their $631 million worth of “private notes” for “exchange notes.” What does that mean?…
Read More “Rex Energy Swapping $631M in Private IOUs for Public IOUs”
Eclipse Resources | Energy Companies | Energy Services | Guernsey County | Halliburton | Hydraulic Fracturing | Industrywide Issues | Ohio

Halliburton Fracked Eclipse’s 3.5 Mile ‘Purple Hayes’ Utica Well
June 1, 2016June 1, 2016

There’s an old saying that goes like this: “Success has many fathers, but failure is an orphan.” Not long ago MDN reported that Eclipse Resources had drilled what is believed to be the longest horizontal well (on land) in the world–the 3.5 mile “Purple Hayes” Utica Shale well (see Eclipse Res. 1Q16: Drills Longest Shale Well Ever! “Purple Hayes”). It wasn’t but a day or two and one of the companies that worked on the well to help drill it, Nine Energy, popped up to say they had a hand in that recording-breaking well (see Nine Energy Completed World’s Longest Shale Well – in the Utica). Last week MDN told you that “snubbing” company Deep Well Services, from Pennsylvania, also helped with drilling the well (see PA Firm Helped Drill ‘Purple Hayes’ – World’s Longest Shale Well). Drilling any well is truly a team effort with many companies involved. Yesterday yet another company stepped up to claim they played a major role in drilling the Purple Hayes–Halliburton…
Read More “Halliburton Fracked Eclipse’s 3.5 Mile ‘Purple Hayes’ Utica Well”
Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Susquehanna County | WPX Energy

PA District Court Rules in Favor of Driller in NEPA Lease Dispute
June 1, 2016June 1, 2016

A decision by the Middle District Court of Pennsylvania is worth noting–for both drillers AND landowners. A landowner in Susquehanna County, PA sold some land already under lease to a new landowner/rights owner. Neither the new landowner nor the previous landowner informed the driller of the change in ownership. The time came to renew the lease and under the terms of the contract the driller sent payment–but didn’t know about the change in ownership–so the driller sent the payment to the previous owner. The new landowner used that faux pas as a legal excuse to sue the driller to break the contract. The new landowner claimed the paperwork filed (not the full lease but an abstract) didn’t contain mention of informing the driller. In other words, the landowner used the “we didn’t know” excuse. The judge disagreed and said, a) the lease itself clearly outlines the responsibilities of the old/new landowners to inform the driller, b) there is a reasonable expectation for the new landowner to perform due diligence in seeking out a copy of the original lease to know that. Therefore the new landowner is still under lease. Here’s an outline of the case, with names…
Read More “PA District Court Rules in Favor of Driller in NEPA Lease Dispute”
Anadarko | Bradford County | Chesapeake Energy | Energy Companies | Industrywide Issues | Litigation | Pennsylvania

Chesapeake, Anadarko Try to Wiggle Out of PA Royalty Lawsuit
May 31, 2016May 31, 2016

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 PA Atty General Sues Chesapeake Energy, Williams for Royalty Fraud). Somehow the anti-drilling Kane, herself facing ejection from office over felony charges (namely perjury), is still in office and the case against Chessy, Anadarko et al is progressing. However, there is a new wrinkle to report. Chesapeake and Anadarko last week filed to dismiss Kane’s complaints against them accusing Kane of attempting to litigate federal antitrust claims in state court. As with many legal cases, this one is complicated. We’ll try and break it down into understandable form…
Read More “Chesapeake, Anadarko Try to Wiggle Out of PA Royalty Lawsuit”
Deep Well Services | Eclipse Resources | Energy Companies | Energy Services | Guernsey County | Ohio

PA Firm Helped Drill ‘Purple Hayes’ – World’s Longest Shale Well
May 26, 2016May 26, 2016

Earlier this month MDN told you about the “Purple Hayes”–a Utica Shale well drilled by Eclipse Resources in Guernsey County, OH that is thought to be the longest shale well every drilled, at 3.5 miles (see Eclipse Res. 1Q16: Drills Longest Shale Well Ever! “Purple Hayes”). The well was drilled in just 18 days and included 124 frac stages–truly astonishing! Not long after Eclipse announced the completion of Purple Hayes, Nine Energy stepped up to say they helped drill the well (see Nine Energy Completed World’s Longest Shale Well – in the Utica). Another company has just stepped up to say they also had a hand in drilling and completing the well–Deep Well Services (DWS). We’ve told you about DWS in the past, a Pennsylvania-based “snubbing” company (see PA “Snubbing” Company DWS Experiences Rapid Expansion). What’s a snubber and what role did it play in completing the Purple Hayes?…
Read More “PA Firm Helped Drill ‘Purple Hayes’ – World’s Longest Shale Well”
Energy Companies | Industrywide Issues | Jobs | Shell

Shell Cutting Another 2,200 Jobs Post-BG Merger, 12,500 Total
May 26, 2016May 26, 2016

In February Shell completed the merger with/purchase of BG Group–the largest such megamerger since Exxon bought Mobil in the 1990s (see Shell & BG One Company After Today, Shell Ponies Up $14.4B Cash). Shell’s purchase of BG was all about LNG–liquefied natural gas (see LNG Love Story: Shell Makes Play to Buy BG in $69.7B Megamerger). As part of the purchase, Shell was up front about the fact that they would lay off some 10,000 people in the combined company (see Shell to Cut 10,000 Jobs After Buying BG; Exiting Shale Drilling). That process has already begun. And unfortunately, Shell announced yesterday they will cut an extra 2,200 jobs, taking the grand total to nearly 12,500 job cuts from 2015 through the end of 2016…
Read More “Shell Cutting Another 2,200 Jobs Post-BG Merger, 12,500 Total”