Energy Companies

American Energy Partners | Chesapeake Energy | Energy Companies | Industrywide Issues | Litigation

Aubrey McClendon Indicted by DOJ for Conspiracy in Bid Rigging
March 2, 2016March 2, 2016

con·spir·a·cy – noun – a secret plan by a group to do something unlawful or harmful. Yesterday the U.S. Department of Justice indicted a single person–Aubrey K. McClendon, on a single count of conspiracy. He is alleged to have conspired to rig bids for oil and gas leases in Oklahoma, his home state, from 2007 to 2012. Do you see the obvious contradiction here? In order to have a conspiracy, you need more than one person. Yet the FBI and the DOJ have brought charges against only one person. It takes at least two people to have a conspiracy–so why has no one else been indicted? McClendon issued a statement (below) blasting the DOJ, pointing out he is the only person in 110 years to be prosecuted under the Sherman Act for bid rigging. What really hurts is that Chesapeake Energy, the company Aubrey co-founded, has been attempting to sell him out in return for not being prosecuted by the DOJ. Anyone else smell a rat in this whole thing?…
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Butler County | Carroll County | Energy Companies | Ohio | Pennsylvania | Rex Energy

Stayin’ Alive: Rex Energy $175M JV to Keep Drilling in PA & OH
March 2, 2016March 2, 2016

Rex Energy, a relatively small driller that drills almost exclusively in the Marcellus/Utica and with headquarters in State College, PA, has a new investor/partner. Drillers across the country and doing everything they can to stay in business with the bottom dropping out of prices they receive for what they produce. Rex is getting $175 million from investment firm Benefit Street Partners to help drill up to 58 new wells in Rex’s Moraine East area (Butler County, PA) and Warrior North area (Carroll County, OH). In return for investing, Benefit Street Partners will receive ownership of anywhere from 15% to 65% in the wells they help fund. Below are the details for how Rex is stayin’ alive…
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Energy Companies | EXCO Resources

EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting
March 2, 2016March 2, 2016

EXCO Resources, once a sizable player in the Marcellus–with 145,000 net acres in the Marcellus and having drilled and operating 124 horizontal Marcellus wells–has pretty much abandoned the Marcellus at this point. The company filed its fourth quarter and full year 2015 financial and operational update yesterday. In picking through the report, we find that EXCO didn’t drill a single new well in the Marcellus in 2015, and has no plans to do so in 2016. Instead, the company is concentrating their meager $103 million 2016 budget on drilling new wells in North Louisiana and East Texas. According to EXCO they get their highest rate of return (35%) in that area. Buried (and we mean buried) in the report is the news that the New York Stock Exchange has threatened the company with delisting its stock (share price is averaging under $1). The company’s proposed “fix” for the low stock price is a reverse split, combining 10 shares of existing stock into one share of new stock. Zooming out to focus on the company’s financial health, EXCO shows a $1.2 billion loss for 2015–but as with other companies, most of it was a paper loss due to impairments or write-downs of the value for its assets, rather than out-of-pocket money loss. Here’s selected portions of yesterday’s update…
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Coterra Energy (Cabot O&G) | Energy Companies | Industrywide Issues | Litigation | Pennsylvania | Susquehanna County

Dimock Trial: Cornell Prof Tony Ingraffea Exposed as Fractivist
March 2, 2016March 2, 2016

MDN has written, forever, about fractivist professor from Cornell University Tony Ingraffea. We still recall the first time we heard “Tony the Tiger” in person nearly six years ago (see Cornell Hydraulic Fracturing Expert Headlines First Meeting of New York Residents Against Drilling (NYRAD) in Vestal, NY). We said this at the time: Dr. Ingraffea is an accomplished speaker. He is equal parts comedian and expert, and he knows how to “work a crowd.” Indeed. He has since retired from Cornell but has created a cottage industry for himself in bashing natural gas and shale energy. The dunderheaded lawyer representing the two families suing Cabot Oil & Gas for contaminating their water in Dimock, PA called Tony the Tiger to the witness stand, as an “expert witness.” At first he wowed the crowd and the jury. We told you, he’s a good speaker. He also claimed, under oath, he’s not a protester or fractivist (an outright lie–perjury in our opinion). Cabot’s lawyers proceeded to shred his credibility under cross examination. Turns out Tony has never been involved with drilling or fracking a single well. Ever. The only thing he does is sit his rear-end in front of a computer and make pretty pie charts and “analyze” data. Oh, and he attends anti-fracking rallies too–as he admitted under oath to the Cabot lawyer. So much for the “expert” witness who claims he’s just a scientist and not a radical anti-driller…
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Energy Companies | Energy Services | EQT Corp | Industrywide Issues | Pipelines | Regulation | Statewide WV | West Virginia

Bill Allowing Surveyors Private Property Access Fails in WV Senate
March 2, 2016March 2, 2016

In June 2014 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 project is called Mountain Valley Pipeline (MVP). A number of West Virginia landowners objected to MVP and would not let surveyors on their property, so MVP (i.e. EQT and NextEra) threatened to sue the landowners claiming eminent domain laws to enter their properties (see WV Landowners Say They’re Bullied by Mountain Valley Pipeline). A month later they did sue (see Mountain Valley Pipeline Sues 103 WV Landowners for Survey Access). But it takes a long time to sue individual landowners in hundreds of cases. So somebody talked to somebody and a bill was introduced in the WV Senate this year, Senate Bill (SB) 596–which would allow surveyors to enter private properties to do survey work as long as a notice was sent by certified mail ahead of time. No doubt the bill was in response to the ongoing, thorny issue of surveying for MVP. The bill passed out of committee with a split vote. But the bill was voted down by the full Senate…
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Energy Companies | Shell

Shell Giving Up on Shale? Merges Unconventional with Conventional
March 2, 2016March 2, 2016

Just last November supermajor Royal Dutch Shell announced they were restructuring their upstream (drilling) units into two divisions: conventional and unconventional/shale (see Shell Restructures Upstream into Conventional/Unconventional Units). Then last week Shell announced they’ve scrapped the plan and will continue to treat all of upstream as one division within the company. What happened? Is this a signal that Shell is giving up on shale?…
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Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

PA Landowners Ask Judge to Intervene in Chesapeake Royalty Case
March 1, 2016March 1, 2016

In March 2015 MDN reported on the “Demchak” royalty case in which a group of Pennsylvania landowners had agreed to a settlement with Chesapeake over Chessy’s alleged shorting of royalty payments (see Chesapeake’s PA Royalty Settlement Affects Some, Not All Landowners). As we reported at the time, “several thousand” landowners (we now know the number is 9,000 landowners) would share two-thirds of the $11 million settlement (the other one-third going to the lawyers), which doesn’t seem all that great a deal to us. Toward the end of last year the issue got heated again as many landowners were faced with a decision of whether or not to opt out of the settlement (see Packed Meeting in Towanda Discusses Chesapeake Royalty Settlement). Then the whole thing came to a screeching half with a new lawsuit by PA Attorney General Kathleen Kane. Her lawsuit stopped the settlement from proceeding (see PA AG’s Lawsuit Derails Demchak/Chesapeake Royalty Settlement). Afraid that Chesapeake will file for bankruptcy protection (not related to this case), landowners in the Demchak case are asking a federal judge to appoint a mediator and finish the deal–so at least they will get pennies on the dollar instead of nothing at all…
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Energy Companies | EV Energy Partners

EV Energy Partners: No New Utica Wells in 2016, in Survival Mode
March 1, 2016March 1, 2016

EV Energy Partners, an upstream master limited partnership (MLP) created by EnerVest that holds enormous acreage in the Utica Shale play, released their fourth quarter and full year 2015 update yesterday. Company mucky mucks also held an earnings phone call with analysts. What did we learn? EV has no plans to drill new Utica wells in 2016. The company is on an austerity budget–only spending to complete 10 already-drilled wells in the Texas Barnett Shale. EV will spend between $10-$18 million on exploration and production in 2016. You read that right, $10-$18 million, NOT $100-$180 million. In other words, essentially nothing. According to EV’s Chairman, John Walker, “Needless to say we all should be running our companies today for survival.” Indeed. Below is yesterday’s EV Energy update, along with a portion of the analyst phone call transcript…
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CONSOL Energy | Energy Companies

CONSOL Sells Coal Mine for $420M; Transforming into Gas Driller
March 1, 2016March 1, 2016

Calling it “another significant event in the execution of CONSOL Energy’s strategy,” CONSOL Energy CEO Nick DeIuliis announced yesterday the company has sold another of its coal mines–this one in southwestern Virginia–for $420 million. The reason? CONSOL continues on its mission to convert from being one of the largest coal companies in the North America to becoming one of the preeminent “pure play” natural gas drillers in the Marcellus/Utica. That’s the goal–and this sale helps propel them toward that goal…
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Accidents | Antero Resources | Doddridge County | Energy Companies | Industrywide Issues | West Virginia

Antero Resources Well Pad Fire in Doddridge County, WV
February 29, 2016February 29, 2016

There was a small fire at an Antero Resources well pad in Doddridge County, WV last Thursday. Antero immediately shut down the four producing natural gas wells and contacted local first responders who put the fire out. The important news is that (a) nobody was hurt, (b) the environment was not harmed, and (c) the wells are secure and there is no danger. What happened is this: When natural gas comes out of the borehole, more than just methane comes out. Along with methane comes other hydrocarbons and water. There is a separating unit on the pad to strip out the water and some of the other substances from the methane. That unit failed, allowing some methane to escape which then caught fire. The good new is that safety precautions worked and the fire did not spread. Below are the details…
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Energy Companies | Southwestern Energy

Southwestern Cuts 2016 Spending 80%, Idles Marcellus Rigs (for Now)
February 29, 2016February 29, 2016

As we highlighted last Friday, Southwestern Energy reported a large paper loss of $4.6 billion for 2015, but also reported an increase in production of 27% over 2014 (see Southwestern Energy 2015: Record Production, Big Paper Loss). As part of the quarterly dog and pony show, Southwestern (like every other driller) hosted an analyst phone call to accompany the release of their numbers. As sometimes happens, further details came out on the phone call that weren’t evident in the official update. For example, in 2016 Southwestern currently does not plan to drill any new wells in the Marcellus/Utica. They have “idled” all of their drilling rigs. Southwestern CEO Bill Way said he specifically used the word idled because they are waiting to restart them when/if prices pick up again. The current plan is to complete 20-30 wells in the northeast, in the southwest and northeast Marcellus–and then wait and see what happens with prices…
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Eclipse Resources | Energy Companies

NYSE Threatens to De-list Eclipse Resources’ Stock – Price Too Low
February 29, 2016February 29, 2016

A number of companies involved working the Marcellus/Utica have received notices from the New York Stock Exchange warning those companies that the average trading price for their stock had fallen below minimum standards and is in danger of being de-listed from the exchange: Seventy Seven Energy (see Seventy Seven Energy’s Stock Threatened with Delisting from NYSE); EXCO Resources (see More Trouble for EXCO Resources – NYSE Threatens to De-List Stock); Atlas Energy (see Atlas Energy Luck Run Out? NYSE Threatens Company with De-Listing); and Halcon Resources (see Halcon Resources Put on Notice by NYSE; Refi Debt at Higher Rate). Two companies actually were de-listed by the NYSE: Nuverra Environmental (see Nuverra Environmental Delisted from NYSE, Now a Penny Stock) and Magnum Hunter Resources (see Magnum Hunter De-Listed from NYSE; Still Shopping Eureka Hunter). You can add another name to the list of companies being threatened with de-listing: Marcellus/Utica pure play driller Eclipse Resources. CEO Ben Hulburt explains why Eclipse’s stock price trading at under $1 doesn’t reflect true value of the company…
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Coterra Energy (Cabot O&G) | Energy Companies | Industrywide Issues | Litigation | Pennsylvania | Susquehanna County

Dimock Trial Update: Plaintiffs’ Expert Witness Exposed as Fracktivist
February 29, 2016February 29, 2016

The hits just keep rollin’ in from the Dimock “Cabot polluted my water” trial being held in Scranton, PA. It’s more like a comedy show than a trial. We wonder if the plantiffs will sue their own attorney for gross incompetence when it’s all done. Here’s the latest from last Thursday/Friday. The plantiffs’ attorney put an “expert witness” on the stand, Paul Rubin. Cabot’s lawyers proceeded to shred his testimony to pieces and show him as an anti-drilling activist with an agenda. Read MDN friend Tom Shepstone’s summary below–it’s prime. Also late last week the plantiffs’ attorney, for the second time admitted in open court, stated that the trial is not about frack fluid getting into well water–but rather about methane migration. For years people like Josh Fox of Gasland fame have falsely claimed frack fluids were the source of contamination in Dimock. That old lie is, once and for all, now exposed. Not even the plantiffs make that claim. We’d say this trial has served a useful purpose: to expose the anti-fossil fuel agenda and its peddlers as being truth-challenged…
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Chesapeake Energy | Energy Companies

Fitch Ratings Downgrades Chesapeake Energy from B to B-
February 29, 2016February 29, 2016

Last week we told you that Chesapeake Energy CEO Doug Lawler had pulled a rabbit out of his hat with fourth quarter and full year 2015 financial news (see Chesapeake Loses $14.9B, Suspends New Utica/Marcellus Drilling). The stock market got all excited and boosted Chessy’s stock by 22% in a single day, from $2.19 to $2.67 per share. But then Fitch Ratings came along and downgraded Chesapeake’s rating from a B to a B-. Fitch says Chesapeake has an increased risk of not being able to put their hands on cash if they need it. Here’s what the Fitch people said last Thursday in downgrading Chesapeake…
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Atlas Energy | Energy Companies | Industrywide Issues | Jobs | Pennsylvania | Statewide PA

Atlas Energy Issues 2015 Update + More Details on Company Layoffs
February 26, 2016February 26, 2016

Yesterday Atlas Energy issued its fourth quarter and full year 2015 update. Atlas, as we’ve pointed out in the past, has sold most of its Marcellus assets in two huge deals: a $4.3 billion deal with Chevron in 2011 and in a $7.7 billion deal with Targa Resources in 2014. Atlas operates mostly conventional (some unconventional) oil and gas wells in a number of states: New York, Pennsylvania, Ohio, West Virginia, Virginia, Tennessee, Indiana, Alabama, Colorado, Oklahoma, Texas and New Mexico. Sizable company. Recently, as MDN has exclusively reported, the company laid off a number of its employees (see Atlas Energy Update – 125 Layoffs Companywide). We’ve since learned, from a highly placed source with knowledge of the layoffs, that the number of companywide layoffs is closer to 150–approximately 20% of the Atlas workforce. There’s no mention of that in yesterday’s update. So what does the update show? Atlas lost $240 million in 2015–but if you back out the paper losses of impairments and depreciation, the company actually made money. In the update Atlas mentions they shut in their prolific Marcellus wells in Lycoming County, PA during 4Q15 due to low prices. Below is the Atlas update, and more details about how many Atlas employees were laid off–and where…
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Chesapeake Energy | Energy Companies | Energy Services | Southwestern Energy | Williams

Southwestern, Chesapeake Negotiate Lower Midstream Rates from Williams
February 26, 2016February 26, 2016

Used to be when a driller signed a contract with a midstream company to gather, process and transport the company’s gas (or oil) to market, the driller was locked in for a minimum of 15-20 years. The rates NEVER change. Midstream companies will build expensive pipeline systems and all of the associated infrastructure only if they’re guaranteed a certain return. Which is why investors love midstream companies–it’s like investing in an annuity, a guaranteed rate of return for 15-20 years to come. And then the bottom fell out of the market. As we wrote about Wednesday, some bankrupt drillers are seeking court action to dissolve those contracts (see Shock: Judge May Allow Drillers to Cancel Gathering Pipeline Deals). We have another new development to tell you about: drillers not in bankruptcy are renegotiating once sacrosanct, set-in-stone contracts, to reduce the amount they pay midstreamers. Southwestern Energy and Chesapeake Energy have both recently negotiated lower rates with Williams. The beginning of a trend?…
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