Energy Companies

Energy Companies | Rex Energy

Rex Energy Extends & Sweetens Offer to Refi Outstanding IOUs
March 23, 2016March 23, 2016

Earlier this month Rex Energy offered to refinance its notes (i.e. IOUs) so the notes expire later, meaning they don’t have to cough up cash sooner to pay off the debt (see Rex Energy Offers to Refinance Outstanding IOUs). It pushes repayment out further, after (presumably) the market has turned and Rex is once again making a profit. Apparently Rex isn’t having much luck convincing its note holders to go for the deal–so they’ve decided to extend the time and sweeten the deal…
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Energy Companies | EnerVest | Ohio | Statewide OH

EnerVest Likes Clinton Sandstone “Utica-lite” Oil Wells in OH
March 22, 2016March 22, 2016

Once upon a time the Clinton Sandstone layer was the most drilled rock layer in Ohio. Then the Utica/Point Pleasant came along and it seemed as if everybody forgot about the Clinton. Previously the Clinton was drilled vertically, or conventional-only. But what if you drilled the Clinton horizontally, like you do in the Utica? You might get a “Utica-lite” well, as we commented a year ago (see Ohio Clinton Sandstone Horiz Wells on the Increase – Utica-Lite?). Last year MDN told you that EnverVest, among others, was experimenting with horizontal drilling in the Clinton Sandstone. According to drillers who are experimenting in the Clinton, drilling a horizontal Clinton well is anywhere from 3-10 times more expensive than a conventional well, but it produces anywhere from 7 to 20 times more oil, which is typically what they’re drilling for in the Clinton. EnerVest has drilled seven horizontal Clinton wells and is extracting 1,100 barrels of oil per day from those seven wells. Here’s more details shared by EnevVest at a recent OOGA meeting about their Clinton Sandstone efforts…
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Energy Companies | Rice Energy

Single Investor Buys ~$56M of Rice Energy Stock in 1Q16
March 22, 2016March 22, 2016

Investors constantly sink money into, and pull money out of, oil and gas companies. Managers of those companies also buy and sell stock in their own companies. From time to time we highlight such cases–but lately, we only highlight it if it’s a really big investment. This is one of those really big investments. Billionaire Steven Cohen, founder of Point72 Asset Management, has snapped up 5.6 million shares of Rice Energy during the first almost three months of this year–so far. Rice’s stock currently trades at $12.69 per share. Over the past three months the price per share has varied from a low of $8.48/share to a high of $13.08/share. Let’s pick a number and say Cohen paid an average of $10 per share for his 5.6 million shares. That means he ponied up something on the order of $56 million–a sizable chunk of ownership in the company…
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American Energy Partners | Energy Companies

McClendon’s Biggest Backer Backed Away the Day Before Car Crash
March 21, 2016March 21, 2016

Details continue to drib and drab out related following the death of Aubrey McClendon on March 2nd (see Stunned: Former Chesapeake CEO Aubrey McClendon Dies in Car Crash). We previously told you that one of Aubrey’s biggest backers, Energy & Minerals Group (EMG), was about to hang Aubrey out to dry (see More Info Comes to Light About McClendon’s Last Days/Last Moments). We now have more details about EMG’s abandonment of McClendon the day before his death. We also have a comment from an analyst who says McClendon’s company, American Energy Partners, will likely declare bankruptcy within a year. They just aren’t producing enough cash to pay all of the debts…
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Energy Companies | Southwestern Energy

Southwestern Energy Pays Preferred Stock Dividends w/Common Stock
March 21, 2016March 21, 2016

Northeast drilling companies like Southwestern Energy are using creative strategies to stay afloat until oil and gas prices increase again. One of the tactics has been to lay off thousands of workers (see Southwestern Energy Cuts Workforce 44%, 200 Marcellus Jobs Gone). Another strategy is to cut spending and suspend drilling altogether (see Southwestern Cuts 2016 Spending 80%, Idles Marcellus Rigs (for Now)). Yet another is to borrow new money to pay off previously borrowed money (see Southwestern Energy Borrows $750M to Pay Off Other Borrowed Money). Southwestern continues with the creative financing with a tactic we’ve not seen before among northeast drillers: Pay dividends for one class of stock (preferred) by giving dividend-holders shares in another class of stock (common)…
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Atlas Energy | Energy Companies

Atlas Energy “Penny Stocks” Begin Trading Today on OTCQX
March 21, 2016March 21, 2016

MDN previously told you that the Philadelphia-based Atlas Energy, which sold off the majority of its Marcellus assets in two different tranches for $12 billion, has fallen on hard times–at least its stock price has. The New York Stock Exchange told the company in December that its stock was in danger of being de-listed from the mighty NYSE (see Atlas Energy Luck Run Out? NYSE Threatens Company with De-Listing). On Friday the company seems to have capitulated and given up on trying to boost the stock price to above $1 per share (the minimum required to be listed on the NYSE). Atlas said that regardless of what happens with the NYSE, as of today, March 21, company shares will begin trading on the Over the Counter stock exchange, called OTCQX. That is, Atlas shares have become penny stocks…
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Energy Companies | Ultra Petroleum

Ultra Petroleum Threatened with NYSE De-listing
March 21, 2016March 21, 2016

It’s been a while since we’ve written anything about Ultra Petroleum. Ultra is an independent exploration and production (E&P) company focused on drilling in the Green River Basin of Wyoming–in the Pinedale and Jonah Fields. In addition, Ultra is currently drilling for oil in the Uinta Basin/Three Rivers area in Utah. However, our interest in Ultra is because they maintain a position in the Pennsylvania Marcellus shale with leases on 184,000 gross (91,000 net) acres. They aren’t currently drilling on their acreage, but if prices change, they likely will. The news we bring you about Ultra is news we’ve brought you about other companies, like Atlas Energy (see today’s story on Atlas). And that news is that the New York Stock Exchange has threatened Ultra with de-listing its stock if the price is not boosted to over $1 per share…
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Energy Companies | Warren Resources

Warren Resources 2015: Lost $620M, Most of it a Paper Loss
March 21, 2016March 21, 2016

As MDN pointed out in February, Warren Resources is on the cusp of bankruptcy (see Warren Resources: Potential Bankruptcy, No Drilling in 2016). They are a small driller–at least in the Marcellus–having drilled two Marcellus wells last year. Earlier this month we brought you the news that the NASDAQ Stock Exchange is threatening to stop trading the company’s stock (see Pretty in Pink? Warren Resources Put on Notice for Stock Delisting). Last week Warren issued its fourth quarter and full year 2015 update. It’s fairly short and to the point: last year Warren lost $620 million. Most of that loss was a paper loss–$578M for impairments. Unlike other drillers, Warren doesn’t include a copy of their financial spreadsheets with their announcement. They make you go fishing on the Securities and Exchange Commission website to find their financial information. It appears they’re making it intentionally difficult to easily obtain the information…
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Energy Companies | Rice Energy

New Board Member for Rice Midstream + Bobby Vagt Flashback
March 21, 2016March 21, 2016

Rice Midstream, the pipeline subsidiary of drilling company Rice Energy, has just added a new board member–Stephanie C. Hildebrandt. Ms. Hildebrandt is a lawyer with international law firm Norton Rose Fulbright US LLP. Normally such an announcement is not something we highlight here on MDN–except we noticed a comment by Rice Midstream’s (and Rice Energy’s) chairman about the appointment. And seeing the name of Rice Midstream’s chairman–Bobby Vagt–reminded us once again of how Bobby is getting the last laugh over Teresa Heinz Kerry…
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Chesapeake Energy | Energy Companies

More on Chesapeake’s Possible (Rare) 1.5 Lien Debt Exchange
March 21, 2016March 21, 2016

Last week MDN told you about a creative way Chesapeake Energy may try to refinance some of its massive debts–by using a 1.5 lien debt exchange (see Chesapeake Considers Unusual 1.5 Lien Debt Exchange). Thanks to MDN’s right arm–Chris Acker–we spotted more details about this infrequently used method to refinance outstanding debt. What we learn from a Reuters story is that only six other companies have tried this route over the past few years. About 40 companies tried and failed to execute a 1.5 lien debt exchange last year. One-third of those 40 are expected to file for bankruptcy this year. Which is kind of an ominous indicator when it comes to Chesapeake. In fact, successfully executing a 1.5 lien is, for some credit rating agencies, considered a form of default in and of itself. We hasten to add that Chesapeake has not yet made any kind of announcement that they intend to execute a 1.5 lien debt exchange. The news is being reported by reputable sources they’re considering it–but no decisions have (yet) been made…
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CNG/LNG | Energy Companies | Exporting | Industrywide Issues | Repsol

Repsol’s Eastern Canadian LNG Export Plant “On Hold”
March 18, 2016March 18, 2016

In early 2015 Spanish oil giant Repsol accelerated plans to build an LNG export terminal on the coast of Saint John, Newfoundland (see Repsol Accelerates Plan for Canadian LNG Exports Fed by Marcellus). The Canaport LNG project, as it’s called, is one of five potential projects we identified in eastern Canada back in August 2014 that will potentially export Marcellus/Utica gas (see List of LNG Export Projects for Marcellus/Utica Shale Gas). Last fall the Canaport project received approval from the Canadian National Energy Board to proceed (see 3rd Eastern Canada LNG Export Plant Receives Approval). However, LNG World News is reporting they’ve received an email confirmation from Repsol that the company is slamming on the brakes with respect to the Canaport LNG export project…
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Energy Companies | Range Resources Corp

Banks Reaffirm Range Resources’ $4B Line of Credit
March 18, 2016March 18, 2016

Range Resources, one of the premier drillers in the Marcellus/Utica, and the company that drilled the very first Marcellus well in 2004, just passed its annual financial physical. The 29 banks that loan Range money say the company’s $3 billion “borrowing base” and its $4 billion line of credit are still OK by them. Which put a smile on the face of Range’s CFO Roger Manny…
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Chesapeake Energy | Energy Companies

Chesapeake Considers Unusual 1.5 Lien Debt Exchange
March 18, 2016March 18, 2016

If you can help us figure this one out–please do! Reuters is reporting that Chesapeake Energy is considering swapping out some existing debt for “new 1.5 lien debt.” We know a first lien means you have “first dibs”–you’re first in line to receive something/anything if a company goes bankrupt. A second lien means you’re second in line, behind the first guy. But a one and a half lien? Apparently its possible to create a legal situation where someone is behind the first guy but ahead of the second guy in line–the 1.5 guy. Boggles the mind. What it says to us is that Chesapeake is engaged in some dramatic financial contortions in order to avoid bankruptcy court…
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Energy Companies | Rex Energy

Rex Energy 2015: $373M Paper Loss; Production Up 27%
March 16, 2016March 16, 2016

Rex Energy, a Marcellus/Utica driller based in State College, PA, filed its fourth quarter and full year 2015 financial and operating update yesterday. Although production was down in 4Q15 compared with 3Q15 and 4Q14 (4% and 5% respectively), overall production for Rex for all of 2015 increased 27% over 2014. On paper Rex lost $373 million in 2015–but most of that loss was from the write-down of assets, or “impairments”–meaning it’s a paper loss and not an out-of-pocket money loss. As we’ve previously noted, Rex entered a joint venture deal to get money to keep drilling in the Marcellus and Utica (see Stayin’ Alive: Rex Energy $175M JV to Keep Drilling in PA & OH). What previously escaped our attention is that the NASDAQ stock exchange put Rex on notice that the company’s stock will be delisted if it doesn’t get the per share price over $1 for ten consecutive days. Below yesterday’s update along with information about Rex’s liquidity issues…
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American Energy Partners | Chesapeake Energy | Energy Companies

Aubrey McClendon’s Death Still a Mystery – Suicide or Distracted Driving?
March 15, 2016March 16, 2016

More details are coming from an investigation into the one-vehicle crash that killed Aubrey McClendon on March 2nd (see Stunned: Former Chesapeake CEO Aubrey McClendon Dies in Car Crash). From the beginning, investigators have implied McClendon’s death was a suicide. They didn’t say it outright–but they certainly indicated it with their language. He was going “at a high rate of speed” and “didn’t hit his breaks” before driving into the concrete wall holding up a bridge. We later found out his friends wouldn’t give him any more money, which seems to support the suicide theory (see WSJ: Aubrey McClendon was in Debt Up to His Eyeballs). The black box in Aubrey’s SUV has been examined (did you know your vehicle has a black box?), and investigators say Aubrey was driving at speeds up to 89 miles per hour, and when he crashed into the bridge support, he hit it going 78 mph. Although he tapped on the brakes a few times in the moments before hitting, Aubrey never pressed down on the brakes hard. However, friends say Aubrey was known to drive fast and multi-task, using his cell phone. So we’re still left wondering–was it suicide? Or distracted driving?…
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Ascent Resources | Energy Companies

Ascent Resources Sells More of Company to Pay Down Debt
March 15, 2016March 15, 2016

In what appears (to us) to be a complex financial transaction, Ascent Resources (formerly Aubrey McClendon’s American Energy Partners’ Utica Shale company) is floating 2.2 billion (with a “b”) common units in order to raise $500 million. Ascent then plans to use that money to pay off existing notes, or IOUs. What confuses us is that Ascent is an LLC, a Limited Liability Company (i.e. corporation). Common units are the equivalent of shares of stock for an MLP, or Master Limited Partnership–a different form of company often used for midstream companies. How can a corporation/LLC issue common units as if it’s an MLP? Perhaps one of our sharp MDN readers can enlighten us? The bottom line in all of the financial mumbo jumbo you’ll read below is this: Ascent is selling more of the company (equity) in return for retiring notes (debt). It is trading equity for debt. That’s the upshot of this latest offering…
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