Even with No Drilling, Southwestern Continues to Renew WV Leases
In a bit of encouraging “this too shall pass,” we spotted an article that says Southwestern Energy Company is actively renewing leases expiring in West Virginia. You may recall that in the fall of 2014 Southwestern purchased 413,000 Marcellus/Utica acres, most of it in West Virginia (see Chesapeake Sells Close to 25% of Marcellus/Utica Operation). In 2015 Southwestern was decidedly contrarian and expanded their drilling program when everyone else was scaling back (see Southwestern’s Contrarian Plan: Double Down on Drilling in the Marcellus). The plan worked, sort of. The company achieved record production in 2015, but they also achieved record losses (see Southwestern Energy 2015: Record Production, Big Paper Loss). Which led to Southwestern idling their rigs in the Marcellus/Utica in 2016 (see Southwestern Cuts 2016 Spending 80%, Idles Marcellus Rigs (for Now)). Many of the leases Southwestern purchased from Chessy are now expiring–it’s been five years. The good news is that even though Southwestern isn’t currently drilling, they are re-signing leases–a vote of confidence that drilling will return soon…
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The Philadelphia Inquirer has published yet another “it’s really bad in the gas industry” articles–news they obviously delight in sharing. However, amid the bad news of fewer jobs and businesses falling on hard times, we spotted some good news in the article: Seneca Resources continues to operate a single drilling rig in Pennsylvania. It would be easy to idle the rig and layoff the people running it–but they’ve kept it going, to their credit. So we’d like to celebrate a little good news amid plenty of bad news. The excerpted article below highlights the story of the guy supervising that lone, still-operating Seneca rig. Along the way we get some interesting inside details about how long it takes Seneca to drill–and how much money it costs to drill a hole these days compared with just a year or two ago…
Thailand’s largest coal miner, Banpu Pcl, has spent $112 million to buy a 29.4% stake in the Chaffee Corners Joint Exploration Agreement (JEA). JEA is a Marcellus shale drilling joint venture 65.4%-owned and operated by Talisman Energy. What it means is that Talisman has a new partner in their northeast PA Marcellus drilling program. Banpu has hired the former CEO of PTT Exploration and Production Pcl, Thailand’s largest oil and gas explorer, as a director and to advise Banpu on JEA and on the company’s new and developing upstream gas strategy. PTT Exploration and Production is a subsidiary of Thailand’s state-owned PTT Public Company Limited. PTT Global Chemical is another subsidiary of PTT Public Company Limited–and the company proposing to build a $5B+ ethane cracker complex in Belmont County, OH (see 
The long, slow process of “reorganizing” and emerging from bankruptcy just sped up for Magnum Hunter Resources (MHR). The Marcellus/Utica driller filed for bankruptcy protection in December (see 
Two shale industry members of last year’s ill-fated Pennsylvania Pipeline Task Force have pulled the curtain back to reveal what went on behind the scenes. The sausage-making. And it’s not pretty. Two important facts emerge for their disclosures: (1) most of the members of the task force didn’t (and still don’t) know their heads from their rear-ends when it comes to how the natural gas industry actually works, and (2) nothing useful will come from the 658-page report and its 184 recommendations. We previously predicted that outcome when we said, “Silly libs–they never learn. This initiative was never about actually getting anything done. It was always about the optics–to show that radical leftist Tom Wolf (and his lackey John Quigley) actually care about the hoi polloi” (see 
There’s no way to sugarcoat the fact that Stone Energy–an independent oil and natural gas exploration and production company (E&P) headquartered in Lafayette, Louisiana that drills mainly in the Gulf of Mexico but also has a presence in the Marcellus/Utica Shale with 75,000 acres of leases–is inching toward a bankruptcy filing. That’s our take anyway. Last week Stone issued an update for 1Q16 in which they disclose their line of credit with the banks has been reduced from $500 million to $300 million (see 
As MDN pointed out earlier this month, 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 (see 
And then there were four. The Center for Sustainable Shale Development (CSSD) has fought stiff headwinds from the beginning. The organization was founded by a group of shale industry people and environmentalists reaching across the isle to forge strict standards that both sides can live with. Environmental leftists, like Mamma Teresa Heinz Kerry and her Heniz Endowments, pulled support and have actively worked against the CSSD (see 
As we have long chronicled, a few anti-drilling parents from the Mars School District (Butler County, far western part of the state), backed by a couple of Big Green groups from the other side of the state (THE Delaware Riverkeeper and the Clean Air Council, both based in the Philadelphia area), sued Middlesex Township to stop shale drilling in rural portions of the county. Rex Energy had applied for, was legally permitted for, but wasn’t allowed to drill a series of wells some three-fourths of a mile from the Mars School (for background, see our long list of “Martian” stories 
Three radical environmental groups well-known for lying about fracking and the oil and gas industry in Pennsylvania–The Center for Coalfield Justice, the Pennsylvania Chapter of the Sierra Club and the Clean Air Council–are accusing Range Resources of intentionally avoiding “wealthy” neighborhoods and instead targeting low-income neighborhoods when drilling wells. The three groups make the claim that Terry Bossert, Range VP for legislative and regulatory affairs, told a meeting of the Pennsylvania Bar Institute that his company company tries to avoid siting shale gas wells near “big houses” where residents might have the financial resources to challenge drilling. Reps from the radical groups claim they heard him say this at the meeting. Range has responded that the comment was a joke–made in jest. The radical groups say it certainly didn’t seem that way to members of the audience. If the comment was not made in jest, it’s deeply troubling and, frankly, boneheaded. The problem is, the groups doing the accusing have lied so much about fracking and frackers, you simply can’t believe what they say. Is this a case of yet another ginned up lie by Big Green groups, or a case of the “boy who cried wolf” by those groups?…
An important case regarding royalties was ruled on in the Superior Court of Pennsylvania on April 7th. As with many of these cases, this one is complicated. We’ll do our best to summarize it. A husband and wife leased their property in the 1990s to a company that eventually sold the least to CNX (i.e. CONSOL Energy). The couple later signed another lease with CNX in 2002. Both leases states that CNX will pay the couple one-eighth of the sale price for the gas as a royalty. But more than just the wells on the couple’s land are commingled in a drilling unit, so the way CNX calculate the royalties (as per the lease) is to measure the amount of production at the wellhead and divide accordingly. If the couple’s well produced 20% of the overall volume produced by all the wells in the unit, they get 20% of one-eighth of the sale price. But here’s the thing: the amount of gas that eventually gets sold “down the pipeline” is less than what is produced at the wellhead. As gas travels through pipelines and compressor stations, some of it disappears. The couple’s attorney says because CNX can’t account for 100% of the gas that disappears (maybe more disappears from the neighbor than his client), that CNX is in breach of the lease and owes the couple a royalty based on the gas produced at the wellhead and not based on what is eventually sold “down the pipeline.” A lower court ruled in favor of CNX. Now, the Superior Court of PA has also ruled in favor of CNX and says the clever legal reasoning by the couple’s attorney doesn’t hold water…
Whew. Eclipse Resources dodged a bullet! In February MDN told you that Eclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA (but drilling mostly in Ohio) had been put on notice by the New York Stock Exchange that the company’s stock had fallen below $1 per share for too long and would be de-listed if they couldn’t get the price up (see 
Last week MDN told you that Rice Energy had floated stock offerings hoping to raise enough money to buy the Marcellus/Utica assets from the now bankrupt Alpha Resources (see