Energy Companies

Coterra Energy (Cabot O&G) | Energy Companies | Pennsylvania | Susquehanna County

Cabot O&G 2015 Update; Cutting 2016 Drilling Budget 58%
February 2, 2016February 2, 2016

Cabot Oil & Gas, one of the premier drillers in the Marcellus Shale (operates totally within Susquehanna County, PA) released their fourth quarter and full year 2015 operational update this morning. The highlights: Cabot ended up spending $774 million on capital expenditures (mostly drilling) in 2015, down a bit from the previous estimate of $850 million. It’s down because they scaled back activity during 4Q15. They also had to write down the value for some of their non-core holdings by $73 million–what’s called an impairment charge. Looking ahead, Cabot plans to spend $615 million on capital expenditures (i.e. drilling) in 2016, which is down 58% from 2015. They will drill approximately 30 new wells, 25 of them in the Marcellus and 5 in the Texas Eagle Ford Shale. Here’s the update…
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Energy Companies | Warren Resources

Warren Resources Misses $7.5M Debt Payment, 30-Day Clock Ticking
February 2, 2016February 2, 2016

Warren Resources, a small, independent exploration and production company with an ongoing drilling programs in California, Wyoming, and in the northeast Pennsylvania Marcellus Shale, announced yesterday they won’t (for now) make a $7.5 million in payments due on IOUs (i.e. notes) that are due to be made this month. Even though they claim to have enough money in the bank. Big red flag. Instead, Warren has hired investment bank Jeffries LLC to help the company with “potential restructuring of its balance sheet” and the company has “initiated restructuring discussions with representatives of the creditors under its first and second lien credit facilities.” Restructuring is a cheaper and (if you can swing it) better alternative than bankruptcy. The question is, will Warren’s restructuring be enough to keep the company out of bankruptcy proceedings? The terms of missing the payment allow a 30-day grace period before bad stuff begins to happen. The clock is ticking…
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Antero Resources | Doddridge County | Energy Companies | Industrywide Issues | Kanawha County | Litigation | Statewide WV | West Virginia

More People Pile on Antero, Seek to Join Mass “Nuisance” Lawsuit
February 2, 2016February 2, 2016

Last September MDN told you about the troubling news that more than 200 residents in WV (likely those who don’t own the mineral rights under their land) began filing “scores” of “nuisance” lawsuits over the past couple of years against Antero Resources and Hall Drilling, in places like Doddridge County (see Scores of “Nuisance” Lawsuits Against WV Drillers Combined). The lawsuits claim excessive traffic, odors and noise from nearby drilling make it “impossible” for them to enjoy their homes. The troubling development was that all of these lawsuits (dozens? hundreds?) had been rolled up into one mega lawsuit that sits before the WV Mass Litigation Panel. In other words a class action lawsuit. Since then we’d not heard anything, until we read about two more such lawsuits filed in Kanawha County. The lawyers want to add the two to the existing mass litigation case…
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Energy Companies | Energy Services | Equinor/Statoil | GE Oil & Gas | Hydraulic Fracturing | Industrywide Issues

4 People Win GE/Statoil Contest to Reduce Water Used in Shale
February 2, 2016February 2, 2016

GE and Norwegian oil giant Statoil today announced four winners of their Open Innovation Challenge, a contest designed to use crowd sourcing to find solutions that reduce fresh water use in shale oil and gas production. There of the winners are in the United States, and one is from Australia. Each winner gets a cash prize of $25,000 with the promise of future funding for their technology. Here’s the cool new technologies that won this year’s contest…
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Columbia Pipeline Group | Energy Companies | Energy Services | Gastar Exploration

Gastar’s Mike McCown Retires; Peg Heeg Joins Columbia Pipeline Bd
February 2, 2016February 2, 2016

From time to time we mention people coming and going at various drilling and midstream companies. The reason we mention it is because when there are changes at the top of an organization, it has the potential to affect the future actions of that organization. We have two such moves to report. The first is that Mike McCown, senior vice president and chief operating officer for driller Gastar is retiring. We’ve quoted Mike a number of times over the years–he’s an important cog in the Gastar wheel. The second bit of news is that Peggy Heeg has joined the board of directors at midstream giant Columbia Pipeline. Peggy is an attorney and former general counsel at El Paso Corporation…
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CNX Resources | CONSOL Energy | Energy Companies | Utica Shale

CONSOL 4Q15: All About that Utica, ‘Bout that Utica, No Marcellus
February 1, 2016February 1, 2016

Last Friday CONSOL Energy released their fourth quarter 2015 update and we couldn’t stop the Meghan Trainor song “All About That Bass” from going through our heads, changing the word “bass” to Utica and “treble” to Marcellus. CONSOL was positively effusive about their Utica program and what it means for the future of the company. And well they should be (pun intended). In 4Q15 CONSOL drilled and brought online it’s most initially productive-ever Utica well, the GH 9 in Greene County, PA. The well’s initial flow was 61.9 million cubic feet per day per day (MMcf/d). That’s not as high as EQT’s record-breaker of 72.9 MMcf/d, also in Greene County (see EQT’s 1st Utica Well Shatters Record – 72.9 MMcf/d IP Rate!), but still, it’s amazing output for the CONSOL well. That amazing second well comes on the heels of CONSOL’s first PA Utica well, drilled in Westmoreland County in 3Q15, with an initial flow rate of 61.4 MMcf/d (see CONSOL 3Q15: Natgas Production Up 33%, Natgas Revenue Down $56M). Here’s what really caught our eye about Friday’s update and accompanying analyst conference call: In the Ohio Utica, the first well CONSOL drilled took 84 days and the drilling phase cost them $9 million. By the fifth well, the cost had gone down to $5 million. And they now believe they can get the cost of drilling a Utica well down to $4 million and do it in 23 days. Astonishing! (Note: that number is not the “all in” cost, which still is still more than $15 million per well.) So what about CONSOL’s Marcellus program?…
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Chevron | Energy Companies

Chevron 4Q15: First Quarterly Loss in 13 Years, Scaling Back 2016
February 1, 2016February 1, 2016

Chevron, one of the country’s largest oil and gas companies (with a sizable drilling operation in the Marcellus/Utica) issued its fourth quarter and full year 2015 update last Friday. It was not good news. Chevron lost money in 4Q15–their first quarterly loss in 13 years. The reason? Upstream (or drilling) got “crushed” due to low commodity prices for oil and gas. The news has created jitters on Wall Street. This week three more majors are due to release their updates: ExxonMobil, BP and Shell. Investors are worried they may show losses too. In their Upstream division, Chevron lost $1.9 billion in 4Q15 over 4Q14, and they lost $4 billion for the entire year, after making $3.3 billion in 2014. Chevron is a BIG company, so don’t fret. They still made money company-wide. Although Chevron lost $588 million in 4Q15 (company-wide), they made $4.6 billion of net income for full year 2015…
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Commodity Price | Energy Companies | Industrywide Issues | Stone Energy

IHS Says Hedging Woes Ahead for E&Ps in 2016 & 2017
February 1, 2016February 1, 2016

A new study from oil and gas powerhouse research firm IHS says there’s problems ahead for U.S. drillers because of hedging. Hedging is a complicated trading activity that reduces risk. In plain English, drillers lock in prices for the gas they will sell in the future–several months or even years in advance–today. On the up-side they get a lot more money for their gas. One of the masters of hedging in the Marcellus/Utica is Antero Resources (see Antero Resources 4Q15 Update: NatGas Sales Averaged $4.40/Mcf). On the down side, you’re not able to lock in prices that earn you a profit. That’s the situation facing drillers as hedges in 2016 and 2017 “roll off” and companies are negotiating new contracts that just aren’t all that great. According to IHS’ “Comparative Peer Group Analysis of North American E&Ps” (unfortunately we don’t have a full copy) in 2016 will see a decline in hedging, and 2017 will be even worse…
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CNG/LNG | Energy Companies | Industrywide Issues | M&A | Shell

It’s a Deal – BG Shareholders Approve Shell Buyout
January 29, 2016January 29, 2016

In the end, it wasn’t even close. Some 99.5% of BG Group’s shareholders voted to approve the sale/merger of the company with Shell at a meeting yesterday. Earlier this week 83% of Shell’s shareholders voted to approve the merger (see Shell Shareholders Vote in Favor of BG Buyout/Merger). As we’ve said from the beginning, this is an LNG love story–Shell wanted BG for its natural gas market share. The Shell/BG merger will create the world’s dominant LNG company, by far. The buyout/merger is, for Shell, it’s largest-ever acquisition. Just how big is this deal? The Shell/BG merger is the largest oil and gas deal since Exxon bought Mobil in 1999. The merger will be consummated on February 15. As we’ve previously noted, Shell plans to lay off 10,000 people across both companies once the merger is complete. Happy Valentine’s Day…
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Energy Companies | Halcon Resources

Halcon Resources Suspends Dividend Payments for Preferred Stock
January 29, 2016January 29, 2016

Halcon Resources is a driller that “guessed wrong” by leasing 140,000 Utica Shale acres in the northern part of the play and currently doesn’t drill in any of that acreage. Halcon is one of the one of eight Marcellus/Utica companies on David Fessler’s “Oil Company Death List” (see 19 Oil/Gas Companies on “Death List” – 8 are in Marcellus/Utica). In November 2013 Halcon’s colorful CEO, Floyd Wilson, said he wouldn’t drill any more, ahem, crappy wells in the Utica (see Halcon CEO Says No More S***** Wells in Northern OH Utica). On an analyst call in early 2015 Wilson quipped “What’s the Utica?” in response to a question from an analyst (see Halcon CEO Floyd Wilson: “What’s the Utica?”). In August 2015 the New York Stock Exchange sent a letter threatening to de-list the stock (see Halcon Resources Put on Notice by NYSE; Refi Debt at Higher Rate). A company must maintain at least a $1/share price in order to continue trading on the NYSE. Yesterday Halcon’s common stock traded at 43.3 cents/share. Oops. So it will be no surprise that Halcon, like several other northeast drillers, has decided to suspend paying dividends on their preferred stock…
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Energy Companies | EQT Corp

Kudos: EQT Foundation Hands Out $5.5 Million in 2015
January 29, 2016January 29, 2016

EQT, like many other Marcellus drillers, runs a foundation that hands out large sums of money to worthy non-profit organizations. Yesterday EQT announced that their EQT Foundation handed out a total of $5.5 million in 2015. Below is a list of organizations that received EQT donations during the second half of 2015…
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Antero Resources | Energy Companies | Industrywide Issues | Reserves (Proved and Unproved)

Antero’s Proved Resources Up 4% to 13.2 Tcfe, 3P Hits 37.1 Tcfe
January 28, 2016January 28, 2016

Antero Resources, with 569,000 under lease, is one of the biggest leaseholders and one of biggest drillers in the Marcellus/Utica. Every year, in order to comply with Securities and Exchange Commission rules, companies like Antero revisit and revise what they call “proved reserves.” That is, how much gas (and NGLs and oil) do they have in the ground? There’s different types of reserves, with proved having the highest confidence. There’s also the “3P” reserve number: proved, probable and possible. 3P has a lower standard to qualify. The news from Antero is that as of Dec. 31, 2015, the company has 13.2 trillion cubic feet equivalent (Tcfe) of natural gas sitting under their leased acreage. That’s a 4% increase over year-end 2014. Antero’s 3P reserves totaled 37.1 Tcfe at the end of 2015…
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Energy Companies | Noble Energy

Noble Energy Cuts Stock Dividend 44%, Lowers 2016 Capex 50%
January 28, 2016February 18, 2016

In an announcement made on Tuesday, Noble Energy, a driller with a significant presence in the Marcellus/Utica, said the company is reducing dividend payments for its commons stock–lowering the payment by 44% to 10 cents per share. MDN recently told you that both Rex Energy and Chesapeake Energy had suspended dividend payments on preferred stock, not common stock (see Rex Energy Suspends Preferred Stock Dividends to Conserve Cash, and Chesapeake Energy Suspends Preferred Stock Dividends, Saves $170M). Noble’s move is a bit different–lowering (not eliminating) dividends on common stock. All of these companies are engaging in strategies to hold on to some of the money in the organization so they can keep the lights on and keep drilling. But it’s a Catch-22. Investors are owners of the company, and they like to get paid. Receiving dividends is an important part of why they invested in the first place. But if the company keeps paying, it risks going out of business and then their shares of stock are worthless. No good choices. Noble also announced on Tuesday they are budgeting to spend $1.5 billion in 2016, which is down 50% from 2015…
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Energy Companies | Industrywide Issues | Jobs | M&A | Shell

Shell Shareholders Vote in Favor of BG Buyout/Merger
January 28, 2016January 28, 2016

Shareholders in Shell just voted to cut 10,000 jobs. Well, not exactly. Shell’s shareholders voted yesterday to approve Shell’s plan to buy BG Group in a $69.7 billion megamerger. As we explained in April 2015 when the deal was first announced, this is a deal about LNG (see LNG Love Story: Shell Makes Play to Buy BG in $69.7B Megamerger). Why the snarky remark about voting to cut 10,000 jobs? Because last week that’s what Shell said they would do once the merger is approved. They plan to ax 10,000 jobs in Shell and at BG (see Shell to Cut 10,000 Jobs After Buying BG; Exiting Shale Drilling). One down, one to go. BG shareholders vote on the merger today. If they vote “yes” as is expected, the merger will be complete on Feb. 15. Expect the pink slips to appear in the mailbox starting Feb. 16. Happy Valentine’s Day…
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Energy Companies | Hess | Ohio | Statewide OH

Hess Drilling 5 More Utica Wells 1Q16 Then Stopping
January 27, 2016January 26, 2016

Hess Corporation released their 2016 capital and exploration budget yesterday. Last October Hess said they would spend $2.9-$3.1 billion during 2016. Throw that out the door. They’ve now dropped the capex budget to $2.4 billion, which is 40% less than they spent in 2015. Hess has maintained an active drilling program in the Ohio Utica Shale. What part of that $2.4 billion do you suppose they plan to spend in the Utica this year? The number is $45 million, which will be spent on drilling five new wells and bringing a total of 14 wells online–all in the first quarter. After that? They’re releasing the single rig they now have under contract. So Hess is spending 1.9% of their budget on the Utica for 2016…
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Energy Companies | EQT Corp | Fayette County | Industrywide Issues | Litigation | Regulation | Wastewater | West Virginia

Judge Stops WV County from Enforcing Injection Well Ban, For Now
January 27, 2016January 26, 2016

The second step has been taken in overturning an illegal ban on wastewater injection wells in Fayette County, WV. You may recall we told you two weeks ago that three Democrat county commissioners voted to ban injection wells (see WV County Officially Bans Injection Wells; Children Brainwashed). There are two injection well operators in Fayette County: Danny Webb Construction and EQT. The day after the vote EQT sued to overturn the new ban (see EQT Sues WV County that Banned Injection Wells, Seeks Injunction). On Tuesday, Jan. 19, U.S. District Court Judge John T. Copenhaver Jr. granted an injunction preventing the county from enforcing the ban at least until a Feb. 11 hearing. As part of his reasoning, Judge Copenhaver said EQT “is likely to succeed” in their lawsuit to overturn the ban…
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