Energy Companies

Energy Companies | Exxon Mobil | Industrywide Issues | Research

ExxonMobil: Fossil Fuels Will Produce 80% of World Energy Thru 2040
January 27, 2016January 26, 2016

Understanding the global energy picture is helpful so we know where the shale energy piece “fits” in that picture. Each year ExxonMobil prepares an annual energy outlook. On Monday they released the 2016 ExxonMobil Outlook for Energy: A View to 2040 report (full copy embedded below). Some interesting tidbits from the report: “In 2040, oil and natural gas are expected to make up nearly 60 percent of global supplies, while nuclear and renewables will be approaching 25 percent. Oil will provide one third of the world’s energy in 2040, remaining the No. 1 source of fuel, and natural gas will move into second place.” Perhaps most astonishing (for wacko environmentalists) is this: Fossil fules–oil, natural gas and coal– will continue to meet almost 80 percent of the world’s energy needs through 2040. It is intellectual suicide to pretend so-called renewables will be able to shoulder the energy burden in our lifetime. Ain’t gonna happen. We live in a world powered by fossil energy–and THERE’S NOTHING WRONG WITH IT…
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Eclipse Resources | Energy Companies

Value of Eclipse Resources’ Ohio Assets Drop by $750-$850M
January 26, 2016January 26, 2016

Last week Eclipse Resources, a pure play driller focused on the Marcellus/Utica (headquartered in State College, PA) announced that the value of its proved reserves (what it can prove is in the ground, waiting to be extracted) is going down 58% over what it was at the end of 2014. Not because there’s now somehow less in the ground waiting to be extracted, but because of the price they can get for what they could extract. The company also announced it will take an “impairment” charge of $750-$850 million for 2015. An impairment is a permanent, irreversible devaluing of the company’s assets (see A Basic Guide to Understanding “Impairments” for Marcellus/Utica). We doubt Eclipse will be the last to make such announcements about year-end 2015 numbers. Here’s the announcement from Eclipse explaining the latest…
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Energy Companies | Seneca Resources

Seneca Resources President Retiring; NFG Musical Chairs
January 26, 2016January 26, 2016

Seneca Resources is the wholly-owned drilling subsidiary of National Fuel Gas Company, headquartered in Buffalo, NY. Seneca has a large and active shale drilling program–all of it in Pennsylvania. The current president of Seneca, Matt Cabell, has decided to get out while the gettin’ is good. Cabell will retire in May, even though he’s only in his late 50s. John McGinnis, currently Seneca’s Chief Operating Officer, will succeed Cabell as president of Seneca. It seems Cabell’s departure ignited a number of changes, with people either changing roles or adding new roles at either Seneca or the mother ship National Fuel Gas. Here’s the announcement about Cabell, McGinnis, and people playing musical chairs at Seneca and NFG…
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Clarion County | Energy Companies | Energy Services | Laurel Mountain Energy | Patterson-UTI | Pennsylvania

Laurel Mountain Drilling First Well in Western PA – It’s a Utica
January 25, 2016January 25, 2016

One of our ace tipsters alerted us that Laurel Mountain Energy, a relatively new E&P (exploration and production) company is firing up a drilling rig to drill one, possibly two new Utica wells in Pennsylvania. You may recall MDN brought you the news one year ago that Laurel Mountain, essentially a reborn Vista Resources with big money backing from TPH Partners (Tudor, Pickering, Holt & Co.), had formed and set up headquarters in Pittsburgh (see “New” Pittsburgh Company Forms to Target Marcellus/Utica in W PA). Since that time we’d not heard anything about Laurel Mountain Energy–until now. Below we’ve pieced together information from our tipster and from the forthcoming edition of the Marcellus and Utica Shale Databook…
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Chesapeake Energy | Energy Companies

Chesapeake Energy Suspends Preferred Stock Dividends, Saves $170M
January 25, 2016January 25, 2016

Last Friday MDN told you that Rex Energy, a small pure play driller focused totally on the Marcellus/Utica has suspended paying dividends on their preferred stock in order to conserve cash and not be forced to keep borrowing money to keep the doors open and the drill bits turning (see Rex Energy Suspends Preferred Stock Dividends to Conserve Cash). A company 54 times bigger than Rex (by market capitalization, as of this morning), Chesapeake Energy, is now using the same strategy. On Friday Chessy announced they are suspending quarterly preferred stock dividends. Shares of those stocks plunged to 13 cents on the dollar on the news, rebounded some, and plunged back down again. Doug “the ax” Lawler, CEO of Chesapeake, said suspending the dividends will let the company keep $170 million in the bank…
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Energy Companies | Energy Services | EQT Corp | Industrywide Issues | Pipelines

Con Edison Becomes a Partner in Mountain Valley Pipeline
January 25, 2016January 25, 2016

The $3.5 billion Mountain Valley Pipeline (MVP) stretching from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA filed an official application with the Federal Energy Regulatory Commission last October (see Mountain Valley Pipeline Files FERC Appl, Now Just Matter of Time). It’s now working its way through the process. Along the way, the number of project partners expanded from the original EQT and NextEra Energy to include WGL Holdings, Vega Energy Partners, and RGC Resources. You can now add one more partner: Consolidated Edison. Con Edison is purchasing a 12.5% interest in the pipeline and at the same time signed a 20-year deal to buy/move 250,000 dekatherms per day of natural gas on the pipeline. In a related deal, Con Edison also agreed to a 20-year firm transportation agreement for 250,000 dekatherms per day on the Equitrans system, located in northern West Virginia and southwestern Pennsylvania, providing more direct access to supply resources upstream of MVP…
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Ascent Resources | Energy Companies

Ascent Resources Offers to Trade IOUs Due 2021 with IOUs Due 2021
January 25, 2016January 25, 2016

Last week Ascent Resources, which is formerly American Energy (Aubrey McClendon’s company), targeting the Utica Shale, launched a note swap. Ascent is offering to exchange 3.50% Convertible Subordinated Notes due 2021 with two sets of new notes, another 3.50% Convertible Subordinated Notes due 2021 and incremental junior secured loans due 2019. We have no clue what it all means–perhaps a sharp MDN reader can elucidate for us? What it looks like to us is some sort of shell game, and in such games the dealer always comes out the winner. Note the phrase in the announcement below: “The New Convertible Notes are not and will not be listed on any securities exchange”…
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Energy Companies | Industrywide Issues | Jobs | Pennsylvania | Southwestern Energy | Statewide PA | Statewide WV | West Virginia

Southwestern Energy Cuts Workforce 44%, 200 Marcellus Jobs Gone
January 22, 2016January 22, 2016

We have some very sad news to share today. Yesterday Southwestern Energy Company, one of the largest drillers in the Marcellus/Utica and the third largest independent natural gas driller in the U.S., announced it will lay off 1,100 people and pause its drilling program. That 1,100 is out of 2,500 employees–or 44% of the company. It was just a few weeks ago that Southwestern got a new CEO, Bill Way (see Southwestern Energy Gets New CEO – What’s Ahead for 2016?). We mused at the time: “When there’s a change in leadership, it has the potential to impact company strategy. So we’re always interested when changes of this type come along. The question now is, what’s ahead for 2016 with Bill Way at the helm?” Indeed. We can see what kind of changes Mr. Way is bringing. In October 2014 Southwestern announced a deal to buy 413,000 Marcellus/Utica acres from Chesapeake Energy, most of it in West Virginia (see Chesapeake Sells Close to 25% of Marcellus/Utica Operation). Then in December 2014, Southwestern bought 46,700 net acres of leases in northeastern PA from WPX for $300 million (see First Shoe Drops: WPX Sells 1/2 Marcellus Assets to Southwestern). Southwestern holds about 755,000 acres total in the Marcellus/Utica region. When everyone else was slowing down, Southwestern was doubling down on their drilling program (see Southwestern’s Contrarian Plan: Double Down on Drilling in the Marcellus). It seems that the wind has finally gone out of Southwestern’s sails. The company did not post an official press release on their website, so we’ve pieced together coverage from a number of sources to try and give you a complete picture of what they said yesterday…
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Beck Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Ohio | Statewide OH | XTO

OH Supreme Court Upholds Victory for Beck Energy in Lease Case
January 22, 2016January 26, 2016

A major victory for oil and gas drillers in Ohio was just handed down by the Ohio Supreme Court. You may recall MDN brought you the news in October 2014 that the Seventh District Court of Appeals in Ohio overturned a lower court ruling in the case of Hupp v. Beck Energy Corp (see Major OH Court Victory for Beck Energy & XTO in Lease Case). Brief background: three landowners filed suit claiming that their leases with Beck Energy Corp. were void and should be terminated because Beck never drilled wells on their property and that a provision allowing Beck to pay a nominal delay fee was against public policy. The lower court agreed and granted summary judgment. The court then granted class certification to the lawsuit brought by the three landowners–meaning between 600-700 landowners would also be able to invalidate their leases. On appeal to the Seventh District Court, the case was overturned and decided in favor of Beck Energy (and XTO Energy who had purchased the leases from Beck). It was appealed again, to the OH Supreme Court, and the high court has sided with Beck/XTO…
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Energy Companies | Rex Energy

Rex Energy Suspends Preferred Stock Dividends to Conserve Cash
January 22, 2016January 22, 2016

Drillers continue to deal with the downturn in the market in different ways. Different companies, different strategies. Yesterday Rex Energy, a pure play Marcellus/Utica driller headquartered in State College, PA announced they are suspending dividend payments on their preferred stock, to conserve capital. It won’t make preferred stockholders happy, but at least the company can continue to live to fight another day…
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Chief Oil & Gas | Energy Companies

Chief O&G Founder “Licking His Chops” to Buy Distressed Assets
January 21, 2016January 21, 2016

Forbes magazine has a fascinating article on the founder and chairman of Chief Oil & Gas, Trevor Rees-Jones. Chief did have a fairly big presence in the Marcellus Shale, but last September they closed their Wexford (i.e. Pittsburgh) office, a story that MDN broke (see Chief O&G Confirms MDN Story re Closing of Pittsburgh Office). Chief still owns about 200,000 acres of leases in the Marcellus. Trevor Rees-Jones has the misfortune of sharing the same name with the body guard present when Diana, Princess of Wales, was killed in a car crash–so don’t be confused. The Forbes article focuses on Rees-Jones’ uncanny timing. He snapped up leases and drilled wells when the shale revolution was just getting under way, and he sold many of those assets just prior to the bottom dropping out of the price for oil and gas. His deft timing earned him on the order of $7 billion. Now, with the industry reeling and companies teetering on the edge of bankruptcy, Rees-Jones, a bankruptcy attorney by training, says “I’m licking my chops.” He can’t wait to be there to pick up the pieces by buying at the bottom to make his next fortune…
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Energy Companies | Energy Services | Ethane | Industrywide Issues | Pennsylvania | Pipelines | Range Resources Corp | Statewide PA | Sunoco Logistics

Range Resources Ethane Heading to Marcus Hook Beginning February
January 20, 2016January 20, 2016

Range Resources’ ethane will start to flow through a “fully operational” Mariner East 1 pipeline to the Marcus Hook refinery in February, according to an announcement by Range. Mariner East 1 has been up and running for some time, but has not, until now, flowed ethane. Yesterday’s announcement states the ethane will be loaded onto ships. Range doesn’t say where the ethane on those ships will go, but we already know that part of the story. The ethane (at least some of it) is headed for Norway, Scotland and possibly Panama (see Ineos Gets Ready to Begin Ethane Exports from Marcus Hook, PA). Here is the fantastic news that the Mariner East 1 pipeline is about to be fully, 100% ethane operational, after a very long battle to complete it…
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Energy Companies | EQT Corp | Fayette County | Industrywide Issues | Litigation | Regulation | Wastewater | West Virginia

EQT Sues WV County that Banned Injection Wells, Seeks Injunction
January 20, 2016January 20, 2016

That was fast. A week ago three Democrat county commissioners in Fayette County, West Virginia voted to ban injection wells in the county (see WV County Officially Bans Injection Wells; Children Brainwashed). Immediately after that vote was taken (last Tuesday), on Wednesday EQT filed a lawsuit against the county. EQT not only operates an injection well in the county, they also operate 200 conventional oil and gas wells in the county, providing the county with $100,000 per year in tax revenue, and “tens of thousands of dollars in royalty payments” to private landowners. According to EQT’s lawsuit, the ban in Fayette is so broad, it would prohibit not only injection wells, but all oil and gas production in the county. EQT is seeking an injunction to stop enforcement of the new ban while the court case plays out. The county will now spend big bucks to defend their farcical ban that will no doubt end up being overturned. Perhaps taxpayers want to rethink whom they elect as county commissioners?…
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Energy Companies | Gastar Exploration

Gastar Spooked by Takeover Threat Adopts Shareholder Rights Plan
January 20, 2016January 20, 2016

According to a press release from Gastar Exploration, a driller with operations in both the Marcellus and Utica Shale plays (among others), the company is adopting a “tax benefit preservation plan to preserve valuable net operating losses.” What, exactly, does that mumbo jumbo mean? It appears to us that Gastar is very concerned that they either are, or will become, a takeover target. The company holds certain paper assets, including an accounting line called a “cumulative net operating loss carryforward” that can be used to reduce Gastar’s income tax bill (i.e. boost per-share value). Apparently a new “Shareholder Rights Plan” just adopted by Gastar will ensure that if the company is taken over, they can use the carryforward to benefit existing shareholders. Yes, it’s complicated and we don’t pretend to understand it all. Our takeaway is that Gastar is spooked that they are being targeted for a takeover, and the current board and management is acting to either prevent it, make it more distasteful (“poison pill”), or perhaps just acting to be sure they don’t lose their own shirts in a takeover or sale…
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Energy Companies | Industrywide Issues | Jobs | M&A | Shell

Shell to Cut 10,000 Jobs After Buying BG; Exiting Shale Drilling
January 20, 2016January 20, 2016

In April 2015 MDN brought you the announcement that Shell was buying BG Group (the former British Gas) in a megamerger worth $69.7 billion (see LNG Love Story: Shell Makes Play to Buy BG in $69.7B Megamerger). As we alluded in the title of that post, the deal is all about LNG–liquefied natural gas. The merger will make Shell THE dominant player in LNG worldwide. The process to obtain regulatory approval in multiple countries has been long and arduous. Later this month, on Jan. 28, BG shareholders will cast a final vote on the plan. In an update issued this morning by Shell, the company says they expect to complete the BG transaction in the next few weeks, and after they do, there will be a total of 10,000 layoffs between the two companies. Don’t you just love mergers? Ax and hack away. Toss a few thousand jobs here and a few thousand jobs there. We know, times a tough. Companies must cut in order to stay in business. We just want to remind you that behind these abstract numbers are 10,000 real people with real families that depend on them. Shell also said they’re hightailing it out of shale…
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Allegheny County | Chevron | Energy Companies | Pennsylvania

Exclusive: Chevron Appalachia Head Nigel Hearne Going to Australia
January 19, 2016January 19, 2016

In 2013 MDN highlighted the news that a Brit, Nigel Hearne, had been appointed vice president (the guy in charge) of Chevron’s Appalachian-Michigan business unit (see Chevron’s Marcellus/Utica Unit Gets New President). Prior to arriving in Pittsburgh to run Chevron’s Marcellus and Utica division, Hearne worked in Chevron’s “downstream” or refinery business. Hearne is a young (under 50), rising star at Chevron. The big news is that Hearne is leaving his post at Chevron Appalachia to become deputy managing director of Chevron Australia–essentially a huge LNG (liquefied natural gas) operation. Hearne will become deputy to Roy Krzywosinski, but everyone knows/says that Hearne will replace Krzywosinski once the first of three trains goes online at the $54 billion Gorgon LNG project, which is Krzywosinski’s baby. Hearne is Krzywosinski’s protege in line to run the entire Australian operation. The question is, who will replace Hearne in Pittsburgh?…
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