Energy Companies

Energy Companies | Lease & Royalty Payments | Marshall County | Ohio County | Southwestern Energy | West Virginia

Southwestern Energy Renewing Leases in WV, PA
January 8, 2016January 8, 2016

Tick tock tick tock. Every day that passes brings landowners and drillers closer to the end of an initial five-year lease contract. In October 2014, Southwestern Energy purchased a humongous 413,000 acres of leases from Chesapeake Energy, most of that land in West Virginia (see Chesapeake Sells Close to 25% of Marcellus/Utica Operation). Southwestern paid over $5 billion for the deal. That leased acreage came with an expiration–which is happening now, at least for some (most?) of the acreage. Every lease is different. Some leases allow the driller to pay the same (or a different) renewal payment to keep the lease going for another period of time, typically another five years. The $5 billion question is, what will Southwestern do? Everyone is scaling back right now. Companies just can’t afford to do much drilling. Will Southwestern opt to renew those leases that they paid big bucks for? It seems we have an answer to that question. A WV newspaper is reporting that Southwestern has begun extending leases in Ohio and Marshall counties…
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CNG/LNG | Energy Companies | Energy Services | Exporting | Industrywide Issues | Pipelines | Regulation | Repsol | Spectra Energy

Repsol Not Happy with Spectra’s Atlantic Bridge, Pipeline Reversal
January 8, 2016January 8, 2016

A number of Canadian LNG export facilities being planned for eastern Canada are dependent on obtaining cheap, abundant Marcellus and Utica Shale gas from the U.S. Today we highlight news of a new (to us) entrant into the LNG race, AC LNG (see our companion story). How will Marcellus and Utica Shale gas get to the northern reaches of Canada? Via the Maritimes & Northeast Pipeline LLP (M&NE), a pipeline that stretches from the Boston area all the way to the northern reaches of Nova Scotia. Historically the M&NE pipeline has brought natural gas south, from Canada to the U.S. One of the sources of the gas traveling south on the M&NE is the Canaport LNG facility in New Brunswick–which imports LNG and regassifies it and sends it out over the M&NE. Repsol, a huge Spanish oil company, is the owner of the Canaport facility. So it’s no surprise that Repsol is sounding the alarm and asking the question: What happens to the gas we send south if M&NE reverses its flow and begins sending gas north?…
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Energy Companies | Noble Energy

Noble Energy Refinances $1.4B of Notes, Gets “Flexibile”
January 8, 2016January 8, 2016

Noble Energy says it got a $1.4 billion bump up in its line of credit. That’s on top of a $4 billion line of credit. Noble is also offering to swap out old IOUs for new ones. All of these financial machinations mean the company now has “enhanced financial flexibility” according to their press release…
Read More “Noble Energy Refinances $1.4B of Notes, Gets “Flexibile””
Allegheny County | CNX Resources | CONSOL Energy | Energy Companies | Pennsylvania | Utica Shale

CONSOL Pursues Drilling Test Utica Well at Pittsburgh Airport
January 7, 2016January 7, 2016

Sometimes when we’re wrong, we’re still right! Last June MDN reported that CONSOL Energy, currently in the process of drilling a series of Marcellus and Upper Devonian shale wells at the Pittsburgh International Airport, was mulling over the possibility of drilling a single test Utica well at the airport (see CONSOL Energy May Add More Utica Wells to Pitt. Airport Project). Our error was in reporting CONSOL had already received a permit to drill a Utica well–they had not. However, CONSOL has just received permission from local town officials to swap out one of the planned Marcellus wells with a Utica well…
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CNX Resources | CONSOL Energy | Energy Companies

CONSOL Energy Slashes 2016 Drilling Budget 50% from Previous Plan
January 7, 2016January 7, 2016

There’s just no ignoring the fact that most (many? all?) Marcellus/Utica drillers are pulling in their horns for 2016 and, as things stand right now, will drill far less this year than they did last. Take CONSOL Energy as an example. Yesterday CONSOL issued a revised 2016 capital budget and operational forecast (full copy below). CONSOL has decided to spend even less on drilling in 2016 than previously announced. CONSOL spent $1.3 billion on drilling in 2014, $1 billion last year, and was planning “$400-$500 million” this year. Now? That number has crumbled to $205-$325 million. You don’t drill many wells with $200 million. CONSOL’s update says the company plans to spend $110-$210 million on drilling and completing wells, with an emphasis on completing already-drilled wells. Of note and interest is the increasing number of Utica wells that are in the CONSOL portfolio. Even though CONSOL will drill and complete far fewer wells than previous years, they still expect production to increase by 15%…
Read More “CONSOL Energy Slashes 2016 Drilling Budget 50% from Previous Plan”
Anti-Drilling/Fossil Fuel | Energy Companies | Hydraulic Fracturing | Industrywide Issues | Litigation | New York | Shell | Steuben County

NY Town Barred from Selling Water to Shell for PA Fracking
January 7, 2016January 7, 2016

In March 2012, the village board in Painted Post (Steuben County), NY voted to sell water to Shell for use in fracking operations across the border in Pennsylvania. The Susquehanna River Basin Commission (SRBC) gave its blessing to Painted Post to sell up to 1 million gallons of water day. But the decision didn’t sit well with power-hungry anti-drillers. The nutters from the radical Sierra Club sued to stop the deal in June 2012 (see Sierra Club Sues to Stop Water Sales in Steuben County, NY). A lower court ruled in favor of the radicals and struck down the deal. On appeal, a corrupt state appellate court has upheld the lower court’s ruling. Shell will have to find water from another source–not that they’re drilling any wells right now anyway…
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CNX Resources | CONSOL Energy | Energy Companies

Corporate Raider Mason Hawkins Now Owns 23.1% of CONSOL Energy
January 7, 2016January 7, 2016

There’s little doubt about who now is, or soon will be, calling the shots at CONSOL Energy: corporate raider Mason Hawkins. Hawkins, along with corporate raider buddy Carl Icahn, is responsible for firing Aubrey McClendon from the company he co-founded (Chesapeake Energy) and further firing some 2,000 or more Chesapeake employees–all in a bid to put more money in his pocket. Hawkins and Icahn control Chesapeake by owning a combined 20% or so of the company’s outstanding shares of stock. In February 2015, MDN shared the disturbing news that Hawkins and his Southeastern Asset Management had amassed 14% of CONSOL’s outstanding shares of stock (see Corporate Raider Mason Hawkins Holds 14% of CONSOL Energy Stock). By July that number ballooned to 21% and Hawkins was throwing his weight (and money) around (see CONSOL’s #1 Stockholder Says Spin Off CNX Gas…or Sell It). Now? We spotted a notice that Southeastern Asset Management’s stake in CONSOL has grown to 23.1% of the company’s outstanding shares. Which means Hawkins can have his way with the company…
Read More “Corporate Raider Mason Hawkins Now Owns 23.1% of CONSOL Energy”
Energy Companies | Southwestern Energy

Southwestern Energy Gets New CEO – What’s Ahead for 2016?
January 7, 2016January 7, 2016

Southwestern Energy CEO Steve Mueller is stepping down (or is it up) from his position as CEO. Mueller will remain on the board of directors as non-executive chairman. In his place, Southwestern’s current president, Bill Way, will take on the added title and responsibility of CEO. Southwestern is one of the biggest, and most important, drillers in the Marcellus/Utica. 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. It was just two years ago that Steve Mueller stepped down as president but retained his title of CEO and was appointed to succeed the outgoing chairman of the board (see Southwestern Energy’s Board Changes, Marcellus Plans for 2014). The company has been on a mission to expand its Marcellus/Utica footprint ever since. In October 2014 Southwestern announced a deal to buy 413,000 Marcellus/Utica acres from Chesapeake Energy, most of it in West Virginia, along with 435 drilled wells in a deal costing the company $5.375 billion (see Chesapeake Sells Close to 25% of Marcellus/Utica Operation). Then in December 2014, Southwestern bought 46,700 net acres of leases and 63 operating Marcellus Shale wells in northeastern PA from WPX for $300 million (see First Shoe Drops: WPX Sells 1/2 Marcellus Assets to Southwestern). 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). The question now is, what’s ahead for 2016 with Bill Way at the helm?…
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Energy Companies | Energy Services | Rice Energy | Summit Midstream

Big Stock Trades for Rice Energy, Summit Midstream
January 7, 2016January 7, 2016

Periodically we catch you up on major cases of insider buying or selling–when upper management and/or board members either buy stock in the company they run, or sell it. We also periodically report on major shareholders either buying or selling. Earlier this week we told you that Eagle Asset Management had sold some of its Gulfport Energy stock and beefed up its Rice Energy portfolio (see Eagle Asset Mgmt Sells Gulfport Energy, Buys Rice Energy Stock). Today we report that Jennison Associates (investment firm) recently sold 369,662 shares of Rice Energy. After all, somebody like Jennison has to sell if companies like Eagle Asset buy, right? In addition, we’re reporting that a board member of Summit Midstream (company with sizable pipeline assets in the Marcellus/Utica) recently bought a whopping $5.6 million worth of company stock. Now there’s a vote a confidence!…
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Eclipse Resources | Energy Companies

Eclipse Resources Drilling 1 Well in 2016, Restricting Production
January 5, 2016January 5, 2016

Eclipse Resources issued their fourth quarter 2015 operational update yesterday, along with publishing an updated investor’s PowerPoint. We have both below. Eclipse is a smaller but important Marcellus/Utica driller with its headquarters in State College, PA–although they do almost all of their drilling in Ohio’s Utica Shale. In November word leaked out that Eclipse is shopping the company (see Marcellus/Utica Driller Eclipse Resources Looking for a Buyer). There was no overt or implied reference to that in yesterday’s update. What the update did say, however, is that save a single well they plan to drill in the first quarter of this year, Eclipse is not planning to do any more drilling until the price of natgas increases. They also said that although previously drilled wells going online have the potential to boost Eclipse’s production in 2016, they plan to reign in the flow rates to keep them at 2015 levels–again, until the price of natgas goes up. Nobody is predicting an increase in natgas prices any time soon (at least not in 2016), but it appears Eclipse is buckling in for a long ride through low-price valley…
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Antero Resources | Commodity Price | Energy Companies | Industrywide Issues

How Antero Resources Converted an Ugly Duckling into a SWAN
January 5, 2016January 5, 2016

Antero Resources is perhaps the largest driller completely focused on the Marcellus/Utica (by acreage). They are certainly one of the most important drillers in the northeast. And bucking the trend of almost all of their competitors, they somehow manage to operate in the black (see Antero Resources 3Q15: Bucks the Trend, $237M in the Black!). What’s Antero’s secret to making money in arguably the worst time for our industry in a generation? In a word, it’s hedging. Somehow Antero crafts financial deals a year or more in advance to sell whatever gas they produce for prices much higher than others–at prices that mean the company continues to make a profit. Most energy companies these days are keeping the people who run those companies, AND their investors, up at night. A company like Antero comes as close to any as a SWAN–a “Sleep Well At Night” energy company. An interesting article on the Seeking Alpha website gives us background and clues as to how Antero has been able to convert itself from an ugly duckling into a SWAN…
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Eclipse Resources | Energy Companies | Northeast Natural Energy

2 Rigs Reactivated – One in WV, the Other in OH
January 4, 2016January 4, 2016

Another rumor to share–from a good source, a source we believe. Last week this same source told us that a new Utica driller was beginning operations in Tioga County, PA (see The 411 on New Driller Firing Up Rig in Tioga County, PA). The new rumor? There are two more rigs reactivating–one in West Virginia and the other in Ohio. Here’s who’s beginning to drill again…
Read More “2 Rigs Reactivated – One in WV, the Other in OH”
Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

PA AG’s Lawsuit Derails Demchak/Chesapeake Royalty Settlement
January 4, 2016January 4, 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 sharing two-thirds of the $11 million settlement (the other one-third going to the lawyers) didn’t seem all that great a deal to us. But we’re not PA landowners with a dog in this fight. Toward the end of last year the issue got heated again as landowners (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 along came PA Attorney General Kathleen Kane, herself under indictment for felony crimes, with her own lawsuit against Chesapeake over the royalty issue (see PA Atty General Sues Chesapeake Energy, Williams for Royalty Fraud). It seems Kane’s lawsuit has now put the brakes on the Demchak settlement that was supposed to have taken place in early February. That plan is now delayed…
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Atlas Energy | Energy Companies

Atlas Energy Luck Run Out? NYSE Threatens Company with De-Listing
January 4, 2016January 4, 2016

Atlas Energy, a once-major driller in the Marcellus Shale, sold much of their Marcellus operations to Chevron in 2011 (see India’s RIL Loses Bidding War for Atlas Energy – $4.3 Billion Deal with Chevron Goes Forward). The Cohen family that runs the company is interesting and colorful. They bought into the company in the 1990s and happened to be in the right place at the right time, just prior to the discovery of the Marcellus (see The Unconventional Rise & Sale of Atlas Energy). In October 2014, the Cohens did it again. Talk about perfect timing! The Cohens sold more of what was left–for a truly astonishing $7.7 billion–to Targa Resources Partners, just prior to the crash of natgas prices (see Atlas Energy/Pipeline Sells Itself (Again) – for $7.7 BILLION!). What’s left now? With respect to the Marcellus, we don’t think there’s much left. But Atlas still does own operating interests in Marcellus wells. It looks like maybe the Cohen family’s good luck may have run out. The New York Stock Exchange has issued Atlas a notice that unless it’s stock price and market capitalization goes up, the NYSE will de-list the company from the exchange…
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Energy Companies | EnerVest | Industrywide Issues | Jobs | M&A | Range Resources Corp | Statewide VA | Virginia

Range Res. Completes Sale of VA Assets to EnerVest, 55 Lose Jobs
January 4, 2016January 4, 2016

In November MDN reported that Range Resources would sell 3,500 operated wells and approximately 460,000 net acres in the Nora/Haysi combined fields located in southwestern Virginia for $876 million to an unnamed buyer (see Range Sells Coal Bed Methane Wells in VA, Focusing on Marcellus). The stated reason for the sale is to pay down debt and use the money for more Marcellus drilling. The deal is done and dusted. The final price turned out to be $865 million, $11 million less than announced. Although Range has remained tight-lipped about who the buyer was, EnerVest admitted they are the buyer. At the time Range first announced the impending sale, they issued a WARN notice that up to 158 people would lose their jobs when the sale was completed (see 158 Range Resources Employees in SW VA May Lose Jobs by Dec 30). The sale was completed on Dec. 30, but fortunately not all 158 jobs were axed. “Only” 55 jobs were axed while 103 people were extended offers to work for EnerVest. Of course the 55 people who lost their jobs had a sucky Christmas…
Read More “Range Res. Completes Sale of VA Assets to EnerVest, 55 Lose Jobs”
Chesapeake Energy | Energy Companies

Should Chesapeake CEO Doug Lawler Start Looking for a New Job?
January 4, 2016January 4, 2016

MDN has not been very complimentary of the tenure of Doug Lawler in taking over as CEO of Chesapeake Energy. Corporate raider Carl Ichan tossed Chesapeake’s co-founder and CEO for it’s entire existence (until Lawler) of Aubrey McClendon. We know, McClendon is no boy scout and certainly had his faults, but we find it sick and disgusting when an investor who holds approximately 8% of the outstanding shares in a company can eject its founder, appoint his own “tool” and embark on massive layoffs as a way of making himself money. Legal? Perhaps. Moral? Never. So we found a portion of an article on The Motley Fool interesting–an article about three CEOs in “the hot seat.” The article quotes Lawler as saying Icahn hired him to deliver on the bottom line–higher stock share price. Over the past year Chesapeake’s stock has decreased in value by 80%. Perhaps it’s time for old Doug to polish up his resume?. Doug may soon know what it feels like to get a pink slip–like the ones he’s handed out, about 2,000 times over the past couple of years…
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