Energy Companies

Energy Companies | Gulfport Energy | Rice Energy

Eagle Asset Mgmt Sells Gulfport Energy, Buys Rice Energy Stock
January 4, 2016January 4, 2016

Eagle Asset Management is a privately owned investment manager. The firm pools and invests $31 billion from high net worth individuals, investment companies, pension and profit sharing plans, pooled investment vehicles, charitable organizations, corporations, and state or municipal government entities. One of the areas that Eagle invests in is the oil and gas industry. We always find it interesting how people with big money to invest decide where to invest (essentially place bets on). According to the latest paperwork filed with the Securities and Exchange Commission, during the third quarter of 2015 Eagle Asset decreased their investment in one Marcellus/Utica driller, Gulfport Energy, while increasing their investment in another Marcellus/Utica driller, Rice Energy…
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Energy Companies | Pennsylvania | Tioga County (PA) | Travis Peak Resources

The 411 on New Driller Firing Up Rig in Tioga County, PA
December 30, 2015December 30, 2015

Looks like there’s a new driller in the Marcellus/Utica. MDN received a tip from an industry insider to let us know that Travis Peak Resources, an Austin, TX-based exploration and production company (E&P, or “driller”), is firing up a rig to begin drilling in Tioga County, PA. Who’s Travis Peak? And are they targeting the Marcellus, or the Utica? We don’t have 100% definitive answers for you, but we do have some informed speculation…
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Energy Companies | Industrywide Issues | Litigation | Pennsylvania | Snyder Brothers | Statewide PA | Taxation

Impact “Fee” or Impact “Tax”? It Matters in this (Court) Case
December 30, 2015December 30, 2015

Is the money collected from drillers in Pennsylvania for wells a fee, or a tax? Under the Act 13 law passed in 2012, it’s called an impact fee. We’ve long made the case that it’s part fee, part tax (see our story from 2012: PA’s New Tax on Drilling (er Sorry, Impact Fee)). Our definition, which we think makes eminent sense, is that a fee is money collected to reimburse the government for a service used. You drill a well in a community, you run big trucks over rural roads–those roads get damaged and it takes money to repair them. Or if there’s an accident because of the increase in traffic and fire/police are called out more frequently–there’s a cost associated. Local towns meeting to review and debate requests related to new wells? Takes precious time, and money. The impact fee, as originally intended, would compensate local municipalities for out-of-pocket expenses they incur when drilling comes to town. But then greedy politicians who like money to flow through their stick fingers got involved and in order to “sell” the impact fee in Harrisburg, compromises were made. In the end, 60% of the money collected from the impact “fee” stays local–to reimburse towns and counties for out-of-pocket expenses. The other 40% goes into the Harrisburg black hole and disappears into the fingers of local and state politicians who don’t incur any expense from drilling. So we call that 40% portion a tax–an obscene one at that. Why does it matter whether it’s considered a tax or a fee? Because of a Commonwealth Court case in which a driller maintains it’s a tax and the company doesn’t owe it if it’s considered a tax…
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Energy Companies | EQT Corp | Industrywide Issues | Litigation | Pennsylvania | Regulation | Tioga County (PA)

PA Supreme Court Gives EQT “Procedural Victory” in $4.5M Fine Case
December 30, 2015December 30, 2015

Over a year ago the Pennsylvania Dept. of Environmental Protection (DEP) fined PA driller EQT $4.53 million for a leaky wastewater impoundment in Tioga County, PA (see PA DEP Levies Biggest Fine Ever, $4.5M Against EQT). While EQT is not saying there wasn’t a problem with leaks at the site, they are saying the way the DEP is calculating the fine is unreasonable and arbitrary. In fact, EQT says the DEP levied the fine and took EQT to court because a few weeks prior EQT has sued the DEP. Seems to be a tit for tat thing going on. There is, more than a year later, a development in the case. EQT appealed the fine and the case to PA Supreme Court and the high court has just handed EQT a “procedural victory” by saying EQT has a point about the manner in which the DEP is calculating the fine. The Supreme Court has sent the case back to a lower court for follow up work…
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Blue Ridge Mtn Res/Magnum Hunter | Energy Companies

Court Approves Magnum Hunter’s “First Day” Bankruptcy Motions
December 30, 2015December 30, 2015

Two weeks ago MDN brought you the sad news that Marcellus/Utica driller Magnum Hunter Resources (MHR) has filed for Chapter 11 bankruptcy protection (see Sad Day: Magnum Hunter Files for Chapter 11 Bankruptcy). A few days after filing, MHR reported (see below) that the courts have already approved all “first day” motions related to the bankruptcy. The upshot is this: the courts have approved MHR’s plans that allow the company to continue to make payroll, pay royalty payments to landowners, and continue to work on getting a $200 million bridge loan to keep it all going. Here’s the details…
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Coterra Energy (Cabot O&G) | Energy Companies | Exxon Mobil | Industrywide Issues | Research

Morningstar Outlook/Predictions for Oil & Gas in 2016 & Beyond
December 30, 2015December 30, 2015

Morningstar, Inc. is one of, if not THE leading providers of independent investment research in North America, Europe, Australia, and Asia. Morningstar’s analysts keep a close eye on many different sectors, including the energy sector. Yesterday Morningstar published its Quarter-End Insights for the oil and gas sector, which include not only a look back at what happened, but predicts what they see coming in 2016 and beyond. Among Morningstar’s predictions: “Long-term” prices for oil will hit $70 per barrel for Brent crude and $64 per barrel for WTI. Near-term oil prices? They “could be ugly.” Morningstar recommends three specific E&Ps in which to invest. Two of them operate in the Marcellus…
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Chesapeake Energy | Energy Companies

Chesapeake Energy Races to Exchange Notes Before the Ball Drops
December 30, 2015December 30, 2015

The news for Chesapeake Energy continues to be downright dismal. And no, we’re not happy to say as much. We believe Carl Icahn deserves to lose every penny (and more) that he invested in the company in return for the mass firings he instigated through his chosen tool Doug Lawler. However, there are still a lot of good people who work at Chessy–and a lot of landowners who depend on Chesapeake drilling on and under their property (that is, when they pay fair royalties). It is in no one’s best interests to see Chesapeake file for bankruptcy. Yet increasingly, that’s the scenario being whispered (see Chesapeake Energy Faces Bankruptcy if Noteholders Don’t Cooperate). Chesapeake faces a deadline tomorrow with noteholders. If they don’t successfully seal the deal and get a majority of those noteholders to exchange their existing notes for new notes–let’s just say the alternative is not pretty…
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Coterra Energy (Cabot O&G) | Energy Companies

Cabot O&G Attorney Sells $97K of Company Stock
December 30, 2015December 30, 2015

From time to time MDN brings you news of a company’s top management either buying (preferred, from our perspective) or selling (not so preferred) shares of company stock. We figure it’s a good sign when the people who run the company believe in it enough that they plunk down their own coin to buy shares of it. We should hasten to add selling company stock is not necessarily a bad sign or indicator of a lack of confidence. People have lives and need money: kids to put through college, renovations to the house, Christmas debt to pay off, etc. This latest buying/selling incident is one in which a top officer is *selling* stock. Cabot Oil & Gas’ General Counsel, George Cunningham, sold 5,670 shares of company stock on Monday for a total price of $97,297.20…
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Energy Companies | EQT Corp | Industrywide Issues | Jefferson County (OH) | Lease & Royalty Payments | Litigation | Ohio | Statewide OH

Federal Judge Rules for EQT in Ohio Lease Dispute – Ramifications
December 29, 2015December 29, 2015

An important decision was recently made in a lease case in Ohio–a case which has implications for both drillers and landowners with Marcellus/Utica leases. Driller EQT signed a lease with Jefferson County, OH landowner Alex Cooper on Oct. 6, 2008. The initial term of the lease was for five years, with a five year extension IF EQT makes an extension payment. The lease also stipulates that EQT MUST drill a well on or before Oct 6, 2013–the end of the first term of the lease. EQT opted to extend the lease, making (or rather attempting to make) a payment to Cooper–but EQT did not drill a well by Oct 6, 2013. Cooper claimed since EQT hadn’t drilled, the lease expired on Oct 6, 2013 and he is free to lease again. The case ended up in Federal District Court for the Southern District of Ohio and U.S. District Judge Algenon Marbley decided in favor of EQT, even though the language in the lease stipulates a well MUST be drilled during the first term of the lease. How and why did Judge Marbley decide the case as he did? Below is a recap of the case, followed by a copy of the full decision from Judge Marbley…
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Beaver County | Belmont County | Energy Companies | Energy Services | Ethane | Industrywide Issues | Odebrecht | Ohio | Pennsylvania | Processing Plants | PTT Global | Shell | West Virginia | Wood County

Will 2016 be the Year *Somebody* Commits to Building a Cracker?
December 28, 2015December 28, 2015

Will somebody, somewhere PLEASE build the northeast an ethane cracker plant? Pretty please? We noticed a couple of stories that indicate 2016 is THE year that at least one company will likely pull the trigger on an FID–a Final Investment Decision to build an ethane cracker. But which company is likely to do it? Shell? PTT Global? Odebrecht? Leaving Odebrecht’s Parkersburg, WV proposed cracker aside for the moment (a project where we barely detect a pulse), both the Shell plant, planned for Beaver County, PA, and the PTT Global plant, planned for Belmont County, OH, have seen impressive signs of activity in 2015. Which of those two will likely say “yes” in 2016?…
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Carlyle Group | Energy Companies | Energy Services | Hilcorp Energy

Hilcorp Forms $1.24B JV with Carlyle to Shop for Shale Deals
December 23, 2015December 23, 2015

Smart. Everyone knows the best time to buy something, whether it’s stocks, real estate, fuel oil, whatever–is when the market is crashing and burning. Always buy in a “down” market and sell in an “up” market. Natural gas and oil selling at current historic lows qualifies as a down market. It’s about as down as it gets! So it figures those companies who have kept their debt levels low and managed themselves well are now in the catbird seat and can go shopping for bargain basement deals–while their competitors sit on the sidelines hoping to stay out of bankruptcy court. Marcellus/Utica driller Hilcorp is one of those well managed/smart companies. Hilcorp has just joined forces with energy investment firm Carlyle in a partnership to go shopping for deals…
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Energy Companies | Rice Energy

Rice Family Sells 5M Shares of Rice Energy Stock to Pay Off Debt
December 23, 2015December 23, 2015

Yesterday the Rice family offered up for sale up to 5 million shares of stock in Rice Energy–the first time that’s happened since the Rice’s founded the company in 2007. Rice Energy was founded by Dan Rice III and his boys Dan IV, Toby and Derek. In fact Dan III, who was the most successful mutual fund manager in the U.S. for 10 years, was unceremoniously dumped by his employer BlackRock because BlackRock screwed up by not telling investors Dan was bankrolling a new company (Rice Energy) while at the same time investing in other oil and gas companies that could be construed as competitors via his mutual fund transactions (see BlackRock’s Screw-up with Dan Rice & Rice Energy). Dan was completely up front and transparent and told his bosses at BlackRock what he was doing–it was his bosses who screwed up, and then fired Dan in a blame-shifting move. Dan has been laughing his way to the bank ever since. Rice Energy has been a huge success. Until the end of last year Rice Energy was a private company–the Rices held most all of the stock. They went public last year and began to take OPM–other people’s money (see Rice Energy IPO Soars, Brings in $84M More Than Expected). As part of the IPO process, the Rices took out a loan with Morgan Stanley. Yesterday’s sale of up to 5 million shares is most definitely NOT the Rices stepping back from their own company. It’s actually meant to defend the company from financial market gyrations, as the Rices explain below…
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Accidents | Anadarko | Clinton County | Energy Companies | Industrywide Issues | Litigation | Pennsylvania

Fed Court Rules PA Wrongful Death Lawsuit Against Anadarko Proceeds
December 22, 2015December 22, 2015

In May 2012 a water truck driver delivering water to an Anadarko Marcellus Shale well pad in Clinton County, PA missed a turnoff for the road he was supposed to take, at 2:30 am in the morning. A couple of miles later he crashed and tragically died because the road he was on was not marked well and not conducive to the truck he was driving. There was a sign warning the driver not to go beyond a certain point. The driver had previously–that night–already delivered to the well pad and successfully turned onto the road he was supposed to take. Why did he miss it the second time? His widow maintains that even though he worked for a subcontractor, Anadarko was the company in charge and should have had a light illuminating the “No Anadarko Traffic Beyond This Point” sign. So she sued Anadarko, and the subcontractor, for wrongful death. Lower courts threw out the lawsuit but a federal appeals court has just reinstated a civil suit against Anadarko that will go to a jury…
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Alpha Natural Resources | Energy Companies | Rice Energy

Alpha Natural Resources Does NOT Own Nearly Half of Rice Energy
December 22, 2015December 22, 2015

It’s not often we get to set the record straight on a story run in the financial press–but we get to this time. A story appeared yesterday on the American Banking & Market News site that coal company Alpha Natural Resources (ANR), which has a joint venture with Rice Energy to drill in the Marcellus Shale, owns 42.8% of Rice Energy’s outstanding common shares of stock. Which made our eyeballs nearly fall out. How in the world could a coal company that filed for bankruptcy earlier this year (see Alpha Natural Resources in Bankruptcy – What about Marcellus?), own that much of Rice Energy? It made no sense to us. So we went digging. The story quotes from an extensive filing by ANR with the Securities and Exchange Commission. The 13D/A filing appears to make the claim that ANR owns 54,306,610 shares of Rice Energy (see below). However, if you read it closely, the language is dense and even misleading. We believe what it means to say is that ANR along with Rice Energy Holding, Rice Energy Family Holdings, and NGP Rice Holdings–all of them together–own 54,306,610 shares of stock. NOT just ANR by itself. We think the author of the story misinterpreted what is very obscure financial language. We reached out to Rice Energy and Rice’s president Toby Rice responded that he believes (is not 100% sure) that ANR owns less than 4 million shares of stock in Rice Energy…
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Energy Companies | Energy Services | Rice Energy | Rice Midstream

Rice Energy Sells Part Ownership in Rice Midstream for $500M
December 22, 2015December 22, 2015

Rice Energy announced yesterday they’ve pocketed a cool $500 million from an unnamed energy investment company in return for an ownership stake in their subsidiary Rice Midstream. Rice Energy (the mother ship) will use $375 million of that new cash to pay off debts, and the other $125 million will get used for drilling new Marcellus and Utica Shale wells…
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Energy Companies | PDC Energy

Energy Investor Jennison Ups Ownership in PDC Energy
December 22, 2015December 22, 2015

PDC Energy, with leased acreage in the Ohio Utica Shale, paused their Utica drilling program in 2015 but recently announced plans to restart that program and drill five wells in 2016 (see PDC Energy to Restart OH Drilling in 2016, Drilling 5 Utica Wells). So when we spotted a notice that investment firm Jennison Associates had boosted its stake in PDC, we noticed. Anything that may affect a Marcellus/Utica driller is of interest to us. Jennison has upped their investment in PDC and now owns 6.95% of PDC Energy stock worth $147,721,000. That’s a far cry from the 42.8% of Rice Energy stock owned by Alpha Natural Resources (see today’s companion story about that deal). Typically when investors increase their stake to the 7-8% range, they begin asserting their influence on the company–getting a board member elected, etc. Not always, and not every investor pursues that course of action. But it’s worth watching for, which is why we bring you this news about Jennison’s investment in PDC…
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