Energy Companies

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    How Much is Magnum Hunter & Eureka Hunter Worth Today?

    Valuing an oil and gas or midstream/pipeline company is probably as much art as it is science. In any real estate or land or business valuation, in fact in any kind of transaction where something is bought and sold, something is worth as much as someone is willing to pay for it. But we all need guidelines…rules of thumb…markers that help us determine how much value something has. The “thing” under consideration in this post is the value of both driller Magnum Hunter Resources, and its midstream subsidiary Eureka Hunter. A stock analyst writing on the Seeking Alpha website tackled that question and came up with some interesting numbers…
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    Warren Resources Announces Departures/New Appointments in Key Roles

    In November, MDN told you that Warren Resources, a small, independent exploration and production company with an ongoing drilling programs in California, Wyoming, and in the northeast Pennsylvania Marcellus Shale, had finally chosen a new CEO nearly a year after the previous CEO abruptly resigned (see After Almost a Year, Warren Resources Gets New CEO). Yesterday Warren announced further “restructuring”–by which they mean “out with the old team, in with the new team.” In addition to a new CEO Warren has a new CFO and now a new VP for Accounting. The people who have been occupying those roles will be leaving the company by March. Here’s the details of the house-cleaning at Warren Resources…
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    Short Selling for CONSOL, Southwestern Energy Spikes Up

    Once again we return to a recurring theme of reporting on “short selling” in Marcellus/Utica stocks. For a primer/explanation of what short selling is, read our previous story: “Short Selling” – An Important Signal for Marcellus-Related Companies. The boiled down version is this: Traders who sell stocks “short” are betting that the price of that company’s stock is heading lower. A lower stock price means the value of the company goes down, making it harder to borrow money, raising the rates on money borrowed, etc. Low stock prices mean it’s harder to do business in general. The average short selling of stocks for all companies in all industries is typically 5-6% of trading volume. Recently, oil and gas stocks, as an industry, have seen an average of 12% short selling of their stocks. When short selling picks up for Marcellus/Utica companies, we take note because it’s a signal about the potential value and future prospects for that company. If more than 12% of a company’s stock is being sold short, well, that’s just not a good “sitch” (as my Millennial kids say). We spotted notices that two important Marcellus drillers’ stocks are quite a bit above the 12% range–CONSOL Energy and Southwestern Energy…
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    No Downturn Here: Hilcorp Gives $100K Bonus to Every Employee

    hilcorp logoHilcorp Energy, owned by billionaire Jeffery Hildebrand and founded in 1989, is one of the largest privately-held oil and natural gas exploration and production companies in the United States. Hilcorp is the largest oil producer in Louisiana. The company operates along the Gulf Coast of Texas and Louisiana, in Alaska and in the Marcellus/Utica Shale–in eastern Ohio and western Pennsylvania. Hilcorp is an important driller in our neck of the woods. The company is headquartered in Houston, TX and employs over 1,350 employees. Since the company is privately held and no one really knows much about its ownership, most people believe Hildebrand keeps all of the company’s stock for himself. But that doesn’t mean he doesn’t reward his employees. During one of the worst downturns in the industry in a generation (2015), Hildebrand is handing out a $100,000 bonus to each employee this Christmas. Talk about generous! Holy smokes. No wonder Hildebrand’s employees are some of the most loyal and hardworking in the business…
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    Where Do Drillers Like CONSOL Think Gas Prices are Heading?

    Where do Marcellus/Utica drillers believe the price of natural gas in the northeast is heading over the next few years? Wouldn’t you love to be a fly on the wall in boardroom meetings where gas price is discussed? We have the next best thing. It’s called hedging. Drillers (and others who buy and sell natural gas) often engage in a practice called hedging, which is, in a simplified explanation, a contract to sell (or buy) a commodity like natural gas at an agreed-on price at a future date. There is an element of risk in hedging. What if the price goes a lot higher? You have to sell at the lower price you agreed to. What if the price goes a lot lower? You’ve covered your derriere by locking in a higher price for the gas your produce. If you look at the hedging contracts gas companies strike, you get a sense for where they believe the price will go. We have an example from CONSOL Energy which has just released details of their hedging for the next few years. Where does CONSOL believe the price of natural gas is going from now until 2018? In a word, down…
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    ExxonMobil Gets a New President, Rex Tillerson Successor?

    ExxonMobil is an important energy company–one of the most important worldwide. ExxonMobil is the largest publicly-traded oil and gas company in the world (by market capitalization). It’s an American company. And it has a meaningful presence in the Marcellus/Utica region via its wholly-owned subsidiary XTO Energy, which it purchased in 2010 for $35 billion. ExxonMobil is the largest natural gas producer in the United States–and has been for years. So when a major change is made at the top of the company, it’s big news–for everyone. Last Friday ExxonMobil announced they have a new president. No, Rex Tillerson isn’t going anywhere (for now). Tillerson will remain as CEO of ExxonMobil. However, Darren Woods will take on the role of president. Woods was also appointed to the Board of Directors last week–meaning Woods (50 years old) is the obvious successor to Tillerson when Tillerson (63 years old) decides to retire. The succession plan is now in place. Here’s a bit more about Woods and where he comes from…
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    Marcellus Companies Among Winners at Platts Global Energy Awards

    Publishing company Platts held their annual Global Energy Outlook Forum yesterday on Wednesday in New York City. MDN editor Jim Willis has gone for the past couple of years–but this year Platts uninvited media, including MDN, to attend. So unfortunately we have no news for you from the Forum. However, Platts holds an evening award ceremony each year, following the Forum. It’s called the Platts Global Energy Awards and Wednesday was the 17th running of the awards. Energy companies from seven countries won 18 awards. One company, a company with a growing presence in the Marcellus/Utica, stole the show by winning three awards. That company was Repsol, the Spanish oil giant with a love affair with American shale. Here’s a recap of the event, and the list of winners…
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    Gulfport Energy Gives $500K to Foundation for Appalachian Ohio

    Kudos to Gulfport Energy for making a half million dollar donation the Foundation for Appalachian Ohio (FAO). The grant money will support projects that increase quality of life, create access to opportunities, or identify and implement solutions to community needs in those communities where Gulfport drills. This is called giving back–and the right way to give back–in those areas where you operate. The details…
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    PA Atty General Sues Chesapeake Energy, Williams for Royalty Fraud

    lawsuitPennsylvania Attorney General Kathleen Kane, who has been indicted on numerous felony charges and likely to be forced from office any day now, filed a lawsuit yesterday against Chesapeake Energy in Bradford County Court over the issue of shorting landowners out of royalties. What every story we’ve seen (thus far) misses is this: The lawsuit also names Williams as participating in the scheme to defraud landowners out of royalty payments. So this is not just a Chesapeake story, it’s a Williams story too. Landowner groups are “hailing” the decision, jumping up and down with glee. Let us throw a little cold water on your face. Note to landowners and the groups that represent them: When you (metaphorically) crawl into bed with Kathleen Kane, you’re crawling into bed with a rattlesnake. Sooner or later she’s going to turn on you too. Mark it down. It’s in her nature. With that disclaimer in place, we’ll break down the news for you, and show you a copy of the lawsuit Kane’s office filed yesterday…
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    1.1 Billion Barrels of Chesapeake Oil Disappear with a Keystroke

    Accounting is the “language of business.” Sometimes it appears to be spoken in a foreign tongue that is hard to understand. In addition to Chesapeake Energy’s major problems with lawsuits over royalties (see today’s top story about PA Attorney General Kane suing them), Chesapeake’s claim of how much oil (and gas) it can extract from its leased acreage, an important number on which loans are made, will decrease by an astonishing 45% this week. Poof! Nearly half what Chessy says is in the ground and available to extract just disappeared. How can that be? Accounting. In order to make a claim that “we have X barrels of oil, or X billion cubic feet of gas available to extract,” you have to be able to sell what you extract *at a profit* or it makes no sense to extract it and sell it. The formula drillers must use to prove they can extract it at a profit is set by the Securities and Exchange Commission. Because the price of oil and gas is low and not going up any time sooner, many companies, including Chesapeake, must now re-evaluate their numbers and restate their claims of how much inventory they have. And nearly half of Chessy’s inventory is now gone, with a few keystrokes and a spreadsheet formula…
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    What’s Up with Carrizo Top Mgmt Continued Selling of Co. Stock?

    Carrizo Oil & Gas CEO Chip Johnson continues to sell off his company stock. On June 1, Johnson sold 24,661 shares of company stock for $1.2 million. A few days later, on June 5, he sold another 6,000 shares for $309,000. Then again on September 8, Johnson sold another 6,000 shares netting him $217,000. And on October 5, Johnson sold yet another tranche of 6,000 shares, this time for $227,040 (see Carrizo O&G CEO Chip Johnson Continues to Sell His Company Stock). In an “Oops, I did it again,” Johnson sold another tranche of 6,000 shares earlier this week–this time for $193,440. That makes the grand total of Johnson’s stock sales 48,661 shares since June for a grand total of $2.1 million. But Johnson isn’t the only Carrizo top dog to sell. Others have sold their shares, including board member Roger Ramsey who this week sold 1,000 shares for $33,310. This is the third time–that we know of–that Ramsey has sold stock in the company he helps oversee (see Carrizo CEO Chip Johnson Sells Another 6K Shares of Stock and Carrizo Oil & Gas “Insiders” Continue to Sell Company Stock). We have to ask, what in the world is going on at Carrizo that top management continues to sell off their stock?…
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    New Marcellus/Utica Drilling Company is Born – LOLA Energy

    lola energyIt’s not often we have the pleasure of announcing the birth of a new company–in particular a new drilling company in the Marcellus/Utica in what has to be the worst economic conditions in a generation in the industry. But, pop the cork on the champagne and break out the cigars! A group of former EQT executives have just launched LOLA Energy with a $250 million investment from private equity firm Denham Capital. The new company is headquartered in Wexford (Pittsburgh area), PA and has already begun leasing land in the Marcellus/Utica. Company execs say they expect to create 10 to 20 new jobs in the Pittsburgh area over the next year. LOLA’s CEO is Jim Crockard, former senior vice president in charge of production for EQT. The strategy of the fledgling company is to pick up good properties cast off by other drillers because there’s not enough money (or enough profit) to drill in this low price environment…
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    Packed Meeting in Towanda Discusses Chesapeake Royalty Settlement

    Last week MDN told you about a very important class action lawsuit that is about to be settled against Chesapeake Energy. It’s called the “Demchak” case and it involves thousands of Pennsylvania landowners who are currently, or even formerly, signed with Chesapeake (see Decision-time for Landowners in Demchak/Chesapeake Royalty Case). Landowners are automatically part of the settlement unless they opt out by December 17. A big confab was held last Wednesday (Dec. 2) at the Towanda (Bradford County), PA High School. It was a packed house with ~650 landowners attending. MDN had our very own reporter, Johnny Williams, on the scene. He files the following report, with important information for landowners…
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    Susquehanna County Residents Love Burning Locally Produced Gas

    Susquehanna County, PA, which sits just across the border from where MDN is written in Broome County, NY, is one of the miracles in the Marcellus Shale. Cabot Oil & Gas, among a few other drillers, have extensive operations in Susquehanna County. In fact, all of Cabot’s PA wells are located in that one county, and Cabot produces (at last check) over 1.5 billion cubic feet of natural gas PER DAY. It’s an amazing story. One of the ironies has always been that rural counties like Susquehanna that produce natural gas often aren’t able to use the gas they produce due to lack of pipeline infrastructure. The entire county has 43,000 residents (11,700 families). The largest “city” in Susquehanna County is the county seat of Montrose, population 1,600 (750 households). It’s just not all that economical to run natural gas pipelines to homes around the county–even though residents live atop an embarrassing riches of natural gas. One company, Leatherstocking Natural Gas, changed all that in late 2013 when they started to run pipelines to residences and businesses around Montrose. How has it turned out? The people who are hooked up and burning Marcellus gas locally produced have high praise…
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    PA Senator Predicts Chesapeake Energy Goes Bankrupt Within a Year

    drugs.jpgThe failed Governor of Pennsylvania, Tom Wolf, “100 percent guarantees” an oil and gas severance tax will be part of next year’s state budget. That’s the claim made by Wolf’s inept Policy Secretary, John Hanger, last Friday. What hubris. Wolf and Hanger can’t even get THIS YEAR’S budget done! Nearly six months late!! And already they’re trying to grab money for next year. Democrats have a heroin-like addiction to OPM–Other People’s Money. (Coincidentally, when John Hanger ran for governor himself, he ran on a platform of legalizing marijuana, see Pass One Last Joint for John Hanger.) The problem (for Wolf and Hanger) is this: the shale industry in PA is in retrograde. It’s receding, not expanding. Drilled wells are either not being hooked up in the first place, or they’re being turned off, called being shut-in. When that happens, less gas flows–less gas to tax. Another lesson Dems never learn: You ALWAYS get less of what you tax, not more. It’s simple economics. A Republican State Senator from York, PA (Wolf’s home town) wrote Wolf a little love letter to school him in the economic realities of his bogus claim that “next year” he’ll get a severance tax. State Sen. Scott Wagner predicts, among other things, that Chesapeake Energy, PA’s largest natural gas producer, will file for bankruptcy within a year…
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    EQT’s Change of Heart: Drilling 72 Marcellus, 5 Utica Wells in 2016

    On Monday EQT released a preliminary 2016 operational forecast. The company plans to spend $1 billion on drilling next year, which is half of what they spent this year. Although EQT’s top brass previously said they were dumping the Marcellus and concentrating on the Utica Shale instead (see EQT Dumps Marcellus Drilling, Concentrates on the Utica in 2016), it seems they’ve had a change of heart. Yesterday’s forecast says EQT will drill 72 Marcellus wells in 2016 and just 5 Utica wells. What happened? We don’t know–but we suspect EQT is finding it more of a challenge than they thought to get the price of a deep Utica well down to the $12.5 to $14 million range they predicted they could get it to. Here’s the details on what EQT plans to do in 2016…
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