Energy Companies

Energy Companies | Hilcorp Energy | Industrywide Issues | Lawrence County | Pennsylvania | Regulation

Conflict of Interest Prevents Hilcorp Wellpad Approval, What Now?
May 14, 2015May 14, 2015

A strange ending occurred at the Pulaski Township (Lawrence County), PA Board of Supervisors meeting Monday night. The marathon four hour hearing saw Pulaski’s three Supervisors (actually, two of the three) approve one of two conditional use permits to allow Hilcorp to construct a wellpad on the property of Victor A. Litwinovich on Topper Hill Road–much to the consternation of anti-fossil fuel ninnies who were present. But when it came to approving a second Hilcorp wellpad–on the property of Sam Varano and his wife, Beverly, on Evergreen Road–the board couldn’t get a single motion among the three Supervisors to approve it. Why? Because one of the Supervisors is Sam Varano himself–a clear conflict of interest. A second Supervisor is Greg Carna, who owns land adjacent to Varano that is leased to Hilcorp and, presumably, would be included in the Varano well drilling unit–also a conflict of interest. That left the third Supervisor, Lori Sniezek, who won’t vote any Hilcorp matters because she is employed full-time by Hilcorp. Ethics rules barred any of the three from making a motion to approve the wellpad. Without a motion, Varano gavelled the marathon session to a close. What will happen next?…
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Belmont County | Energy Companies | Gulfport Energy | Industrywide Issues | Litigation | Ohio

Barnesville, OH Hires Costly Columbus Lawyers in Gulfport Lawsuit
May 13, 2015May 13, 2015

In 2012, Barnesville (Belmont County), OH signed a contract with Gulfport Energy to sell Gulfport water from the Slope Creek Reservoir for 1 penny per gallon. Gulfport now wants to begin drilling in the area, following a joint venture agreement with Antero Resources. But Barnesville says the water level in the reservoir is too low and won’t sell. Gulfport sued and the whole matter has ended up in federal court (see Gulfport Energy Sues Barnesville, OH for Access to Water in Reservoir). As we later pointed out, the cost to Barnesville taxpayers because their political leaders “didn’t think” when they signed on the dotted line will now be very expensive (see Barnesville Officials “Didn’t Think” When Signing Gulfport Water Deal). Barnesville has just hired a high priced law firm from Columbus to represent them in court. How will Barnesville pay the new high priced lawyers? From money the town received from (yes) selling water from the reservoir to someone else…
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Energy Companies | Rice Energy

Rice Energy Floats 6M Shares of Stock, Looks to Raise $145M Cash
May 13, 2015May 13, 2015

Yesterday Rice Energy, a pure play exploration & production company focused on the Marcellus and Utica, is floating a new round of stock–6 million shares of it. It was only January 2014 when Rice launched its initial public offering of 44 million shares of stock and hauled in $924 million (see Rice Energy IPO Soars, Brings in $84M More Than Expected). The IPO was priced by underwriters at $21 per share and by the close of the bell on its first day of trading, the stock had gone to $21.90 per share (a 4% increase). How much does the company want for this new round of stock? They’ve priced it at $24.20 per share–which is pretty good considering the stock closed yesterday at $25.12 per share. If Rice gets the asking price of $24.20 per share, this latest round of new stock sales will haul in just north of $145 million in cash…
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CONE Midstream | CONSOL Energy | Energy Companies | Energy Services | Noble Energy

CONE Midstream Looking to Add Customers Beyond CONSOL & Noble
May 13, 2015May 13, 2015

In August 2014, CONSOL Energy and Noble Energy formed a midstream joint venture called CONE Midstream to connect their Marcellus and Utica wells (see CONSOL & Noble Energy Form New Marcellus Midstream Company). By February of this year, CONE had already flown by the 500 million cubic feet per day of of throughput (see CONE Midstream’s Strong Beginning, Hits 500 Mmcf/d 6 Mos Early). CONE issued their first quarter 2015 update on Monday. Management also held an earnings call and on that call upper management stated they are now looking to open up their pipelines to flow gas for other companies. CONE CEO John Lewis said so far CONE has two customers: CONSOL Energy and Noble Energy. Lewis said they’re looking at taking on new customers as well as looking at possibly buying other pipelines already in place to add to their network…
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Air Quality | Energy Companies | Energy Services | Industrywide Issues | Litigation | Lycoming County | National Fuel | Pennsylvania | Regulation | Seneca Resources

PA DEP Loses its ‘Common Sense’ in Seneca Air Pollution Ruling
May 13, 2015May 13, 2015

Every now and again the legal definition of “adjacent” and “contiguous” pops up in lawsuits in Pennsylvania related to natural gas drilling. Two years ago we highlighted the issue (see Should PA Compressor Plants Miles Away be Considered “Adjacent”?). The argument revolves around lumping together several potential air pollution sources, like compressor plants and even well pads and pipelines–into one, common, larger source of air pollution for the purposes of regulation. Smaller sources are regulated by the PA Dept. of Environmental Protection (DEP) and larger sources, over a certain threshold, by the federal Environmental Protection Agency (EPA), with much stricter and more expensive standards. The PA DEP, for whatever reason, has gone after Seneca Resources and its parent company National Fuel Gas Co. for their operations in Lycoming County, PA. Even though Seneca’s well pads, pipelines and compressor stations are miles apart, because they are all owned by one corporate entity, the DEP wants them all lumped together into one source for pollution regulation. Although the combined single source would not trigger EPA regulation, Seneca/National Fuel Gas is suing the DEP to push back, on principle. The case will get a hearing in court this week…
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Energy Companies | Energy Services | EV Energy Partners | GASFRAC | Hydraulic Fracturing | Industrywide Issues | Ohio | Tuscarawas County

EVEP Reports Waterless Fracked OH Well is a Bust
May 12, 2015May 12, 2015

Reading through earnings calls transcripts (hey, somebody has to do it), we discovered what we believe no one else has (yet) discovered or reported. On an earnings call yesterday, top management from EV Energy Partners, one of the largest acreage holders in the Utica Shale, shared interesting initial results from the test Utica well they drilled in Tuscarawas County, OH–a well drilled using waterless fracking technology from GASFRAC (see Details on GASFRAC’s Waterless Frack Test in OH Utica). The theory being tested by EVEP is that using water during fracking of a well targeted for oil recovery somehow damages the chances of oil recovery. GASFRAC used a mix of 75% butane and 25% mineral oil to frack EVEP’s “Nettles” well. The results? On yesterday’s earnings call EVEP Chairman John Walker revealed that after 90 days in production, the Nettles well is producing about half the production of a similar nearby well fracked using water. That is–the waterless frack job was a big disappointment…
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Blue Ridge Mtn Res/Magnum Hunter | Energy Companies | Utica Shale

Magnum Hunter’s 5-Point Plan to Raise Cash in 2015
May 12, 2015May 12, 2015

Yesterday MDN reported on Magnum Hunter Resources’ (MHR) first quarter 2015 update yesterday (see Magnum Hunter 1Q15: Prod. Up 66%, Financials Worse Than Expected). Something slipped by our notice–the section in the update that we call “Magnum Hunter’s 5-Point Plan to Raise Cash in 2015.” Buried in the update is a section called “2015 Liquidity Events” that outlines MHR’s strategy for raising money and keeping afloat in 2015. Below we show you what MHR said, and then we break it down and tell you what it means–we interpret what they said. The standout point (#5) is MHR’s plan to sell of $450 million worth of Utica Shale acreage…
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Butler County | Energy Companies | Industrywide Issues | Pennsylvania | Processing Plants | Regulation | XTO

XTO Files Paperwork to Double Size of NGL Plant in W PA
May 12, 2015May 12, 2015

In 2013 XTO Energy began operation at its very own natural gas liquids (NGL) cryogenic processing facility in Butler County, PA (see XTO’s New NGL Recovery Plant in Butler County, PA Now Online). Life is good in the midstream. According to the Pittsburgh Business Times, XTO has just filed paperwork with the state to build a new plant at the site, doubling capacity at the facility…
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Belmont County | Energy Companies | Greene County (PA) | Ohio | Pennsylvania | Rice Energy | Washington County

Rice Energy 1Q15 Earnings Call: 100% Focused on 3 Counties
May 11, 2015May 11, 2015

Last Friday MDN brought you the Rice Energy first quarter 2015 update (see Rice Energy Doubles Production 1Q15; Utica Flows; Ekes Out a Profit). On Friday, Rice’s upper management held an earnings call with analysts and as always, quite a bit more comes out in the call than in the official press release. Below is Rice Energy CEO Dan Rice’s prepared remarks on that call with some interesting details on both their Marcellus and Utica operations. Among the interesting comments: Rice is 100% focused on just three counties in the Marcellus/Utica…
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Butler County | Carroll County | Energy Companies | Lawrence County | Ohio | Pennsylvania | Rex Energy

Rex Energy to Sell Acreage in OH & PA, Focus on 3 Counties
May 11, 2015May 11, 2015

Last week MDN brought you the first quarter 2015 update for State College, PA-based Rex Energy (see Rex Energy 1Q15: Production Up 61%, Revenue Down 33%, Gulf Coast Deal). Rex’s management held an earnings call later that day, and as is typical, a some important news was revealed on that call that was not included in the press release update. Namely, Rex is looking to sell it’s leased Utica Shale property in Belmont, Guernsey and Noble counties in Ohio. They also plan to sell leases in Westmoreland, Clearfield, and Centre counties in PA. When it’s all over and done, Rex will be concentrating on just three counties…
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American Energy Partners | Belmont County | Energy Companies | Lease & Royalty Payments | Ohio | XTO

Another Belmont County Landowner Threatened with Forced Pooling
May 11, 2015May 11, 2015

In April MDN told you about a landowner in Belmont County, OH who had questions and objections to phrasing in a proposed lease agreement from XTO Energy that talks about “nuisance oil” (see XTO Threatens Belmont County, OH Landowner with Forced Pooling). NEVER sign a lease without running it by a competent oil & gas attorney, and ALWAYS get the sometimes obscure terminology in a lease explained before you sign it. That’s our advice. We have another story along the same lines as the “nuisance oil” story–language that energy companies can’t or won’t explain to landowners. This one also comes from Belmont County, OH–perhaps the hottest of the hot places for drilling right now in the Utica Shale. A landowner from Martins Ferry, OH says XTO offered him an eye-popping $8,000 per acre signing bonus with 20% royalties, and Aubrey McClendon’s American Energy Partners offered $6,000 per acre with 20% royalties. Both have a “market enhancement clause” in the lease. The landowner didn’t like the clause, fearing it would reduce his royalties. The landowner was told by either XTO or AEP or both (we’re not sure), that they would force pool him if he didn’t sign. By force pooling him he would not get a signing bonus at all and only a 12.5% royalty. These kinds of strong-arm tactics give the industry a black eye in our opinion…
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Blue Ridge Mtn Res/Magnum Hunter | Energy Companies | Energy Services | Eureka Midstream

Magnum Hunter 1Q15: Prod. Up 66%, Financials Worse Than Expected
May 11, 2015May 11, 2015

Magnum Hunter Resources, now a pure play company focused on the Marcellus and Utica Shale region, released their first quarter 2015 update this morning. On the positive side we learn that production as up a healthy 66% in 1Q15 vs 1Q14. Production costs–how much it costs to produce the natural gas/oil/liquids, went down a big 36% year over year. And Magnum Hunter now owns ~80,000 net acres located in the Marcellus Shale and ~130,000 net acres located in the Utica Shale. Eureka Hunter, the company’s pipeline subsidiary, had new record high throughput volumes. But on the downside the company lost $0.57 per share. The “consensus” estimate was that they would lose $0.32 per share, so the performance of the company financially, if you want to think of it this way, was roughly twice as bad as Wall Street watchers thought it would be. Look for the stock price, which (before the opening) was trading at $1.86 per share–well off the typical $8 per share or so over the past year–to take a further beating…
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Energy Companies | Energy Corporation of America | Energy Services | WGL Holdings

Washington Gas $126M Deal to Bring Marcellus Gas to DC Suburbs
May 11, 2015May 11, 2015

Washington Gas, a natural gas utility serving customers in Washington, DC, Maryland and Virginia, announced a deal last week to purchase Marcellus Shale natural gas directly from 22 producing wells in Pennsylvania to be used to sell to Washington Gas’ customers in Virginia. Yes, some of that cheap, abundant and wholesomely fracked Marcellus Shale gas will be going to the Washington, DC suburbs. The deal is with Energy Corporation of America (ECA) for $126 million and runs for 20 years. It is the first such deal under a new 2014 Virginia law that allows such investments. Here’s the details…
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Beaver County | Energy Companies | Ethane | Industrywide Issues | Pennsylvania | Processing Plants | Shell

Shell to Close on PA Cracker Plant Property in “Next Few Months”
May 11, 2015May 11, 2015

Last week we told you a positive sign that the proposed $2-$3 billion ethane cracker plant to be built by Shell in Monaca (Beaver County), PA was the joint information session recently held by the Dept. of Environmental Protection and Shell to discuss an air quality permit the DEP will issue for the project (see Progress: DEP & Shell Hold Info Session on PA Cracker Plant). Here’s yet another very encouraging sign: Horsehead Corporation, which still owns the site Shell would use to build the plant, said in their first quarter update that they expect to close on a sale of the property to Shell “within the next few months”…
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Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Marshall County | Ohio County | West Virginia

Wheeling Non-Profits Sue Chesapeake for Taking O&G with No Lease
May 8, 2015May 8, 2015

A group of non-profit organizations in the Wheeling, WV area is suing Chesapeake Energy claiming the company illegally stole oil and natural gas from underneath their property without a valid lease. The Parks System Trust Fund of Wheeling, Ohio Valley Medical Center, Elmhurst House of Friendship, Vance Memorial Presbyterian Church, the Children’s Home of Wheeling and the YWCA are all joint owners of 224 acres bequeathed to them in 1957. The groups say Chesapeake illegally pooled their acreage with others in a local drilling unit and proceeded to extract oil and gas without paying them…
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Energy Companies | Energy Services | Rice Energy | Rice Midstream

Rice Energy Doubles Production 1Q15; Utica Flows; Ekes Out a Profit
May 8, 2015May 8, 2015

Rice Energy, a driller focused on the Marcellus and Utica Shale region, released their first quarter 2015 update yesterday. Counter to most others, Rice was actually able to eke out a gain of $152,000 for 1Q15 (most others, in fact we think all others, experienced a loss in 1Q15). Of course that’s down radically from 1Q14 when the company made $129.5 million! But still, they ended up on the positive side of the balance sheet. The big news was that Rice more than doubled their production in 1Q15 from a year ago–to an average 440 million cubic feet equivalent per day (Mmcfe/d). Unlike last year, this year 15% of Rice’s production came from the Utica Shale (last year it was 0%). Rice’s midstream division continues to experience strong growth as well–by volumes shipped and by revenue. Below we have Rice’s update yesterday, links to several stories analyzing Rice’s results, and a copy of the newest PowerPoint slide deck, used by Rice management on their earnings call with analysts…
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