Energy Companies

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    Penn Virginia the Latest Plaything for Billionaire George Soros

    Penn Virginia is an interesting company. They are an independent E&P (exploration and production) company incorporated in Virginia in 1882–but their headquarters is in Radnor, PA (near Philly). They drill for oil, NGLs and natural gas mostly in…Texas and Oklahoma! They also have operations and acreage in the Mid-Continent, Mississippi and last (and sorta least)–the Marcellus Shale. According to NGI’s Shale Play Factbook, Penn Virginia has leased 38,000 in the Marcellus. According to the latest MDN Databook, Penn Virginia has received permits for two well sites in the past two years–precisely squat. We don’t think they’ve actually drilled a single well in the Marcellus.

    Why are we going on about who Penn Virginia since (so far) they are a bit player in the Marcellus? Because yesterday liberal Democrat billionaire George Soros got his claws into the company. Why did he invest? To instill good LibDem values like lifetime employment, free condoms, etc. in the capitalist heathens at the company? Nope. Soros invested $29.1 million in Penn Virginia, grabbing a 9.1% ownership, so he can force them to sell themselves…
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    OH Landowners Question Chesapeake’s Royalty Calculations

    The bad news for Chesapeake just keeps rolling in. Not only are landowners in Pennsylvania up in arms over minuscule royalty checks (see Bradford PA Landowner Rally over Chesapeake Royalty Shenanigans), so too are Ohio landowners now questioning whether or not they’re getting the shaft from Chessy.

    As we mentioned last week, the anti-drilling site ProPublica published an “investigative” article trying to lay the blame for Chesapeake’s current bad behavior on the previous CEO (and founder) Aubrey McClendon (see Chesapeake Shafting Landowners out of Royalties Mess Gets Messier). In Ohio Chessy shows a big, fat zero in the column for post-production expenses deducted from the royalty payment. Some say that’s a lie…
    Read More “OH Landowners Question Chesapeake’s Royalty Calculations”

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    Chesapeake Rushes to Spin Off Oilfield Services into New Company

    Three weeks ago MDN brought you the news that Doug “the ax” Lawler, nominal CEO of Chesapeake Energy (his boss corporate raider Carl Icahn really runs the show) had decided to either spin off or sell Chessy’s oilfield services division (see Chesapeake Energy Looks to Dump Oilfield Services Division). Doug and Carl are impatient men–they’re on a mission to fatten Carl’s bank account. Since there were no immediate takers for this latest fire sale item, Doug and Carl announced yesterday they’re spinning the oilfield services division out into it’s own company–a company that will be named Seventy Seven Energy Inc.

    This action comes on the heals of selling off many (most? all?) of the remaining compressor plants owned by Chesapeake, including all 103 of the compressors they owned in the Marcellus (see Chesapeake Fire Sale Continues: Marcellus/Utica Compressor Plants). We have to ask–what is there left to sell at this point? Er, right–the company itself! However, no one will buy the company with the current cloud of accusations hanging over it that they’ve been cheating landowners out of royalties. Here’s the announcement that Chessy is saying sayonara to their oilfield services division…
    Read More “Chesapeake Rushes to Spin Off Oilfield Services into New Company”

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    New Houston-based E&P Targeting Oily Plays, Including Utica Shale

    A brand new shale exploration & production (E&P or what we calling driller) has formed in Houston, TX, but it has its eyes set on the Utica Shale–at least in part. Rock Oil Holdings recently began operations and received a nice little $250 million cash infusion from New York-based energy equity firm Riverstone Holdings LLC. Rock Oil says they will concentrate their efforts in the Eagle Ford Shale, the Utica Shale and the Permian Basin, “which are well suited to the Company’s land and technical capabilities.” In other words, they’re targeting “oily” shale plays–those with the potential for crude and for natural gas liquids (NGLs).

    We’ll keep an eye out for Rock Oil in the coming months to see if they lease any Utica acreage. Meanwhile, here’s the announcement of Rock receiving start-up capital from Riverstone:
    Read More “New Houston-based E&P Targeting Oily Plays, Including Utica Shale”

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    Shell Using GTL Technology to Convert Natural Gas to Motor Oil

    What if a company perfected a method to convert natural gas into motor oil–a motor oil extremely pure and high quality, because there are no impurities associated with using crude oil? Shell has already done it–is doing it at their massive gas-to-liquids (GTL) plant in Qatar. Shell issued a press release last week to make sure everyone knows they are (so far) the only company that converts natural gas to motor oil on a full production scale. The oil they produce is used in their premium brands: Pennzoil Platinum® and Pennzoil Ultra® Platinum Full Synthetic.

    So far no American shale gas is being used in Shell’s Middle Eastern GTL operations. Perhaps with abundant, cheap natural gas here at home Shell will consider setting up an operation somewhere on American shores? Here is the very interesting technology Shell is using, that may one day arrive here commercially…
    Read More “Shell Using GTL Technology to Convert Natural Gas to Motor Oil”

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    Magnum Hunter Marcellus/Utica Update: 8 New Wells Coming Online

    It’s often hard to get heard in our 24/7 news-saturated culture. How do you get folks to focus on your good news? Issue a press release, of course. While these bits of self-promotion are often eschewed and overlooked by the mainstream press, MDN delights in bringing them to you because they often contain a lot of really good information. To wit: on Friday Magnum Hunter Resources issued an update (i.e., press release) updating the world on their good news in the Marcellus and Utica Shale region. MH says they will bring 8 new wells online within the next 30 days in West Virginia–and those wells will flow gas through MH’s very own pipeline system in the area. It’s nice to not only own the wells but the pipeline system too.

    Here is the MH update with lots of details on lateral lengths, locations, robotic drilling rigs and more…
    Read More “Magnum Hunter Marcellus/Utica Update: 8 New Wells Coming Online”

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    Cuts Coming to Shell’s Marcellus Shale Operations

    chopping blockIn a statement issued yesterday, and from comments made by Shell’s CEO Ben van Beurden on a “management day” analyst phone call, Shell has signaled they aren’t happy with the return they’re getting from their shale plays in the U.S., including the Marcellus. Specifically Shell has said they plan to decrease spending and investment, and trim operations, in dry gas (methane only) shale areas starting this year. Trim by how much? The statement they issued says 20%, but van Beurden is reported to have said 30% in his statements on the analyst call. In either case, look for Shell to sell some of the their 900,000 acres of Marcellus Shale leases and trim back on the 300 workers they currently have working in the Marcellus play.

    It was just four years ago that Shell bought all of East Resources and their Marcellus operations (see East Resources Sells to Royal Dutch Shell for $4.7 Billion, Deal Includes All of East’s Marcellus Shale Operations). Apparently they now believe that was a bit of “irrational exuberance,” to borrow a phrase from Alan Greenspan. The odd thing for us is that much smaller companies, like Cabot Oil & Gas, make money hand over fist in dry gas-only areas of the Marcellus, but the big boys like Shell are hamstrung and don’t make money. Why is that? What gives the smaller players a leg up that simply can’t be matched by companies like Shell?…
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    Shell’s Shale Pessimism Signals Worry for Some re PA Cracker

    The Shell emotional roller coaster continues to gyrate up and down when it comes to the fate of a multi-billion dollar ethane cracker plant previously announced by Shell for Beaver County, PA. We knew it would be a years-long process just to make a decision, and told you that two years ago almost to the day (see Shell’s Cracker Plant Actually “Years Away”?). Since that time it seemed at one point like all was lost (see Rumor Mill: PA Ethane Cracker Plant on Shell Chopping Block?). Over the past two years we’ve written dozens of stories, at first it seemed like a sure thing, then it wasn’t, then it was again, then it wasn’t again… you get the idea (see our list of Shell cracker stories here).

    According to a Morningstar analyst interviewed by the Pittsburgh Post-Gazette, the pendulum has now swung back to the pessimistic side again in light of Shell CEO Ben van Beurden’s comments yesterday knocking U.S. shale (see our companion story today). van Beurden said Shell is triming back on U.S. shale investments this year, “restructuring” those assets (which is CEO talk for selling a good portion of it). Although the ethane cracker will be fed by Marcellus and Utica Shale gas, Shell’s impotence when it comes to turning a profit from shale drilling doesn’t mean they will walk away from a huge petrochemical plant. Such big projects are what they think they’re best at doing. Still, van Beurden’s comments have at least one analyst wondering if the PA cracker plant is now down the list of Shell’s priorities…
    Read More “Shell’s Shale Pessimism Signals Worry for Some re PA Cracker”

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    Chesapeake Shafting Landowners out of Royalties Mess Gets Messier

    Corporate raider Carl Icahn is likely developing a case of heartburn over his investment in Chesapeake Energy. He’s been responsible for cutting thousands of jobs and selling off billions in assets at Chesapeake, but there is a developing situation he can’t control that will definitely affect his pocketbook. Pennsylvania’s landowners are up in arms over what they perceive to be theft of their royalty payments by Chesapeake Energy. We told you about the recent rally in Bradford County, and about Gov. Corbett and others who invited PA’s anti-drilling Attorney General, Kathleen Kane, to get involved (see Bradford PA Landowner Rally over Chesapeake Royalty Shenanigans). It’s now a royal mess and likely to get messier as time goes on.

    The sorta short version of the story is this: A few years ago Chesapeake was hammered by bad press (because the media hates Aubrey McClendon, then CEO). Chessy’s stock tanked and with lots of debt, McClendon couldn’t find any more money to borrow at a reasonable rate. So McClendon invented a clever scheme to re-interpret leases that would allow Chessy to deduct certain pipeline fees from landowner royalties. The expenses would be paid to Access Midstream (spun off from Chesapeake) in return for Access giving Chessy a big, fat pile of cash/investment. The inflated pipeline fees paid to Access–now deducted from royalty checks–would generate enough revenue for Access to recoup their investment in Chessy. It was a clever way of extracting money from landowners by doing it through the intermediary of a pipeline company. At least that’s the theory spun by the anti-drilling ProPublica/Daily Beast. Is it true?…
    Read More “Chesapeake Shafting Landowners out of Royalties Mess Gets Messier”

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    Rice Energy Issues First Public Quarterly & Full Year Update

    Rice Energy, one of the success stories of a brand new energy company starting up to focus on the Marcellus and Utica Shale region, went public in January (see Rice Energy IPO Soars, Brings in $84M More Than Expected). Along with becoming a publicly traded company comes the responsibility to file quarterly updates with the Securities and Exchange Commission. Rice has done just that. Yesterday they released their fourth quarter and full year 2013 operational and financial update, for the first time. What did it show?

    It shows that Rice’s natural gas production in 4Q13 was up 120% over 4Q12 (154 million cubic feet per day average, or MMcf/d), and up 20% over 3Q13. They certainly expect their daily volume to grow–a lot. The company has pipeline agreements in place for up to 330 MMcf/d in 2014, up to 654 MMcf/d in 2015 and up to 761 MMcf/d in 2016. As of Dec. 31, Rice owns 43,351 net acres in the Marcellus and 46,488 net acres in the Utica Shale with a big budget to buy more this year. That’s the good news. However, there was a small (very small) spot of “bad” news…
    Read More “Rice Energy Issues First Public Quarterly & Full Year Update”

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    Gastar Update: First Utica Well Coming in April, Marcellus Grows

    Gastar Exploration released their fourth quarter and full year 2013 report yesterday. Gastar drills in both the northeast (Marcellus) and the Mid-Continent shale play areas in the U.S. What do we learn about Gastar’s recent history and plans going forward in our neck of the woods? First, the update says that Gastar plans to drill their very first Utica Shale well in April. Gastar says they believe there is drillable Utica acreage under their leased land in Wetzel and Marshall counties in West Virginia–and they plan to take full advantage of it starting this year.

    We also learn that the company’s Marcellus Shale production increased by 37% year over year. In Q412 Gastar produced 29.9 million cubic feet per day of natural gas, and in Q413 it was 41.0 MMcf/d. Which is tiny when compared to the 1 Bcf/d being produced by several Marcellus producers. But still, the numbers are going in the right direction. Here’s a small portion of yesterday’s update that deals with the Utica and Marcellus…
    Read More “Gastar Update: First Utica Well Coming in April, Marcellus Grows”

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    # of Youngstown Earthquakes go from 2 to 11 – Fracking to Blame?

    earthquakeTwo days ago MDN told you about a pair of earthquakes near Youngstown, OH (see 2 New Earthquakes Near Youngstown, OH – Fracking Connection?). That number has now grown. So far there have been a total of 11 measurable earthquakes ranging from 1.2 (not felt by humans) to 3.0 (barely felt by some humans). We suspect most people around Mahoning County didn’t feel anything, but that doesn’t stop mass hysteria when it’s announced that there have been a series of earthquakes and the only thing (supposedly) going on in the area is drilling and fracking.

    As we previously pointed out, we are aware of one instance–in England–where fracking over an active fault caused an earthquake. So it can happen. But that’s one time out of 60,000+ horizontally, hydraulically fractured shale wells worldwide (maybe more than that now). Statistically it’s zero. We need to keep perspective in this situation. Initially the Ohio Dept. of Natural Resources (ODNR) said there are no active Class II injection wells in the area pumping waste fluids deep below the surface for disposal, and so the well being drilled and fracked by Hilcorp near the epicenter of the quake looks like the prime candidate as the cause. But one news story we’ve read (below) seems to cast doubt. There may be injection wells, which also have been known to cause earthquakes when injecting near a fault, operating in the area…
    Read More “# of Youngstown Earthquakes go from 2 to 11 – Fracking to Blame?”

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    Local Town Slows CONSOL’s Plan to Drill at Pittsburgh Airport

    More than a year ago the Pittsburgh International Airport, located about 20 miles west of downtown Pittsburgh, elicited bids to have shale drilling done on 9,263 acres of airport-owned land. After some toing and froing, CONSOL Energy was awarded the contract. After some more toing and froing, CONSOL raised the lease signing bonus to 50 million smackeroos (see CONSOL Increases Bonus Offer to Pgh Airport by 2.4 Times to $50M). Then the real work began. CONSOL has put together a plan to drill 47 wells on 6 well pads, building three water impoundments (see CONSOL Energy Reveals Drilling Plan for Pittsburgh Airport). CONSOL is going to extraordinary lengths with the airport project, including the use of all-electric drilling rigs (a first in the Marcellus). Problem is, three people on the Findlay Township board have the power to approve, or not, the permits to drill. Findlay has CONSOL by the proverbial short hairs, especially since the right to zone oil & gas activities by local municipalities was upheld when the Act 13 law was trampled by seven PA towns that sued and won in state Supreme Court–a decision handed down just a few months ago.

    Last night CONSOL presented their safety plan to the three Findlay board members and interested local residents who attended the board’s regular meeting. The bone of contention (for some local residents) is the location for one of the proposed drill pads–about a half mile from a populated neighborhood. When the hour plus presentation by CONSOL was over, and local residents had had their say, the Findlay board members decided to postpone a decision to approve CONSOL’s permits, yet again…
    Read More “Local Town Slows CONSOL’s Plan to Drill at Pittsburgh Airport”

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    Forced Pooling Circus (ie Hearing) Coming to Lawrence County, PA

    The circus will come to town in New Castle (Lawrence County), PA on March 25 and 26. No, not Ringling Bros. and Barnum & Bailey, but something sure to be far more entertaining. There will be a PA Dept. of Environmental Protection hearing on Hilcorp’s request to force four landowners to allow drilling under their property. We first brought you this story last October (see Hilcorp Uses PA Forced Pooling Law Against Lawrence Cty Landowner). MDN has always held a dim view of forced pooling, so you can’t say we didn’t warn them. Hilcorp has brought this on themselves by invoking a 1961 PA law to sue the landowners to allow drilling.

    Here’s the latest, including details on where the circus, er, hearing will be held…
    Read More “Forced Pooling Circus (ie Hearing) Coming to Lawrence County, PA”

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    Earth to Mars (School District) – Time to Check into Funny Farm?

    We wonder what they teach at the Mars Area School District (Butler County, PA). One thing they don’t teach is logic and scientific inquiry. Probably too busy showing American Idol re-runs to the kiddies to bother with heftier education pursuits. How else can you explain a school board, and parents, who turn down $1 million+ to lease 175 acres of school land for shale drilling that would happen more than a mile below solid rock with no adverse affects and with no surface disturbances? We’d call it mass insanity (time to check into the local psychiatric hospital)–but that would be unkind.

    Tuesday night the Mars Area School District school board voted 9-0 to reject an offer from Rex Energy to lease the school’s property, which sits next to private property Rex has already leased and will still drill on anyway. The Rex offer was $4,000 per acre up front as a signing bonus, and another $330,000 in advance royalties, for a grand total of $1 million. Drilling will go on all around the school, but those sharp-as-a-tack board members have now denied the children $1 million they could of had. Hey, it’s always for “the children,” right? Heartless board. The anti-drillers present for the vote were positively orgasmic that the school board voted it down unanimously. Go figure…
    Read More “Earth to Mars (School District) – Time to Check into Funny Farm?”

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    Noble Energy’s Huge Vote of Confidence in the Marcellus

    Noble Energy has big plans for the Marcellus. Yesterday the company confirmed they will be new tenants in a huge new office building going up in the Southpointe business park near Pittsburgh. The new building being built by Horizon Properties will be 208,000 square feet, of which Noble is leasing 138,000 square feet. Noble’s president & CEO David Stover says the Marcellus is “the premiere gas play in the United States,” and the Marcellus figures prominently in Noble’s future plans.

    Noble plans to employ 200 people in the new facility by the end of this year, and eventually–400-450 people at the facility. PA welcomes Noble to the Marcellus!…
    Read More “Noble Energy’s Huge Vote of Confidence in the Marcellus”