Energy Companies

Accidents | Carrizo Oil & Gas | Energy Companies | Industrywide Issues | Pennsylvania | Wastewater | Wyoming County (PA)

Carrizo Resumes Fracking at Site of Spill in Wyoming County, PA
April 8, 2013April 8, 2013

On March 13, Carrizo Oil & Gas temporarily lost control of a Marcellus Shale gas well they were fracking in Wyoming County, PA, leading to a spill of over 200,000 gallons of fracking water. The frack water was contained and trucked away (see Carrizo Problem Fracking NE PA Well, Evacuates 3 Nearby Families). Since then, Carrizo has tested local water sources and has found “nothing unusual,” so the state PA Dept. of Environmental Protection has given them the green light to resume fracking the well:

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Energy Companies | Gastar Exploration | Marshall County | West Virginia | Wetzel County

Gastar Exploration – Rising Star in the Marcellus?
April 5, 2013April 5, 2013

An article on the Seeking Alpha blog site highlights the (so-far) underperformance, and now potential upside for Gastar Exploration in the Marcellus Shale. The article refers to Gastar as a “rising star” in the Marcellus.

Here’s a brief portion of the article with a map showing Gastar’s “liquids-rich” lease holdings and where they’ve already drilled (in WV):

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Energy Companies | Health Impacts | Industrywide Issues | Litigation | Pennsylvania | Range Resources Corp | Washington County

Pittsburgh Newspapers Not Ready to Concede Defeat in Range Case
April 5, 2013April 5, 2013

The Pittsburgh Post-Gazette and the Washington, PA Observer-Reporter are not quite ready to throw in the towel on what increasingly looks like a vendetta against Range Resources. The two newspapers sued in May 2012 to have court documents unsealed in a settlement between Range and the Hallowich family in Washington County, PA (see Pittsburgh Newspapers Sue to Unseal Drilling Court Case). The newspapers were hoping to find evidence that Range had covered up a case where their drilling (fracking) had led to contamination of the Hallowich’s water well, or perhaps had adversely affected their health. A judge recently unsealed the court documents and guess what? No evidence of water contamination (see Judge Orders Range/Landowner Settlement in PA Made Public).

Not only was there no water contamination, the Hallowich’s signed an affidavit stating there has been no ill health effects as well (see Affidavit in Range PA Settlement Shows No Drilling Health Impacts). Oops. Major egg on the face of the newspapers. Or using a different metaphor, they went fishing and didn’t even get a bite. What to do? We know! Gin up a false controversy that there’s still a missing document from the the mountains of documents the court released. Yeah, that’ll be worth a few more headlines and copies sold. After all, we have to somehow help pay for the lawyers and time we burned on this effort…

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Energy Companies | Hydraulic Fracturing | Industrywide Issues | Litigation | Marion County | West Virginia | XTO

District Court Judge Asks WV Supremes to Rule in Surface Rights Case
April 4, 2013April 4, 2013

Waaaay back in July 2011 MDN told you about an interesting legal case in West Virginia in which a surface rights landowner was suing XTO because XTO is (in the opinion of the landowner) abusing the right to set up a well pad on his surface in order to get gas not only under the surface of his property, but also from his neighbors’ property (see WV Marcellus Legal Battle over Well Pads: Surface Rights Owners v. Mineral Rights Owners). The surface landowner, Richard Cain, acknowledges law and precedent allows XTO to set up a well on his land in order to get the gas under his land—but Cain maintains XTO isn’t really all that interested in getting it from under his land, but simply wants to use his convenient location to reach other nearby properties. Cain gets all of the headaches and none of the royalty money. Kind of a raw deal, from his perspective. Can’t blame him.

There is a new development in the case. The judge presiding over the case, U.S. District Judge Irene Keeley, has formally asked the WV Supreme Court to rule on the key question in the case since it will set a precedent (and has far-reaching consequences) for the entire state…

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Energy Companies | Industrywide Issues | Shell | Supply Chain

Ultimate Supply Chain Challenge: Sell Your Whole Company to Shell
April 4, 2013April 4, 2013

Listen up start-up technology companies with products and services in the oil and gas space: Shell is ready to invest “several hundred million dollars” in emerging tech companies—everything from gas production and conversion technologies to geophysical mapping to “big data.” To find out if your company fits the profile, and for details on how to contact Shell with a proposal, read the press release below:

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Blue Ridge Mtn Res/Magnum Hunter | Energy Companies

Magnun Hunter Resources – Delays in the Marcellus/Utica
April 4, 2013April 4, 2013

What’s going on with Magnum Hunter Resources (MHR)? That’s the question asked and answered by Seeking Alpha blogger Mike Maher in an article posted today. The article is a mea culpa and explanation as to why he was wrong about MHR’s stock price. Back in November he predicted the stock, then at $3.92 per share, would soon take off. Today? It’s trading almost exactly at the same $3.92. So what happened?

MDN is not an investment blog, although a number of individual investors and investment firms do subscribe and read. Our interest in Maher’s article is not about MHR’s stock performance, but rather his discussion of MHR’s operations in the Marcellus and Utica Shale. He brings some good new information to light—a brief status report about MHR’s activities (or lack thereof) in our neck of the woods…

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East Resources | Energy Companies

East Resources Responds to Unflattering WSJ Article on Violations
April 3, 2013April 3, 2013

On Monday, the Wall Street Journal published a story titled “As Big Drillers Move In, Safety Goes Up.” The premise and tone of the article is that in the early days of Marcellus Shale drilling, there were many smaller, less-experienced companies drilling in the Marcellus–companies not as safety conscious and careful as the big boys. Now that the big boys have arrived, safey and accidents are down–way down.

The opening few paragraphs are none too flattering to one company in particular–East Resources. East is still around, although they sold their Marcellus operation to Shell in 2010. The WSJ article opens this way:

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Chesapeake Energy | Energy Companies

DOI Slaps Chesapeake with $765K Fine for Underpaying Royalties
April 3, 2013April 3, 2013

The U.S. Dept. of Interior (DOI) has accused Chesapeake Energy of underpaying oil and gas royalties due to DOI for drilling on federal lands and has slapped Chessy with a $765,000 fine. Chessy says there has been no intentional shorting of royalty payments and if you add up the total amount in question, it’s less than $500–little more than a rounding error on the purchase of paperclips for DOI.

DOI says Chessy has a history of “inaccurate reporting” when it comes to royalty reporting:
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Energy Companies | Rex Energy

Rex Energy Goes to the Bank, Walks Out with $85M
April 3, 2013April 3, 2013

Rex Energy, an independent oil and gas exploration and production (E&P) company headquartered in State College, PA focuses their drilling on the Marcellus/Utica Shale region. Rex announced on Monday they’ve expanded their credit line at the bank–from $240 million in borrowing capacity to $325 million (an $85 million increase). What does it mean?…

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Chesapeake Energy | Energy Companies | Ohio | Statewide OH | Utica Shale

Chesapeake Innovates New Way to Move Utica Rigs Twice as Fast
April 3, 2013April 3, 2013

Chesapeake Energy publishes a quarterly newsletter (more like a magazine) called The Play. The latest issue, Winter 2013 (released earlier this year, full issue embedded below) contains two interesting and important stories that relate to the Utica Shale. The feature story starting on page 3, “Poised for Success,” focuses on Chesapeake’s Ohio Utica Shale program. The article says Chessy’s previously drilled Utica wells should be online starting in February since new pipelines to transport liquids for processing have recently been installed. The article also says Chessy expects they will eventually drill around 13,000 wells in the Ohio Utica on their 1.6 million leased acres.

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Encore Energy | Energy Companies | Ohio | Statewide OH | Utica Shale

Encore Energy Shops Utica Shale Leases at NAPE East
April 3, 2013April 3, 2013

Encore Energy, Inc. specializes in “lease acquisition and development of the Utica Shale play and other oil and gas projects in Ohio.” Think of Encore as a real estate agent for leases. Encore issued a press release yesterday to get some attention on Utica Shale properties they are “shopping”–looking for drilling companies who want to buy the leases. Encore will shop their leases at the upcoming NAPE East event in Pittsburgh next week. (Note: MDN editor Jim Willis is attending NAPE East, hanging out at the Shale Daily booth, #205. Please stop by if you’re at the show and introduce yourself!)

The interesting part of the Encore press release, which is why we’re bringing it to your attention, is the per-acre asking price Encore lists for Utica Shale properties in Guernsey, Noble and Morgan counties (Ohio):
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Chesapeake Energy | Energy Companies | Ohio | Statewide OH | Utica Shale

Chesapeake’s New Acting CEO Says Utica Shale is a Big Deal
April 2, 2013April 2, 2013

Yesterday morning the new acting CEO of Chesapeake Energy, Steve Dixon, delivered his first investors talk as CEO. One of the primary parts of that talk—indeed we would say the centerpiece—were remarks about the Utica Shale and its importance for Chesapeake as they move forward. According to Dixon, Chesapeake’s production in the Utica for 2012 will show lower numbers than otherwise possible because of lack of pipelines and processing plants. Dixon says that will soon change, and so too will their production numbers.

Dixon began his remarks with a 10-second “so long and thanks for all the fish” acknowledgment to the departed Aubrey McClendon:

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Chesapeake Energy | Energy Companies

McClendon Exits Chesapeake, Well-Bonused “Friends” Replace Him
April 1, 2013April 1, 2013

As of today, Monday, April 1, 2013, Chesapeake Energy has made the biggest error in its 24-year existence. Today marks the exit of Chesapeake’s co-founder and CEO, Aubrey McClendon. In his place, the company announced Friday they have created an “Office of the Chairman” which will be populated with three people: Archie Dunham, non-executive chairman of the board; Steven Dixon, who is currently COO and will take on the role of acting CEO to replace Aubrey (for now); and Dom Dell’Osso, CFO. Apparently it takes three people to replace Aubrey–that should tell you something right there.

The colossal error is in letting McClendon go in the first place, which is being done largely because of pressure from corporate raider Carl Icahn (see Breaking: Chesapeake Energy CEO Aubrey McClendon Gets Pink Slip). You might think that Steve Dixon and Dom Dell’Osso would leave with their old friend and comrade–but they’re two of three people ~~bribed~~ paid a whopping $15.4 million bonus to stick around (see Chesapeake Pays $15.4M to Prevent Exodus of Top Talent). After being showered with millions, Steve and Dom said, “Aubrey who?”…
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Anadarko | Antero Resources | Blue Ridge Mtn Res/Magnum Hunter | BP | Chesapeake Energy | Chevron | Energy Companies | EnerVest | Gulfport Energy | Hess | Ohio | Shell | Statewide OH | Utica Shale

Who’s Who in Leasing & Drilling the Utica Shale?
April 1, 2013April 1, 2013

Many people eagerly await Ohio’s annual production numbers, which will (hopefully) be out sometime later this week. Drillers had to file their production numbers no later than yesterday, Mar. 31. MDN has brought you some of the recent “idle” speculation that inevitably happens while waiting. The speculation lately has been along the lines of, “Is the Utica really all it’s cracked up to be?” (see More Angst Over OH Utica’s Oil Prospects). It is natural gas liquids (NGLs) and oil that makes the Utica special. If it turns out Utica production is mostly dry gas (methane only), it will be a major disappointment.

Investor websites are famous for analyzing this stuff to death before any hard data is available. We say: Let’s see what the numbers actually say! In the meantime, yet another “idle speculation” article on one of our favorite sites, The Motley Fool, once again talks about the potential for the Utica. However, a big part of the article interests us. It’s a handy, condensed roundup of the major energy companies that are active in the Utica Shale:
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BP | Energy Companies | Ohio | Trumbull County | Utica Shale

Better Late than Never: BP Gets First Permit for OH Utica
March 28, 2013March 28, 2013

From MDN’s bedtime stories…Once upon a time (in April 2012), a huge international oil and gas company (BP) leased 84,000 acres all at once with landowners in Trumbull County, OH (see BP’s Big Utica Shale Deal, Leases 84K Acres in Ohio). They later tossed out some of the deals (see BP Cancels Deal for 7% of ALOV Leases in Trumbull County, OH). The end.

Whoops! Not much of story—but that’s been the entire story for a year now. After leasing all of that land in Trumbull County, BP has done no Utica Shale drilling. Zip, zero, nada. Earlier this year BP said, in essence, they’re taking their sweet time, but they do intend to drill a few initial wells this year, perhaps starting in April (see BP in OH Utica Shale: The Prospectivity of Producibility). Looks like the wait may be over…

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Coterra Energy (Cabot O&G) | Energy Companies | Pennsylvania | Susquehanna County

Cabot Spins Gold from Hay with Low Cost Drilling
March 27, 2013March 27, 2013

Cabot Oil & Gas is, so far, the only driller to attain 1 billion cubic feet per day of natural production in the Marcellus Shale (see Who’s a Member of the Marcellus “1 Bcf/d” Club?). Perhaps the most astonishing part of their story is that all of Cabot’s drilling happens in rural northeastern Susquehanna County, PA. Although Cabot is some 10 times smaller than Chesapeake Energy, the value of their stock (market capitalization) recently surpassed Chesapeake (see Guest Post: Corporate Hubris Humbles Chesapeake – Cabot Soars Sure & Steady).

Cabot’s ability to spin gold from hay is in no small part because of their Marcellus operation in Susquehanna County…

At a recent conference, Cabot made an investor presentation (full copy below) that shows, in part, why they’re so profitable—even in a low commodity price environment. As we’re writing this story, the commodity price of natural gas is exactly $4 per thousand cubic feet. Depending on geography, the cost to produce natural gas approaches $4/Mcf for many drillers. But for Cabot? Their average cost per Mcf in 2012 was $1.67, and for 2013 they estimate it will go even lower (see slide 10 below).

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