Liberal Groups Force Range, Anadarko to Consider Global Warming

We get tired of saying it, but perhaps we should never get tired of saying that according to the most reliable methods of tracking temperatures on earth (by satellite), THERE IS NO GLOBAL WARMING. The only way global warming alarmists get away with claiming the earth is heating up is by using doctored computer algorithms. The actual testing and measurement of temps doesn’t show we’re heating up! And yet the manipulators who persist in using scare tactics that mankind is somehow causing the earth to heat up catastrophically by burning fossil fuels and leaking methane into the atmosphere, have just claimed a couple of more scalps in their efforts to shut down the fossil fuel industry. A so-called church, the Unitarian Universalist Association (people who believe in everything, consequently they believe in nothing) bought $2,000 worth of Range Resources stock and proposed a resolution to all shareholders at the annual meeting that forces Range to publish a report on how evil the company is for causing global warming (i.e. produce a report on Range’s efforts to scale back methane emissions). The measure passed by 50.25%. A group called As You Sow bought Anadarko stock and floated a resolution instructing the company to produce a report on how mythical man-made global warming will affect the company financially as it will no doubt have to scale back its exploration and production. That resolution passed by 53%. These groups, with innocent-sounding names, are NOT innocent. They are far left, liberal groups that have snookered shareholders into voting against their own best interests by harming the very companies they invest in, forcing those companies, ultimately, to stop drilling. All in the name of “climate change” (i.e. global warming)…
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Average Workers at Top Marcellus Drillers Make $100K+ Salary

The average worker who works for producers (i.e. drillers) in the Pennsylvania Marcellus makes among the highest average salaries of any industry in the state. Looking at six of the state’s top Marcellus drillers, the average worker made $113,610 last year! That’s an average taken from workers at CNX Resources, Range Resources, Chesapeake Energy, Southwestern Energy, EQT and Cabot Oil & Gas. We hasten to add not “all workers” but “average” or “median” workers–meaning there are people who make below that number and people who make well above that number. It also means the majority of Marcellus workers in those companies made at least $100,000 per year. Those working for oilfield services (OFS) companies like Halliburton, Baker Hughes and others didn’t fare quite as well, making an average of $52,000-$80,000 per year. Still, hey, it ain’t bad money! Here’s a look at the average wage for top Marcellus drillers and the OFS companies that serve them…
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Investor Owning 3% of Range Stock Voting Against Mgmt Compensation

Although the average employee at Range Resources made $123,500 last year (see today’s lead story, Average Worker at Top Marcellus Drillers Makes $100K+ Salary), those in upper management at Range made considerably more. We don’t have the 2017 number, but in 2016, Range CEO Jeff Ventura made $9.8 million (see EQT Pay Dispute – Comparing CEO Salaries for Top M-U Firms). Ventura’s salary works out to be 79 times the average Range worker’s salary–actually far better than the average for all industries which averages 140 times as much. Still, not everyone is happy with the what Range’s upper management gives themselves. A significant investor in Range, Stelliam Investment Management, which owns around 3% of all outstanding Range stock, has issued a press release and an open letter to the board to say they intend to vote against Range’s proposed management compensation plan at today’s annual meeting. Stelliam says over the past four years management compensation has “remained generous” while during the same period the company’s stock price has slipped a huge 80% in value. So who is Stelliam, and does their vote of no confidence create any issues for Range management?…
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The Different Ways Range and CNX Dealt with ME1 Pipeline Outage

Now that the Mariner East 1 (ME1) NGL (natural gas liquid) pipeline is back up and running, Marcellus/Utica producers are breathing a sigh of relief–at least, Range Resources, the primary customer for the pipeline, is. Following sinkholes that developed while Sunoco Logistics Partners was drilling for the Mariner East 2 (ME2) project, a portion of ME1 was exposed to open air in Chester County, PA, which prompted the state Public Utility Commission to shut down ME1 in early March (see PA PUC Shuts Down Mariner 1 Pipeline Due to Mariner 2 Sinkhole). Range sends 20,000 barrels a day of ethane and propane through ME1. The closure sent them scrambling for alternatives (see Range, CNX Look for Alternatives to ME1 Pipe Following Shutdown). CNX Resources is also a customer using ME1, but much less so than Range. It took two months, but the PUC finally allowed ME1 to restart last week (see Sunoco’s ME1 Pipe Restarts, ME2 Pipe Pays Another $355K in Fines). Range and CNX coped with the ME1 closure in very different ways…
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Anti Group Stirs Up Pittsburghers Against Fracking, (Ab)Uses Kids

We always find it deeply disturbing when a group of anti-fossil fueulers, like the innocent-sounding (but very radical) Moms Clean Air Force, pushes little kids in front of the cameras, getting them to hold protest signs in a sleazy attempt to play on people’s sympathy. That’s what happened yesterday in the Pittsburgh suburb of Indiana Township (Allegheny County). Hey, knock yourself out if you want to show up and protest and make some noise. But don’t bring the kids along. Don’t put your guilt trip on the kids, making them protest something they frankly don’t even understand. Don’t implant them with your irrational fears. We find it disgusting…
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EQT Pay Dispute – Comparing CEO Salaries for Top M-U Firms

In mid-March, the country’s #1 producer of natural gas, EQT, suddenly and without previous warning lost it’s President & CEO, Steven Schlotterbeck (see EQT CEO Steve Schlotterbeck Suddenly Quits, Leaves Company). Steve is the man who guided the company through its acquisition of Rice Energy last year (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). It was a tough battle against multiple corporate raiders who didn’t want to see the deal happen, but Steve held it together and made it happen. The notice from EQT was short and sweet and said Steve had resigned immediately, due to “personal reasons.” MDN was the first to disclose what those “personal reasons” were: a pay dispute. According to Steve, the board wasn’t paying him what similar CEOs at competitors are making. So he quit. Makes you wonder how much Steve was making, and what CEOs at other large Marcellus/Utica drillers make. We spotted an article in the Pittsburgh Business Times that reveals what Steve made last year. We did some digging to find what comparable CEOs make. The numbers we discovered may surprise you…
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Range Resources 1Q18: Drills 2 Longest Marcellus Wells Ever!

Range Resources, the very first driller to sink a well in the Marcellus Shale, provided their first quarter 2018 update yesterday. And what an update it was! First thing that jumped out for us is that Range says they drilled “the two longest laterals to date by Range at 18,129 feet and 17,875 feet.” We checked, and the previous record holder for drilling the longest Marcellus well was EQT, which drilled a Marcellus well with a lateral of 17,400 feet long in Washington County last December (see EQT Drills Longest Marcellus Well Ever, Reveals 2018 Plans). Although Range isn’t claiming they’ve drilled “the longest Marcellus well ever”–they actually have! (Note to Range’s PR department–you’re missing an opportunity to toot your own horn.) Range did not say where (which county or counties) the long lateral wells were drilled–only that it was in southwestern PA. Our guess is Washington County. Range’s long laterals caught the attention of analysts on yesterday’s quarterly phone call. Range personnel were peppered with questions about the long laterals. Other news coming from yesterday’s update: The company made $49 million in profit during 1Q18, down 71% from the $170 million Range made in 1Q17. The company is still larded up with debt–$4.1 billion worth of debt. Range CEO Jeff Ventura said, “Our plan is to continue the process of high-grading our portfolio and accelerate the de-leveraging process by targeting non-core assets sales and the thoughtful monetization of under-appreciated inventory in our portfolio. We currently have processes underway, pursuing various transactions that would support our near-term goal of getting leverage below 3 times, as we ultimately move towards an investment-grade leverage profile.” Translation: We’re selling stuff as fast as we can that doesn’t make us a lot of money. Some of those sales likely will include Range’s Marcellus assets in northeastern PA…
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Range, CNX Look for Alternatives to ME1 Pipe Following Shutdown

MDN reported yesterday that due to underground horizontal direction drilling (HDD) in Chester County, PA (near Philadelphia) for the Mariner East 2 (ME2) Pipeline project, a third sinkhole had developed (see PA PUC Shuts Down Mariner 1 Pipeline Due to Mariner 2 Sinkhole). ME2 is being built close to the existing Mariner East 1 (ME1) pipeline. The sinkhole exposed a portion of the ME1 pipeline to the open air. Not a good situation, which is why the state Public Utility Commission has temporarily shut down the propane and ethane flowing through ME1. The shutdown is for 10-14 days. Problem is, both Range Resources and CNX Gas pump propane and ethane through ME1. With the shutdown, both companies are “scrambling” to find alternative means to get their NGLs to market…
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Clash of the Titans: PA Marcellus Gas Competes with TX Permian

Last week MDN editor Jim Willis attended Hart Energy’s Marcellus-Utica Midstream conference in Pittsburgh (a series of stories are coming this week from that event). One of the stray comments Jim heard at the event was this: The chief rival or competitor to the Marcellus with respect to natural gas production is not, as you might assume (we sure did) the Haynesville Shale in Louisiana. No. The chief competitor, producing more and more volumes of natgas, is…the Permian! That’s right, an oil play! Why? When you drill for oil, you get other hydrocarbons out of the ground along with the oil. Primarily methane, or natural gas. It’s called “associated gas.” Even though most of what comes out of a Permian well is oil and not gas, because there are so darned many oil wells in the Permian (with more being drilled all the time), the total volume of gas coming from the Permian is going up, dramatically. The problem is, some Marcellus/Utica gas heads to the Gulf Coast to be used by petrochemical companies or to be exported. However, gas produced right there in the region is less expensive to get to market (shorter distance), so that Permian-sourced gas is competing, and increasingly crowding out, Marcellus/Utica gas. Investors have noticed and have, in a sense, “punished” some of the biggest of the big Marcellus/Utica producers by selling their shares, leading to a loss in share value. Among the hardest hit have been Southwestern Energy, Gulfport Energy, and Range Resources. The stock price for those three companies is down, since Jan. 1st, 33%, 30% and 25% respectively. A Bloomberg article says the stocks for those companies have been “mauled.” Indeed. Here’s some insight into how the Marcellus/Utica is increasingly going up against the oil giant Permian Basin, sometimes getting mauled…
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Impressive 2018 Marcellus Growth Not So Impressive Because of DUCs?

Our lead story today is about Gulfport Energy which highlights some exciting news: This year (in 2018) Gulfport will fund their entire drilling budget out of the cash flow the company generates from selling gas/oil/NGLs (see Gulfport Energy Continues Focus on Utica for 2018, No Borrowing). Thing is, Gulfport isn’t the only Marcellus/Utica driller to advertise the fact that this year they are “living within their means” and not borrowing. Others include Range Resources, EQT and Antero Resources. Wow! We’re finally profitable!! Or are we? MDN spotted some analysis by a hedge fund manager. Writing on the Seeking Alpha investor’s website, Josh Young says (in our words) “hold on a minute” with respect to M-U drillers appearing to be able to grow production without borrowing. Why is Josh not convinced with this good news? Because when you dig deeper into the numbers, you find that “organic growth within cash flow is further from reach” because drillers are using DUCs to spend less on drilling, and grow production, than they otherwise would be. A DUC is a Drilled but UnCompleted well. Many times drillers will drill the initial hole in the ground, but then not “complete” (or frack) the well. Why do that? For a variety of reasons. The biggest reason is usually because the commodity price of gas (or oil, depending on the well) is not favorable. Rather than lose the lease (an expensive proposition), drillers will begin the process by drilling, and then leaving, the well, returning later to complete it when prices go up again. Josh’s thesis is that by using DUC inventory drillers aren’t really funding the entire budget from current year cash flow, because some of the money was spent in a previous year to drill the well. They are, in essence, still borrowing–from a different year. Josh estimates an average of 20% of the “new” wells coming online are DUCs and not truly new wells funded by current year dollars–meaning these companies aren’t as “profitable” as they may seem. Does he have a point? Is it all just financial mumbo jumbo? You decide…
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Range Res. 2018 Budget & 5 Yr Outlook: Focus on SWPA Marcellus

Yesterday Range Resources released a pair of press releases. One outlines a high level overview for what the company will spend in 2018 and beyond, for the next five years. The other release trumpets Range’s “proved reserves.” As for 2018, Range says they are reducing the amount of money they will spend to drill this year versus what they spent last year. Range previously said they would spend $1.15 billion this year. That’s now been reduced to $941 million. Last year Range spent $1.27 billion, so this year’s spending is down 26% over last year. That’s a pretty hefty decrease. The good news is that Range will spend 80% of this year’s budget on drilling in the Marcellus, mainly in southwestern Pennsylvania. Even though Range will spend and drill less this year, they predict production will grow another 25%. As for the 5-year outlook, Range says almost all growth will come in the Marcellus (not the Louisiana Haynesville, their other drilling location). Range still has some 3,200 locations where they can drill new wells. Range CEO Jeff Ventura says shale has entered a “new era” of shale development where companies (like Range) have “captured the most prolific resources” and will now switch to focus on returns for shareholders. Translation: We won’t be drilling as much as we did in the past so we can concentrate on bottom line profitability. Which explains why Range is spending less this year than last. In the release Range calls the Marcellus its “flagship asset” and clearly signals the company will keep its focus here, in our region. As for proved reserves (how much gas and oil is in the ground, retrievable with today’s technology and at today’s costs), Range says proved reserves as of December 31 increased by 26% from the prior-year, now at 15.3 trillion cubic feet equivalent (Tcfe). That’s alotta gas! We have the Range announcements below, along with an updated PowerPoint slide deck chocked full of useful information…
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Longer Laterals Major Trend in 2017 Marcellus-Utica Drilling

Yesterday MDN updated you on Eclipse Resources’ program of drilling looooong laterals–the horizontal part of shale wells (see Eclipse Res. 3Q17: Super-Laterals Proving to be Super Productive). Eclipse is the reigning champ, having drilled the three longest onshore horizontal wells–in the WORLD. Upward of 3.5 miles underground! All three of Eclipse’s record-breakers are Utica wells. However, Eclipse isn’t the only driller hopping on the long lateral bandwagon. In June, Range Resources reported drilling the longest Marcellus lateral well (see Range Resources Drills Longest Marcellus Well Ever – in Washington Co.). If you compare the lateral length of Range’s wells from 3Q17 with 3Q16, they are drilling laterals 90% longer than they were just one year ago! EQT and Antero Resources are also experimenting with longer laterals. All of which leads us to christen 2017, “the year of the longer lateral”…
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Range Resources’ 10-Year Pipeline Strategy About to Pay Off

Yesterday MDN received an email from subscriber Sandy R. who lives in southwestern PA. Her land is leased to Range Resources, and she recently read that Range “now has their own pipelines to carry Marcellus gas to better paying markets.” In our response to Sandy, we mentioned that although producers sometimes buy a share of a pipeline, they rarely own pipelines outright. More often they sign long-term (10-20 year) agreements with large midstream companies to reserve capacity along pipelines. We went looking for which pipelines Range might have reserved capacity on that are near where Sandy lives, and found two things that caught our attention. One is a recent statement from Range bragging (our word) about a strategy they put in place 10 years ago to get enough pipeline capacity to move Marcellus gas out of the region to better paying markets. The second thing is we located a list of major northeast pipeline projects with the pipelines Range has reserved capacity along highlighted in yellow. Cool! So below is an article mentioning some of the pipelines Range says will be a game-changer for them in the near-term, followed by that list of pipelines they have reserved capacity along…
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Range Resources 3Q17: $112M Profit, Production Hits 1.99 Bcf/d

Range Resources released its third quarter financial and operational update earlier this week. Range is one of the premier drillers in the Marcellus (and Utica) shale region. In fact, Range drilled the very first Marcellus well back in 2004. The Range update is full of interesting details. First and foremost, the company turned a profit of $112 million in 3Q17, contrasted to losing $361 million in the same period last year. That’s nearly half a billion dollar swing in one year. Impressive. Also impressive is that Range’s total production came a whisker away from 2 billion cubic feet equivalent per day–which is up 32% over the same period last year. During 3Q17 two Marcellus “super-rich” pads were brought on line. The wells on those pads had an average per well 24-hour initial production (IP) rate of 41.3 million cubic feet equivalent (Mmcfe) per day. Impressive. As part of the update, Range held a call with financial analysts to discuss company performance. As these types of calls usually do, this one had a Q&A at the end. One analyst asked if Range would be willing to sell some of it’s non-core assets in southwest PA. Range CEO Jeff Ventura said yes, the company would consider such a move, under the right kind of terms. Here’s the full update from Range…
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Range Resources VP Says M-U Heading for “Sweet Spot Exhaustion”

Platts held their Appalachian Oil and Gas Conference in Pittsburgh earlier this week. One of the more interesting comments at the event came from Alan Farquharson, senior vice president of Range Resources. Farquharson gave an interview to a Platts reporter and said natural gas production in the Marcellus/Utica can’t continue its rapid increase indefinitely. Farquharson said drillers are going to hit “sweet spot exhaustion,” by which he means they will soon run out of Tier 1 locations to drill, requiring they branch into Tier 2 and Tier 3. As they drill in those other locations, well production will decrease, and along with it regional output will decrease. Range was the very first driller to sink a Marcellus well, back in 2004, so they know a thing or two about the play. When Range talks, everyone listens. Here’s more of Farquharson’s provocative comments from earlier this week…
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