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EQT Urged by Major Investor to Merge with Either Range or Antero

A kerfuffle erupted yesterday when Chapter IV Investors, a Charlotte, NC-based investment firm with investments in EQT, Range Resources and Antero Resources, announced it had sent a letter to EQT urging the company to consider merging with either Range Resources or Antero Resources. Chapter IV, which is essentially two big-money investors (W. Barnes Hauptfuhrer, Managing Partner and Portfolio Manager, and Ryan J. Jack, Partner), does not own enough stock in any of the companies (less than 1% in each) to throw its weight around like a corporate raider. Rather, it appears to be two investors attempting to grab the attention of these companies and their shareholders by issuing a press release (full copy below) with a plan they say would create a new Marcellus/Utica driller worth more than $25 billion. Obviously the value of investments for Chapter IV would go up under such a scenario–so there is self-interest at work here. However, we don’t detect any kind of bullying on the part of Chapter IV, like that of a raider Carl Icahn (successful takeover of Chesapeake Energy & Cheniere Energy) or Keith “Mini-Me” Meister (unsuccessful attempt to takeover Williams). Rather, it appears to be a couple of investors who believe there is an honest and good case for a combination of EQT with another company, and were willing to spend $500 on a press release to make their case. Are they right?…
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Marcellus Biggest Drillers Lock in 2017 Gas Prices at $3+ per Mcf

In September, MDN brought you research on 10 of the largest Marcellus/Utica drillers that have “hedged” their 2017 production (see Hedging Gas Prices in Marcellus/Utica – Who Hedges & How Much?). Hedging is a concept of pre-selling the gas you produce at a price you agree to now, in advance. Although that may sound risky, it’s actually an exercise in risk avoidance. It’s less risky to lock in favorable prices now rather than wait and potentially get far less. How do drillers know what the price of gas will be six months or a year from now? They don’t know, for sure, but there is something called the forward market, that predicts what prices will be at future dates. In fact, traders create contracts now based on prices in the future, and those contracts are reported by various news and data services, like NGI’s Forward Look publication. The company that provided the research back in September, S&P, is back with an update. The latest research shows that all of the top 10 drillers have hedged at least some of their production–and some of them have hedged most or even all of their production. What prices have each of these 10 drillers locked in and for how much production?…
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Landowner Appeals Range Well Contamination Case to PA Supreme Crt

lawsuitFor some time we’ve followed the story of Range Resources and their (former) wastewater impoundments in Washington County, PA. The PA Dept. of Environmental Protection (DEP) fined Range a whopping $4.15 million for violations in September 2014 (see PA DEP Fines Range Resources $4.15M for Wastewater Impoundments). Some of the nearby neighbors claimed that Range’s leaky impoundments (a quarter of a mile away) contaminated their water wells. One of those landowners was Loren Kiskadden, who sued Range in civil court. The problem is, the DEP determined that the nearby Yeager impoundment had not contaminated Kiskadden’s well, which led to allegations that the DEP had bungled the investigation (see Did DEP Mishandle Range Wastewater Impoundment Investigation?). Kiskadden had to press on, because if the DEP doesn’t reverse its finding, he has no civil case against Range. Press on he did (see Hearing on Range Yeager Impoundment/Water Contamination Continues). The matter was heard by the DEP’s Environmental Hearing Board (EHB). The EHB found that Kiskadden didn’t have a case–his well was not contaminated by Range’s impoundment. So Kiskadden and his lawyers asked for a re-hearing. The result of that re-hearing came in December 2015 and we thought it finally closed the door, once and for all, on the case (see DEP Final Determination: Range Didn’t Pollute Kiskadden Water Well). But no, that was not the end. Kiskadden appealed again, and in October 2016 a Commonwealth Court appeals panel affirmed the EHB’s 2015 dismissal of Kiskadden’s appeal of the DEP 2011 ruling that Range’s Yeager site operations did not contaminate Kiskadden’s well water. Case closed, right? Nope. Kiskadden has one card left to play, and he’s done it. Kiskadden’s attorneys have appealed the case to the PA Supreme Court…
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PA Court Says Range Impoundment Did NOT Contaminate Water Well

Gavel-falling.jpgYou may recall that for some time we’ve been following the back and forth between Range Resources and their (former) wastewater impoundments in Washington County, PA. The PA Dept. of Environmental Protection (DEP) fined Range a whopping $4.15 million for violations in September 2014 (see PA DEP Fines Range Resources $4.15M for Wastewater Impoundments). Some of the nearby neighbors claimed that Range’s leaky impoundments (a quarter of a mile away) contaminated their water wells. One of those landowners was Loren Kiskadden, who is suing Range in civil court. The problem is, the DEP found that the nearby Yeager impoundment had not contaminated Kiskadden’s well, which led to allegations that the DEP had bungled the investigation (see Did DEP Mishandle Range Wastewater Impoundment Investigation?). Kiskadden had to press on, because if the DEP doesn’t reverse its finding, he has no civil case against Range. Press on he did (see Hearing on Range Yeager Impoundment/Water Contamination Continues). The matter was heard by the DEP’s Environmental Hearing Board (EHB). The EHB found that Kiskadden didn’t have a case–his well was not contaminated by Range’s impoundment. So Kiskadden and his lawyers asked for a re-hearing. The result of that re-hearing came back in December and (we thought) closed the door, once and for all, on the case (see DEP Final Determination: Range Didn’t Pollute Kiskadden Water Well). But no, that was not the end. Kiskadden appealed again. Last week a Commonwealth Court appeals panel affirmed the EHB’s 2015 dismissal of Kiskadden’s appeal of the DEP 2011 ruling that Range’s Yeager site operations did not contaminate Kiskadden’s well water. Have we finally reached the end of this drawn-out saga?…
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Range Resources 3Q16: Smaller Loss of $42M, Marc Production Up 9%

Range ResourcesRange Resources, the very first company to sink a Marcellus well, issued their third quarter update yesterday. Among the highlights: Range lost $42 million for the quarter, which is a vast improvement over 3Q15 when the company lost $301 million. So things are getting better, financially. Marcellus production was 1,396 million cubic feet equivalent (Mmcfe) per day, a 9% increase over 3Q15. Range’s “Southern” division, in SWPA, saw a 23% increase in production, but because Range sold some assets in Bradford County, their “Northern” division saw a 39% decrease (year over year) in production. Range continues to focus its efforts in the southwest PA area, saying the company “continues to drill and complete outstanding wells, with peer-leading EURs, while continuing to drive costs lower.” Here is yesterday’s 3Q16 update from Range…
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4 Marcellus Drillers Ramp Up Production in 2016

step-on-the-gasWe can’t say enough good things about Rusty Braziel and RBN Energy. Rusty was the co-founder of Bentek Energy, sold a few years ago to Platts. Rusty is the consummate industry professional who has forgotten more about the oil and gas industry than most of us will ever know. He recently wrote and published The Domino Effect: How the Shale Revolution is Transforming Energy Markets, Industries and Economies (buy it on Amazon). Rusty has collected a group of very smart industry analysts who write about the oil and gas industry. One of those analysts is Nick Cacchione, who wrote a post on the RBN Energy website yesterday about the top 10 gas-focused drillers in the country. It’s no coincidence that all of them have operations in the Marcellus/Utica, and most of them are totally focused on the northeast. We found it to be an enlightening and helpful article. One of the main points is how four of the top 10, while reducing their spending, have significantly increased their production numbers for 2016. Here’s a deep dive into the top 10 according to RBN, featuring the four who are “stepping on the gas”…
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Judge Drops Testing Lab from Ongoing Range Res. Lawsuit in W PA

Gavel-falling.jpgIn June MDN brought you a report about a family (John and Ashley Voyle) living near a former Range Resources wastewater impoundment in Washington County, PA who had sued not only Range, but a water testing company (TestAmerica Laboratories) in a lawsuit alleging their water well had been contaminated by Range’s impoundment. The water testing company was made part of the lawsuit because, said the Voyles, the company allowed their test results to be doctored by Range before the results were reported to the PA Dept. of Environmental Protection. That aspect of this long, drawn-out lawsuit has been decided. The judge in the case said TestAmerica is not at fault and has been removed from the lawsuit…
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Range’s Dennis Degner Named VP of Southern Marcellus Shale

dennis-degner
Dennis Degner – Range Resources

Range Resources has a new vice president for their Southern Marcellus Shale Division. His name is Dennis Degner. Range ran an interesting article on Dennis in the Washington Observer-Reporter–a profile of how he got into the oil and gas business. It’s an interesting look at a key player in the Marcellus. Dennis grew up on a farm in Texas. Learn how he got from chemical engineering in Texas to gas development in Pennsylvania…
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Mt Pleasant Twp Approves Range Well Near School

approvedSomething noteworthy is happening in southwest Pennsylvania. Landowners and pro-gas supporters are turning out at local hearings to support more drilling. Case in point: Range Resources had applied for a permit to build a drill pad near a local elementary school in Mt. Pleasant (Westmoreland County), PA. Moms Clean Air Force and other anti-drillers turned out to oppose the plan. A local town board meeting was packed to capacity. However, a majority of those packing the meeting were pro-gas and wore t-shirts with “Land Owners United” printed on them. Cool! About time our side began to turn up for these meetings to support the industry…
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Range Resources Completes Buyout/Merger with Memorial Resource

tie-the-knot.jpgAs MDN previously reported, Range Resources, the very first driller in the Marcellus Shale (in 2004) and one of the largest Marcellus drillers, has decided to take advantage of the down market and branch out into another shale play (see Range Resources Buys Louisiana Driller in Deal Worth $4.4B). In May Range announced a deal to buy Memorial Resource Development Corp. (MRD) in a stock swap/debt assumption deal worth $4.4 billion. MRD holds 220,000 acres of leases and drills in the Terryville Field in northern Louisiana. Essentially Range has purchased themselves a Gulf Coast operation which sets them up nicely to export natural gas to Mexico. That’s at least part of the attraction. Perhaps another part of the attraction is that gas from Terryville Field, part of the Cotton Valley Tight Gas formation, is cheaper to drill and in many cases just as productive as shale wells in the Marcellus. Last Thursday Range reported receiving final stockholder approval for the merger/buyout, and last Friday Range reported that the deal is now done…
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Investor Buys/Sells Stock in 4 Marcellus/Utica Drillers, Doubles $

double moneyThere’s certainly more than one way to make money on fracking in the Marcellus/Utica. Billionaire hedge fund manager David Tepper (Appaloosa Management) has found such a way. Tepper knows a good company, or four, when he sees them. In the fourth quarter of 2015, when Marcellus/Utica company stocks were at one of their lowest points, Tepper loaded up, buying stock in four leading northeast drillers. Half a year later he turned around and sold that stock, for a 100%+ return on his investment. He doubled his money. Smart man. Which drillers’ stocks did Tepper buy and then sell?…
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SailingStone Capital Buys 11% of Range Stock, Gets Board Seat

SailingStoneInvestment firm SailingStone Capital Partners recently purchased enough stock that the firm now owns 11% of Range Resources. That’s more than enough to exert great power and control. And so they have. That 11% stake in the company has “encouraged” (forced?) Range to grant SailingStone a seat on the board of directors. We were, at first, concerned. Is this yet another corporate raider out to force a company (Range) to layoff employees and sell assets in a bid to force the stock price higher so they can dump it and make a big profit? We don’t think so. We find no evidence that SailingStone is anything other than an investor with a lot of money who likes what they see in Range. Below is the official announcement, followed by commentary on SailingStone’s motivation for buying up Range stock…
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Where are Big Marcellus/Utica E&Ps Beginning to Drill Again?

whereThe answer to the question posed in the headline of this article, asking where drillers are starting to drill again now that they are starting to drill again, is–it depends on the driller. There is no particular geography in the Marcellus/Utica, nor is there a preference for a given layer (Marcellus or Utica) across the major players. Each of them is following their own strategy. Here’s a rundown for several major players and their strategies…
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Range Resources Loses $225M in 2Q16, Marcellus Production Up 16%

Range ResourcesRange Resources, one of the largest (and the very first) Marcellus Shale drillers, issued their second quarter 2016 update yesterday. While there was plenty of good news Range highlighted at the beginning of the release–Marcellus production was up 16% year over year at 1.379 billion cubic feet per day, costs were down 8%, total debt as low as it’s been since 2012–there was no getting over the 800-pound gorilla in the room: Range lost $225 million for the quarter in 2Q16, versus losing $119 million in 2Q15. One of the things Range seems most jazzed about is buying Memorial Resource Development Corp. and drilling in Louisiana instead of the Marcellus (see Range Resources Buys Louisiana Driller in Deal Worth $4.4B). CEO Jeff Ventura did mention the company can quickly ramp up drilling on 200 well pads in the Marcellus when/if the time is right. Below is Range’s 2Q16 update, along with a copy of their latest PowerPoint presentation, with lots of interesting slides…
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Which 5 Companies Dominate Production in the SW Marcellus?

DOMINATOR LOGO7/21/16 Update: Please see our note below updating production numbers to include Antero Resources in the top tier of Marcellus producers.

Which companies “dominate” the Marcellus Shale in southwestern Pennsylvania? It depends on how you define “dominate.” Typically that means “which companies produce the most natural gas and/or oil from the Marcellus play.” That makes sense. We spotted an article on The Motley Fool investors’ website on that very topic. However, the Fool article was titled “The 5 Companies Dominating the Marcellus Shale Play.” In reading it, we immediately knew this was tilted to the SWPA area and not all of the PA Marcellus because the three most productive drillers in the entire Marcellus–Chesapeake Energy, Cabot Oil & Gas, and Southwestern Energy–weren’t in the Fool’s Top 5 list! Below we have a portion of the Fool article because it’s still interesting to see which companies are dominate in the SWPA area. We also have a list of the top 20 Marcellus producers for the entire state of PA–including those located and operating mainly in the NE portion of the play…
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Which 3 Marc. Drillers Best Able to Ride Price Roller Coaster?

HH Spot Price
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The price of natural gas at the benchmark Henry Hub trading point has slow risen through the spring and summer–in particular since June (see the chart at left). A collective sigh of relief has come from investors, traders, drillers and just about everyone. But don’t break out the party hats just yet. Analysts are warning that “the party is already coming to an end.” The stark reality is this: the price of natural gas is and will gyrate up and down. That is, the price of natgas is highly volatile and remain so for the foreseeable future. Why? Lots of reasons. Weather is always a big factor. When it’s real hot or real cold, natgas is used to heat or cool, drawing down reserves and boosting the price. When storage levels get high (too much supply, not enough demand), the price goes down. New markets appear to soak up some of the supply, like more electric plants converting to natgas or being built to use natgas, less supply, price goes higher. Hey, it’s complicated. The question is, which Marcellus drillers (i.e. “producers”) are best positioned to ride out these gyrating up and down cycles when it comes to the price natgas will fetch? An analyst with S&P Global Market Intelligence believes he has the answer to that question…
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