XcL Midstream Building New Dry & Wet Gas Gathering Pipes in WV

It doesn’t happen often, but every now and again we read about driller or (in this case) pipeline company operating in the Marcellus/Utica we had never heard of before. Such is the case today. A new (to us) midstream company, XcL Midstream, has formed and is already building a dry gas gathering pipeline system in West Virginia, with plans to build a wet gas gathering system in WV too. According to its website, XcL “operates in the premier region of the Appalachia basin in Marshall and Wetzel Counties, West Virginia. XcL Midstream’s Appalachia Connector Pipeline is strategically located at the intersection of every major long-haul interstate pipeline system in Southwest Appalachia and provides shippers with market price optionality.” XcL plans to gather and process dry gas, wet gas (i.e. natural gas liquids), and transport water for its customers. XcL has its headquarters in Canonsburg, PA, near Pittsburgh. The reason that the company popped up on our radar is because Platts ran an article announcing that XcL has signed a customer–THQ Appalachia I, an affiliate of Tug Hill–to use 600 million cubic feet per day (Mmcf/d) on the dry gas pipeline, 200 Mmcf/d on the wet gas pipeline system, and to use a forthcoming water pipeline to boot. Here’s the thing: both XcL and THQ/Tug Hill are backed by private equity company Quantum Energy Partners. So apparently this is one of Quantum’s portfolio companies doing business with another of Quantum’s portfolio companies. In essence, one cousin helping out the other cousin. Perhaps we can call them kissin’ cousins?…
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Thai Company Banpu Invests Another $16M in PA Marcellus Wells

Last May, Range Resources sold its portion of a joint venture in northeast Pennsylvania (see Thai Company Buys Out Range Resources’ JV in NEPA for $112M). Banpu Pcl, Thailand’s largest coal producer, invested $112 million to purchase Range’s Marcellus non-operated JV operations in Bradford County, PA. The “Chaffee Corners Joint Exploration Agreement” gave Banpu an ownership share in 62 producing wells and another 14 wells waiting on completion, and a share in 170+ more drilling locations. Talisman is the operator of the wells and the company that does the drilling (Banpu is just an investor). Banpu liked it so much, they did it again in January of this year (see Thai Company Banpu Makes 2nd Investment in Northeast Marcellus). The January deal gave Banpu a 10.24% stake in 10,000 acres of Marcellus leases, once again in northeastern PA, for $63 million. Chief Oil & Gas is the driller on the acreage in the second deal. We have a three-peat. Banpu, via its American agent Kalnin Ventures, has just signed an agreement to invest $16 million into a venture with Tug Hill Marcellus. The new deal does not identify the exact counties, but does say the acreage is located in northeastern PA. Once the deal closes, when you add all three deals together, Banpu says it will own partial interests in 215 operating wells producing 40 million cubic feet of gas per day. And Banpu says it’s not over yet. They plan to invest more in the Marcellus in 2017…
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Stone Energy Exits Bankruptcy, Sale of M-U Assets to EQT Finalized

Stone Energy is an independent oil and natural gas exploration and production company (E&P) headquartered in Lafayette, Louisiana, drilling mainly in the Gulf of Mexico but also has (or rather had) a presence in the Marcellus/Utica Shale with 86,000 acres of leases. Stone quit actively drilling in the Marcellus in 2015, and filed for bankruptcy last October. As part of the bankruptcy filing, Stone signed a deal with Tug Hill to sell those 86,000 acres to Tug Hill for $350 million (see Stone Energy Enters Bankruptcy, Sells Marc/Utica Assets for $350M). The deal with Tug Hill was called a “stalking horse bid,” which meant Tug Hill would get the deal if no one else came along and bid higher. Someone did come along and bid higher–EQT (see EQT Wins Bankruptcy Auction for 86K Stone Energy M-U Acres, $527M). As of yesterday ownership for Stone’s 86K acres + wells was officially transferred to EQT. As of today, Stone is exiting bankruptcy. Now they have to pay Tug Hill a $10.8 million breakup fee…
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EQT Wins Bankruptcy Auction for 86K Stone Energy M-U Acres, $527M

Stalking horse

Stone Energy is an independent oil and natural gas exploration and production company (E&P) headquartered in Lafayette, Louisiana, drilling mainly in the Gulf of Mexico but also has a presence in the Marcellus/Utica Shale with 86,000 acres of leases. Stone quit actively drilling in the Marcellus in 2015, and filed for bankruptcy last October. As part of the bankruptcy filing, Stone signed a deal with Tug Hill (at one time closely associated with Chief Oil & Gas) to sell those 86,000 acres to Tug Hill for $350 million (see Stone Energy Enters Bankruptcy, Sells Marc/Utica Assets for $350M). The deal with Tug Hill is called a “stalking horse bid,” which means Tug Hill would get the deal if no one else came along and bid higher. Someone did come along and bid higher–EQT. Yesterday EQT said it has won with the highest bid at $527 million ($6,128/acre) to take over all 86,000 of Stone’s Marcellus/Utica acres. The stalking horse is dead…
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Stone Energy Enters Bankruptcy, Sells Marc/Utica Assets for $350M

Stone EnergyStone Energy, an independent oil and natural gas exploration and production company (E&P) headquartered in Lafayette, Louisiana drills mainly in the Gulf of Mexico but also has a presence in the Marcellus/Utica Shale with 90,000 acres of leases. Last year Stone quit drilling in the northeast and actually shut-in part of their production due to low prices (see Stone Energy 3Q15: Shut Down 110 Mmcfe/d of Marcellus Production). In June Stone cut a new midstream gathering agreement with Williams to return some of their shut-in Marcellus wells to full production (see Stone Energy Opens Marcellus Spigots Again; New Midstream Deal). In April MDN told you Stone was (in our opinion) inching toward bankruptcy (see Stone Energy Appoints Special Liaison, Inches Toward Bankruptcy?). In August MDN tipped you off that Stone is looking to unload their Marcellus/Utica assets (see Stone Energy in Talks to Sell 90K Acres of Marcellus Leases/Wells). Both bits of news have come true. Last Thursday Stone issued an announcement that the company, like others before it, has cut a deal to file a “prepackaged” bankruptcy AND sell its Marcellus/Utica assets to Tug Hill for $350 million…
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Gastar Leaving the Marcellus/Utica “on or before” April 8th

As MDN previously told you, Gastar Exploration has found a buyer for its Marcellus/Utica wells and leased acreage located mainly in Marshall and Wetzel counties in West Virginia–for $80 million (see Gastar Leaving Marcellus/Utica, Sells Assets to Tug Hill for $80M). Gastar expected the sale to be completed long before now–but ran into issues with one landowner. Gastar says it’s all patched up now and the transaction will be complete “on or before” April 8th…
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Gastar Leaving Marcellus/Utica, Sells Assets to Tug Hill for $80M

Gastar Exploration is throwing in the towel in the Marcellus/Utica. Gastar is selling its Marcellus/Utica assets–mainly located in Marshall and Wetzel counties in West Virginia, to Tug Hill for $80 million. Gastar has seen the light and that light is in becoming a “pure play” company focused solely on the Oklahoma STACK Play. Why sell what they admit are “high-quality”? Because they can’t get enough money for their gas in the northeast–and they can’t get enough money because there aren’t enough pipelines to move the gas to other markets. So they’re throwing in the towel and calling it quits. In addition to the sad news that they’re leaving the Marcellus, Gastar also delivered the bad news that their proved reserves went down 45% in 2015 due to lower commodity prices…
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Lease Terms Revealed for Land Deal in Marshall County, WV

In November, MDN brought you the news that Tug Hill Operating, a privately-owned exploration and production company, did a deal with the Marshall and Ohio County Landgroup in West Virginia for a $100 million signing bonus for about 500 families (see Panhandle WV Landowners Broker $100M Deal with Tug Hill Operating). We later learned that Tug Hill’s CEO was at one time concurrently the COO of Chief Oil & Gas, meaning the two companies are “tight” and perhaps share a drilling program (see More Details on Tug Hill $100M Lease in WV Panhandle). In November we had precious few details, beyond the $100 million signing bonus and a claim that royalties may end up being another $400-$500 million. Can you imagine a half BILLION dollars rushing into the economy of those two panhandle counties? Astonishing. Behold the miracle of fracking! At any rate, we now have an inkling of what the terms may have been. The Marshall County Commission is considering signing a lease with Tug Hill for 72 acres behind the animal shelter. The deal isn’t done yet, but the we know the proposed terms, both for the signing bonus and the royalty…
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Still Time for WV/PA Landowners to Participate in $100M Deal

Landowner coalitions are certainly not new. They began in the Marcellus region around seven years ago when landowners in Pennsylvania banded together to get rates and conditions more favorably than they otherwise could on their own. Smart idea. What is new is that landowners in West Virginia are now banding together because, although Marcellus drilling takes place in the state and much of that land has been leased, the Utica Shale that underlies the state is just now getting started. So landowners, like those in Marshall and Ohio counties (in the panhandle of WV) and Greene County (in southwest PA) are forming new groups to negotiate new leases for the Utica Shale. The Marshall/Ohio/Greene landowner group did just that, recently signing a $100 million deal (see Panhandle WV Landowners Broker $100M Deal with Tug Hill Operating). A few more details about the group and the deal…
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More Details on Tug Hill $100M Lease in WV Panhandle

Just One More Thing - ColumboWe have some more details about that lease deal for $100 million by Tug Hill Operating to lease land in Marshall and Ohio counties in the northern panhandle of West Virginia that we wrote about yesterday (see Panhandle WV Landowners Broker $100M Deal with Tug Hill Operating). We know a bit more about Tug Hill and the person behind it, and we now know that the $100M deal is with about 500 families (average of $200,000 signing bonus per family), and that it’s not too late for others to get in on the deal…
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Panhandle WV Landowners Broker $100M Deal with Tug Hill Operating

Bag of moneyWe have some information, but not a lot, on a recent deal to lease land in Marshall and Ohio counties in West Virginia. Tug Hill Operating, a small, privately owned exploration & production company headquartered in Fort Worth, TX, has just brokered a deal with the Marshall and Ohio County Landgroup. We don’t know how many acres are involved in the lease, nor how many families. What we do know is that the money Tug Hill is paying the landowners, collectively, is an eye-popping $100 million. We don’t have a copy of the lease, but we have little doubt that both Marcellus and Utica layers are part of the deal. Here’s what we do know about Tug Hill and the deal:
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Tug Hill’s Wandering Eye – JV with Quantum Targets Non-Marcellus

Tug Hill, Inc., an investment firm owns an oil and gas drilling subsidiary called Tug Hill Operating. Tug Hill, to date, has been bosom buddies with Chief Oil & Gas in the Marcellus Shale region (see these MDN articles). Together Tug Hill and Chief have established a lease position of a massive 600,000 Marcellus Shale acres. But what’s this? Tug Hill has a new dance partner. While Tug Hill is not abandoning Chief and their current joint drilling program in the Marcellus, they went looking and found some big money backing from Quantum Energy Partners, a Houston, TX-based private investment firm. Quantum and Tug Hill together (mostly Quantum) is pumping $450 million into a brand new joint venture between the companies to drill in other shale (and perhaps non-shale) plays across the U.S….
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