Dominion Buys its Own Questar Pipeline in $1.7B ‘Dropdown’ Deal
In September midstream giant Dominion completed its $4.4 billion takeover of Questar Corporation (see $4.4B Dominion-Questar Merger Happens Tomorrow). Yesterday Dominion issued an announcement that the company is transferring the Questar Pipeline to its midstream subsidiary in a transaction worth $1.725 billion. It’s all complicated financial mumbo jumbo called a “dropdown” deal. Essentially Dominion will take money out of one of its pockets and put the money back in another pocket. There are (potentially) different groups of investors for each, so there is a real consequence. We mention the transaction because Questar is a Rockies-based integrated natural gas company operating through three principal subsidiaries. The Dominion deal to buy Questar is an attempt by Dominion to diversify out of the northeast/Mid-Atlantic region. In other words, this is all a big distraction (from our point of view) to the work that needs to get done here at home in the Marcellus/Utica…
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As this post is being written and published, the world’s third largest oilfield services company, Baker Hughes, is holding an investor webcast to announce it has struck a deal to combine/merge with/sell itself to GE’s oil and gas business. The deal, according to the Wall Street Journal, will result in a new company that will be 65.5% owned by GE and 37.5% owned by Baker Hughes shareholders. The deal, IF it gets approved by the Dept. of Justice, will create a company with $32 billion in revenues. Make no mistake, aside from all of the “partnership” talk, this is GE buying out Baker Hughes. The CEO of the new company will be Lorenzo Simonelli, chief executive of GE Oil & Gas. The board of directors for the new company will have 5 members appointed by GE and 4 members appointed by Baker Hughes. The deal, if it happens, would catapult the new Baker Hughes (or whatever it will be called) past Halliburton to become the world’s second largest oilfield services company. Get this: The deal may even catapult the new company to become the world’s number one oilfield services company–eclipsing Schlumberger! The question now is, will the Dept. of Justice approve the deal? Earlier this year the Obama DOJ killed the proposed Baker Hughes merger with Halliburton (see 
On Friday, ahead of releasing its third quarter update, Williams issued a press release to confirm what we already know: Atlantic Sunrise will be delayed. Atlantic Sunrise is a $3 billion, 198-mile pipeline project running through 10 Pennsylvania counties to connect Marcellus Shale natural gas from PA with the Williams’ Transco pipeline in southern Lancaster County. Two weeks ago the Federal Energy Regulatory Commission announced a delay in the environmental review of the project (see 
In April of this year, Mountaineer NGL Storage announced an open season for a new underground NGL storage facility in Monroe County, Ohio, near Clarington, along the Ohio River (see 
In May 2014 Panda Power Funds broke ground on building an 829-megawatt Marcellus gas-fired electric generating plant in Asylum Township, Bradford County, PA (see 
EQT issued its third quarter 2016 update yesterday. The company reports losing money on its drilling operations ($22 million), but making money on midstream operations ($133 million), so they ended the quarter in the black. Highlights include production zooming up 26% higher over the same period last year. EQT drilled 24 wells in 3Q16, which breaks down as 21 Marcellus wells, 2 Upper Devonian wells and 1 Utica well. However, the biggest news coming from yesterday’s update came from the analyst phone call when EQT president Steve Schlotterbeck said, “We continue to make solid progress on both the cost and recovery efforts and we’re encouraged that the Deep Utica can compete with or surpass our core Marcellus economics in the near future.” That is, although they just got done drilling a bunch of Marcellus wells, it is the Utica that has turned EQT’s head in a major way. Why? Schlotterbeck also said he thinks Utica drilling will end up costing the company half as much as Marcellus drilling (due to higher production in Utica wells). The company sees itself as primarily a Utica driller in the not-too-distant future. Here’s the update, along with a select portion of yesterday’s analyst phone call…
MPLX, Marathon Petroleum Corp.’s fuels processing, transportation and logistics subsidiary, issued its third quarter 2016 update yesterday. MPLX reported that profits more than tripled, to $141 million, in 3Q16. MPLX is the owner of MarkWest Energy after buying them out late last year. One of the keys to MPLX’s increase in profits? Yep–the Marcellus/Utica. On an analyst phone call yesterday, MPLX’s president Don Templin said: “While other basins are in decline the Marcellus and Utica rich gas volumes continue to grow. For 2016 we continue to expect processed volumes to increase by approximately 15% year-over-year and gathered volumes to increase by approximately 20%. And in 2017, we expect an additional 10% to 15% increase in processed volumes compared to 2016.” Here’s the MPLX 3Q16 update…
Each month MDN tracks how many rigs oilfield services company Patterson-UTI Energy reports operating–as a proxy for when/if the drop in rig counts for the Marcellus/Utica will turn around. Patterson operates a number of rigs in the northeast, as well as other areas of the continental United States (and Canada). Patterson reported losing $84 million during the second quarter of 2016, responding that the company is positioned for a recovery (see 
In June 2014 Dominion filed an application with the Federal Energy Regulatory Commission (FERC) to construct and operate new compression facilities at existing compressor stations in Marshall County, WV and Monroe County, OH, and certain other facilities, collectively called the Clarington Project (see 
In September 2015 MDN brought you the news that two joint venture partners, MPLX (Marathon Petroleum) and Enterprise Products Partners, were actively evaluating a plan to reverse the flow of the 795-mile Centennial Pipeline to send natural gas liquids (NGLs) from the Utica/Marcellus to the Gulf Coast (see 
The world’s largest oilfield services company (OFS), Schlumberger, turned a profit in 3Q16 (see 
Last week MDN reported that electric company FirstEnergy has begun construction of a new electric substation in Washington County, PA to provide electricity to “support two natural gas processing facilities being developed in the area” (see 
We’re always delighted when we spot a story or reference about a new company operating in the Marcellus/Utica that had heretofore escaped our finely-turned radar. Here’s one of those stories. In 2014, five people with experience in the oil and gas industry came together to form Evolution Energy Services. Based in Cadiz, OH, the company provides a range of services and products for the o&g industry–everything from porta potties to fracking chemicals to rig workers. We’ll call them an oilfield services company (OFS). We hadn’t heard of this upstart company until we spotted a brief reference that Evolution has just secured a $2 million load that will allow them to expand…