National Truck Stop Chain Buys M-U Wastewater Hauler

You know those Pilot Flying J truck stops you sometimes visit to fill up as you’re traveling along our nation’s interstate highways? They’re not just big gas stations with convenience stores. Pilot Flying J has its own fleet of trucks. One of the divisions of Flying J targets the exploration and production (E&P) sector, i.e. drillers. Flying J has just announced it has bought out Equipment Transport, LLC, which hauls shale wastewater in the Marcellus, Utica and Permian Basin. Now your favorite truck stop is also your favorite wastewater hauler!
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Dominion One Step Away from Closing on SCANA Merger

In January Dominion Energy announced a deal to buy out and merge in South Carolina-based SCANA Corporation (see Dominion Buys SCANA, Mulls Atlantic Coast Pipe Expansion into SC). SCANA is an energy-based holding company principally engaged, through subsidiaries, in electric and natural gas utility operations and other energy-related businesses. In other words, the local electric and gas company for much of South Carolina. When Dominion’s Atlantic Coast Pipeline gets built and expanded into South Carolina, it will flow Marcellus/Utica gas to SCANA customers–an important and huge new market for our molecules. Hence our interest in this merger. Dominion announced yesterday that North Carolina has now signed off on the merger, and all that remains is one final regulatory approval. Dominion expects the merger to be done this year.
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Encino Takes Over from Chesapeake in Ohio Utica; Big Plans

The deal is done. On Monday, Encino Acquisition Partners completed its purchase of all of Chesapeake Energy’s Ohio Utica Shale assets for $2 billion, originally announced in July (see Stop Press: Chesapeake Sells ALL of its Ohio Utica Assets for $2B). The deal includes all of Chesapeake’s 933,000 Ohio acres (with 320,000 net Utica acres) and 920 operated and non-operated Ohio Utica wells. With the deal now done, Encino is signaling good things are ahead. The company will keep its Utica regional headquarters in Louisville, OH–right where Chesapeake had it. Encino has and will continue to operate two active drilling rigs in the Utica this year, and add a third rig next year. Encino CEO Hardy Murchison recently spoke about the company’s Utica plans moving forward. It has folks in Ohio excited!
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Electric Fracker U.S. Well Services Begins Public Trading Friday

If all goes as planned, this Friday U.S. Well Services (USWS), a company that specializes in fracking shale wells using gas-fired electric (as opposed to diesel) engines, will begin to trade its stock publicly. USWS has operations in the Marcellus/Utica, as well as other plays. Does the company sound familiar? Last week we told you that Pittsburgh-based driller Huntley & Huntley has contracted with USWS to frack the wells it is drilling (see Huntley & Huntley to Use Gas-Powered Electric Fracking in SWPA). Although USWS is “going public,” it’s not doing so via an IPO (initial public offering). Instead, “blank check” firm Matlin & Partners Acquisition Corp. is investing in (essentially buying out) USWS and taking it public. Top management at USWS will mostly stay in place. What’s that? What’s a “blank check” company?
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Dominion Sells Its 50% Share in Blue Racer Midstream for $1.5B

In September, MDN told you that Dominion Energy had sold two “merchant” (non-regulated) natural gas-fired electric generating plants for $1.23 billion to Starwood Energy. And at the same time, Dominion announced it was shopping its 50% ownership stake in Blue Racer Midstream (see Dominion Sells 2 Gas-Fired Plants; Blue Racer Midstream For Sale). The sale of the power plants and potential sale of Blue Racer is aimed at helping Dominion pay down debt. The Blue Racer sale is no longer a potential, but a reality. Yesterday Dominion announced it is selling its share in Blue Racer to private equity investment firm First Reserve for $1.5 billion.
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Chesapeake Now Gone from Ohio Utica; Spends $4B in Eagle Ford

Chesapeake Energy has just blown the minds (and confidence) of investors by plunking down $4 billion in cash and stock to buy WildHorse Resource Development Corp, a driller with big-time assets in the oily Eagle Ford Shale play in Texas. Investors didn’t like the news, punishing the stock by sending it 12% lower. Chesapeake Energy today is definitely not the same company it was even five years ago. Chessy was co-founded by the flamboyant Aubrey McClendon (God rest his soul). Aubrey, a landman by profession, founded the company as a natural gas driller–building it into the largest onshore natural gas-drilling company in the U.S. Today Chessy’s focus on gas is pretty much gone. While they still drill and maintain wells in both the Marcellus (in PA) and Haynesville (in Louisiana), most of the talk in Chessy’s 3Q18 update, which was issued yesterday, was oil, oil, oil.
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Penn Virginia Finally Sells Itself, Denbury Buys for $1.7 Billion

Penn Virginia is an oil and gas driller headquartered in Radnor, PA (near Philadelphia). Although it’s based in the Keystone State, Penn Virginia has only a small presence in the Marcellus Shale–21,700 net acres with no drilled wells (at last check). They concentrate on oil drilling the Texas Eagle Ford Shale play. In July we told you the company is once again trying to sell itself (see Penn Virginia Puts Itself Up for Sale – Again). In September they added a new board member to help the process along (see Penn Virginia Hires New Board Member to Help Sell the Company). Looks like it worked. Penn Virginia is selling itself to driller Denbury for $1.7 billion.
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Aqua America Buys Peoples Gas for $4.3B – Old Pipes, Similar Nature

Aqua America, the nation’s second largest water/wastewater utility company headquartered near Philadelphia, announced it is buying Peoples Gas, the nation’s fifth largest natural gas utility company headquartered in Pittsburgh, for $4.275 billion. This story interests us because the buyer, Aqua America, provides services to Marcellus/Utica shale drillers, and because Peoples Gas is a buyer of Marcellus/Utica gas. The combined company will both serve the shale industry as part of the supply chain, and buy the output of the shale industry as a customer. How cool is that? What made Aqua interested in Peoples? It has to do with old pipes in the ground. And similar natures.
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Energy Transfer Partners & Equity Merging into One Company Today

Energy Transfer is, on paper, several different companies. Energy Transfer Equity (ETE) is the mother ship–the main holding company. Energy Transfer Partners (ETP) is and has been (for us) the main company, builder of Rover Pipeline, among other projects. Nearly two years ago Sunoco Logistics Partners, a subsidiary of ETE, was merged into ETP (see ETE Merging Sunoco Logistics and Energy Transfer Partners). Sunoco, aka ETP, is building the Mariner East 2 NGL pipeline project. Although technically ETP is the builder, we still call the company doing the work Sunoco, because that’s what everyone else does. Confusing! Hopefully that confusion ends today. ETE announced yesterday that following a vote of unitholders (i.e. shareholders), as of today ETE and ETP are merged, and the new name is simply, Energy Transfer.
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Nine Energy Buying Magnum Oil Tools for $493M

Nine Energy Service, an oilfield services company that competes with companies like Halliburton and Baker Hughes, operates in a number of shale basins, including the Marcellus/Utica. Magnum Oil Tools is a “downhole technology” company providing completions products including dissolvable frac plugs and a number of other patented inventions. Magnum also has operations in the Marcellus/Utica. Yesterday Nine announced it is buying out and merging in Magnum in a deal worth $493 million.
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Diversified Gas & Oil Buys Core Appalachia for $183M

Diversified Gas & Oil continues its mission to buy as many non-shale (conventional) oil and gas wells as it can in the Appalachian Basin. In June, MDN brought you the exclusive news that Diversified had purchased EQT’s Huron Shale assets in Kentucky, Virginia and West Virginia for $575 million (see Diversified Gas & Oil Adds to Conventional Assets in KY, VA, WV). They’ve just done it again. This week Diversified announced a deal to buy out Core Appalachia for $183 million, which includes ~5,000 producing wells (90% of production is natgas) and 1.3 million acres in West Virginia, Kentucky and Virginia.
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Nuverra Buys Clearwater Solutions w/Guernsey, OH Injection Wells

Nuverra Environmental Solutions (formerly Heckmann) is one of the largest companies in the United States that handles transportation and disposal of shale drilling wastewater and leftover rock and dirt from drilling. The company has major operations in the Marcellus/Utica region. Those operations are expanding. Nuverra announced last Friday it has purchased, lock, stock and barrel, ClearWater Solutions, an Ohio injection well operator. Purchase price was $41.9 million. Looks like Nuverra has fully recovered from bankruptcy just one year ago.
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Dominion Sells 2 Gas-Fired Plants; Blue Racer Midstream For Sale

Dominion Energy has found a buyer for two of its natural gas-fired electric generating plants, one located in Pennsylvania, the other in Rhode Island. In July MDN told you that Dominion was shopping the two plants, hoping to raise $1+ billion (see Dominion Looking to Sell Gas-Fired Power Plants in PA, RI). One plant, the Fairless Power Station, is located in Bucks County, PA near Philadelphia. The other, Manchester Street Power Station, is located in the People’s Republic of Rhode Island. So why would Dominion, a company that really digs natgas, want to dump two of its natgas power generating plants situated in large, urban areas? In a word, regulation, or rather lack of it. Both of the plants Dominion wants to dump are “merchant plants”–meaning they sell electricity on the open market, at market rates. Regulated plants, on the other hand, have their prices determined by quasi-governmental agencies. Selling electric that’s regulated means the potential upside is limited, but it also means you are guaranteed a certain price and can count on receiving that price year in and year out. In the lingo of high finance, being regulated “derisks” a company–makes revenue streams predictable, which investors like. So Dominion is on a mission to (a) pay down debt by selling assets like these two merchant power plants, and (b) provide more revenue certainty for investors. And it looks like they achieved their goal, selling the two plants for $1.23 billion to Starwood Energy. In the same Dominion announcement about the Starwood sale, the company said they will continue to shop their 50% ownership stake in Blue Racer Midstream, which is the first we’ve heard that Dominion is looking to unload their share. Dominion says there is “strong interest” in buying it…
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Nova Scotia Goldboro LNG Buys Driller, Getting Gas from Canada

For years we’ve had a Canadian LNG export project on our radar, bringing you news about the project, hoping that prodigious amounts of Marcellus/Utica gas would be used at the plant. The project is called the Goldboro LNG project, planned by Pieridae Energy for the coast of Nova Scotia. Two weeks ago we told you that $3 billion of German money will be used to propel the $10 billion project to begin (see With $3B from Germany, Canadian Goldboro LNG Looks Like Done Deal). While it looks like the project will happen, alas, it will happen without liquefying Marcellus/Utica molecules. Last Friday Pieridae announced it is purchasing Canadian driller Ikkuma Resources Corp. Ikkuma has major acreage and producing wells (both conventional and shale) in Western Canada, mostly Alberta. With TransCanada Pipeline’s new lowball shipping charges (see TransCanada Pipe Begins Lowball Shipping to Compete with Marc/Utica), Pieridae will be able to ship its own gas to Nova Scotia, liquefy it, and sell it. We’re disappointed, but we certainly understand. You can’t build a multi-billion dollar LNG plant on the *hope* that US politicians in New York and New England will suddenly get their heads right and allow pipelines to flow cheap Marcellus gas north into Nova Scotia. We get it. It’s just a shame–because our gas is more than thousand miles closer to the Goldboro plant, cheaper to ship–IF the pipelines were in place to do so. Because of anti-fossil fuel freaks in New England, that’s not the case. Pieridae wants to get going and can’t wait forever. They’ve purchased their own reliable supplies, and with TransCanada’s low-ball shipping from west-to-east, Pieridae is pulling the trigger. The FID will happen soon, and Pieridae will be totally self-sufficient. Good for them. Bad for us…
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Rex Energy Sells Itself to PennEnergy Resources for $600M

Rex Energy, one of our favorite small drillers, has finally found a buyer for its Marcellus/Utica assets. And it’s a good home. After scheduling and rescheduling a bankruptcy auction four times in a single week, Rex canceled the auction and said it has cut a deal with PennEnergy Resources to buy the company–for $600.5 million. You may recall that Rex, heading into bankruptcy in May, owed nearly $1 billion to several creditors (see Rex Energy Owes Nearly $1B – Who They Owe & How Much). If the deal is for $600.5 million, somebody’s not going to get paid everything they’re owed. But then, that’s the nature of bankruptcy court–to decide who gets what and how much. The deal Rex/PennEnergy is subject to approval by the bankruptcy court, but we expect it will get approved. Part of the deal calls for PennEnergy to pay $1 million to Rex landowners who had sued the company claiming Rex didn’t pay them royalties. We think PennEnergy will be a good home for the Rex assets. PennEnergy launched in 2011, founded by two former Atlas Energy executives–Rich Weber and Greg Muse. The company is backed by EnCap Investments and now has 70 employees. No word on how many of Rex’s employees will come along with the deal. Rex’s acreage sits close to PennEnergy’s, hence the interest. Below the details as we have them, including Rex’s SEC filing outlining the deal…
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Eclipse’s Top Brass Not Sticking Around After Blue Ridge Merger

MDN brought you the big news yesterday that Eclipse Resources is merging with Blue Ridge Mountain Resources (see Eclipse Resources Merging with Former Magnum Hunter). We noted that nowhere in the announcement and paperwork we read that Eclipse co-founder and CEO Ben Hulburt would be staying with the newly merged company. We now have confirmation that Hulburt is leaving when the deal closes. We also have confirmation that pretty much all of Eclipse’s top brass is leaving–except for Oleg Tolmachev, who will become the senior vice president and COO of the newly merged company. In addition to Hulburt’s departure, Eclipse executive VP/general counsel Christopher Hulburt is leaving, and executive VP/CFO Matthew DeNezza will also exit stage right. All three are being paid more than $1 million (Ben Hulburt more than $3 million) to leave…
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