Wolf’s Severance Tax Threat Costs Small PA Town $315,000
Two weeks ago the hapless newly elected governor of Pennsylvania, Tom Wolf, introduced a new 7.5% severance tax plan to soak the Marcellus Shale industry in his state (see PA Gov Wolf Proposes Marcellus-Killing 7.5% Severance Tax). Wolf wants to target one industry, oil and gas, to give their hard-earned money away to another industry, teachers. He’s trying to pay back all of those good union voters in Philadelphia who elected him. But Wolf’s threat of a tax is already having very tangible consequences. Huntley & Huntley Energy Exploration has pulled out of a deal to lease 90 acres of land owned by Harmar Township (Allegheny County), PA. That just cost Harmar $315,000. Why did Huntley & Huntley pull out? The uncertainty over Wolf’s severance tax. If the tax passes, a great deal of drilling in PA’s Marcellus Shale will be idled–and that’s not idle speculation…
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There’s a stark difference between pro-drillers and anti-drillers. Take pro-drillers in New York State as an example. NY landowners have had their property rights stripped away by a lawless (and spineless) governor–Andy Cuomo. Yet NY landowners soldier on. When the state’s highest court handed them an unfair and crushing blow by allowing municipalities to ban drilling, they continued to make their case and use whatever means they can–within the law–to advance their cause. NY landowners hate the fact that Cuomo and the courts have bastardized the law in the Empire State, but they continue to recognize the rule of law and abide by it. They are good citizens. Let’s contrast that with anti-drillers–say those in Ohio. When a court decision goes against anti-drillers, like the recent OH Supreme Court ruling (see 
Calling OH Gov. John “foreigner hunter” Kasich. We have an infraction! Quick! You’re needed, stat. Word has leaked out that MarkWest Energy has not only reduced the number of union members they’re using on jobs in Harrison County, OH, they’re using non-union (gasp) out-of-state workers–from exotic places like Texas and Louisiana and Oklahoma. Those places have been defined by John Kasich as “foreign” locations (i.e. non-Ohio). Periodically the jingoist-in-chief gets on his high horse and goes riding after those darned foreigners (see 
New York’s anti-drillers are still not happy–even after winning a ban by pressuring a spineless governor. They continue to rally and agitate and spread lies and threats and tell scary stories of environmental boogeymen…”that pipeline’ll kill ya”…”the fracked gas comin’ out the stove has radon in it”…”the compressor station three miles from your house that you didn’t even know existed is poisonin’ Mother Earth.” Why do they persist long after they’ve won? Are they empty in the soul and only find meaning in these silly pursuits and endless meetings? Do they have otherwise meaningless lives? Is there a permanent cloud over their heads no matter the circumstance? Who knows. Here’s the latest “fracking will still kill New Yorkers–even though there is no fracking in New York” event this Thursday, starring the so-called “distinguished scholar in residence” at Ithaca College, Sandra Steingraber…
David Fessler is energy and infrastructure strategist (i.e. stock analyst/researcher) with The Oxford Club–a publisher based in Baltimore, Maryland that publishes the Oxford Resource Explorer, among other financial publications. Fessler spends his days immersed in the energy industry and in the stocks of companies in that industry. Fessler and The Oxford Club have produced a special report called “The Oil Company Death List” which is a list of 19 publicly-traded oil and gas companies that, according to a formula worked out by Fessler, will “die soon.” That is, they’ll go bankrupt if they don’t sell themselves or otherwise sell off major assets. Why? They’re “swimming in debt” and way over leveraged with “ugly balance sheets.” Fessler’s simple formula is all about a company’s debt ratio. When a company’s debts reach 4 times or higher its earnings (EBITDA), that’s a huge red flag. Below we have the list of 19 on the “death list” along with a copy of Fessler’s full report (describing his methodology). The interesting/troubling aspect is that 8 of the 19 are Marcellus/Utica operators–one of which is #1 for highest debt-to-earnings ratios. Some companies in the list surprised us–others did not. Is your favorite Marcellus/Utica driller in the list?…
Is Pennsylvania Gov. Tom Wolf an extortionist? Or is he just dumb? Last week, in response to a reporter’s question about his proposed severance tax and what might happen if it doesn’t pass the legislature, Wolf said this: “You know, the alternative is not really no tax… the alternative is no drilling – a ban as in the case of New York” (see 
There is an effort underway–a serious effort–for towns along the border in some upstate New York counties to secede from New York State and join Pennsylvania. Why? Because of New York’s ban on hydraulic fracturing. And no, this is not an early April Fool’s joke. MDN first started hearing of secession talk shortly after Gov. Cuomo’s disgraceful cabinet meeting in which he let bootlickers Howard Zucker (State Health Commissioner) and Joe Martens (DEC Commissioner) take the fall for a ban on fracking–a ban Cuomo himself wanted. We saw some signs and heard a few mentions of secession and chalked it up to understandably high emotions over Cuomo stealing away their future. But it seems it’s not just so much hot air. A group called the Upstate New York Towns Association has done some polling and found 15 towns along the border area of NY are ready to make the leap. There are, however, some major hurdles in the way…