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Range Announces Management Additions and Bank Borrowing Base Reaffirmation

Press Release from Range Resources (Oct 7):
Range Announces Management Additions and Bank Borrowing Base Reaffirmation

FORT WORTH, TEXAS – Range Resources Corporation announced today that it has hired Joseph H. Frantz, Jr. as Vice President of Engineering and K. Scott Roy as Vice President of Government and Regulatory Affairs for the Marcellus Shale Division located in Pittsburgh, Pennsylvania.

Mr. Frantz brings more than 26 years of petroleum engineering experience with Texaco, S.A. Holditch & Associates and Schlumberger. Recently, Mr. Frantz led Schlumberger’s shale evaluation team for various emerging shale formations, including the Barnett, Fayetteville and Marcellus. Mr. Frantz has extensive experience working in the Appalachian Basin, and he has performed studies on topics ranging from reservoir simulations to hydraulic fracture optimization. He holds a bachelor’s degree in Petroleum and Natural Gas Engineering from Penn State University.

Mr. Roy previously served as Executive Deputy Chief of Staff in the Office of the Governor of the Commonwealth of Pennsylvania. He has spent more than 17 years in public service in various positions, including key roles in both the Rendell and Ridge administrations and acting as the Governor’s liaison to various regulatory and environmental agencies. Mr. Roy earned his bachelor’s degree from Allegheny College and his juris doctorate from the Dickinson School of Law at Penn State University.

Range also announced that at its regularly scheduled review, the Range bank group unanimously reaffirmed the Company’s $1.5 billion borrowing base effective September 30, 2009. Range elected to retain the existing $1.25 billion commitment amount, which provides in excess of $800 million in available liquidity. There were no changes to the interest rate, repayment terms or number of banks in the credit facility.

Range’s Chairman and CEO, John H. Pinkerton, commented, “We are extremely pleased to announce these two new management additions to our Marcellus Shale team. Both Joe and Scott are Pennsylvania natives, who will report to Ray Walker in our Pittsburgh Marcellus Shale Division. Joe Frantz will head up our technical evaluation, not only of the Marcellus, but also for the other Appalachian shale formations. His extensive technical background in shale reservoir evaluations and optimized completion techniques is a key addition to our technical team. As the pioneer of the Marcellus Shale play, we fully understand the importance of forging a strong partnership among public, regulatory and industry interests to ensure that the development of the Marcellus Shale is accomplished in a responsible way. The addition of Scott Roy reflects Range’s commitment to being a good steward of Pennsylvania’s resources. Lastly, the unanimous affirmation of our borrowing base by our bank group reflects our low-cost structure, high-margin asset base and strong financial position. We are well positioned to continue to execute our plan of low-cost, consistent per share growth.”

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Top Rendell aide quits to join gas driller

Philadelphia Inquirer (Oct 7):
Top Rendell aide quits to join gas driller

An interesting bit of news: A top aide to Gov. Ed Rendell is stepping down to take a job in the drilling industry:

K. Scott Roy is stepping down as the $146,000-a-year executive deputy chief of staff to Rendell to become vice president for government relations and regulatory affairs for Range Resources Corp., a Texas-based company with a major drilling stake in Pennsylvania.

And another bit of interesting news found in this article is that Gov. Rendell wants to forego an extraction tax–for now (although the Democrats in the legislature are still trying to get a tax passed for this year):

[Rendell’s call for an extraction tax] changed Aug. 31. In a move that took even some of his top aides by surprise, Rendell said at a news briefing that he was giving up his push for the tax this year.

He said he changed his mind after meeting with industry executives who convinced him that imposing the tax now would stunt the growth of drilling in the state.

“We felt we should let the industry get off to a good start, and that surpasses our need for money,” Rendell said Aug. 31. He said he favored starting such a tax next year.

The article is mostly quoting eco-nut groups moaning about a potential conflict of interest by Mr. Roy’s “sellout” to the drilling industry.

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PA House budget unlikely to advance

Pittsburgh Post-Gazette (Oct 3):
House budget unlikely to advance

Pennsylvania still has not adopted a budget for the new fiscal year. Part of the wrangling is how to raise taxes to meet the ever growing demand of government to transfer wealth from the producers of society to the non-producers. In PA, the Democrats want to tax natural gas drilling, which of course will take money out of the landowner’s pocket…make no mistake, any tax on drilling will be passed on as an “expense” by the energy companies, reducing royalties to landowners. The Republicans in the PA statehouse are trying to stop it. Make your voice heard if you’re in PA!

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Toxins tied to fish kill may have hitchhiked: Investigators weigh whether mining equipment is culprit

Pittsburgh Post-Gazette (Oct 4):
Toxins tied to fish kill may have hitchhiked: Investigators weigh whether mining equipment is culprit

A highly speculative and irresponsible article trying to tie an algae buildup along the Pennsylvania-West Virginia border to drilling for natural gas. I would go as far as saying it’s pure fantasy. But that’s what passes for “news” these days. Part of the article ties in completely unrelated news, like the Cabot problems in Northeast PA, with this one–a favorite tactic of people who don’t have a case.

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Finally Some Common Sense About (Not) Taxing Marcellus Production in Pennsylvania

Pennsylvania Rep. Dave Reed (Republican, Indiana, PA) “gets it” when it comes to drilling in the Marcellus. Gov. Ed “fast Eddie” Rendell (Democrat), wants to tax drilling in the Marcellus. According to the Indiana Gazette (PA), fast Eddie’s plan calls for:
Read More “Finally Some Common Sense About (Not) Taxing Marcellus Production in Pennsylvania”

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Lock Haven University Biology Professor (and Landowner) Recounts Positive Experience with Drilling in the Marcellus

Lock Haven University (PA) produces a regular online publication called The Hemlock. The current issue, dated March 2009, focuses on drilling in the Marcellus region in Pennsylvania. The issue is quite long with different articles focusing on different aspects of Marcellus drilling. As you can imagine, the articles are mostly negative and “the sky is falling” in nature. Fair enough. They have a viewpoint and wish to air it. Those of us who believe drilling can occur safely, but understand there will be problems along the way, have nothing to fear from the very worst the anti-drilling side can dish out. I rather enjoy reading such articles because I always learn something.

What do I learn from the opposition? As an example, one of the articles contributed is from a retired state forester–Butch Davey–offering this bit of insight into why he’s against drilling in the Marcellus:

Reading the children’s book The Lorax by Dr. Seuss to my grandchildren brings home the lesson that we need to carefully conserve the natural resources of Pennsylvania on both private and public land.  It is up to us to start living in a sustainable way so that future generations won’t be saddled with mistakes we made because of a myopic view of natural resource limitations or outright greed.

There you have it folks. Dr. Seuss, a leading light of environmental knowledge and highly-sought after expert source, is one of Mr. Davey’s inspirations.

About half way down the issue, amongst the articles recounting the gloom and doom of drilling, are a couple of landowner perspectives. One perspective is from a landowner who purchased his land without purchasing the mineral rights. Doh! When the energy companies show up and drill and you don’t get a dime from it, of course you’re going to be against it and focus on every single shortcoming and ill-effect of drilling (noise, traffic, etc.). Such a perspective is hardly impartial. Lesson to those buying land in the Marcellus: Be sure you purchase the mineral rights–and don’t blame the Realtor for your own stupidity if you don’t purchase the mineral rights, as this person did.

But, somehow The Hemlock added a pro-drilling perspective! About the only pro-drilling aspect of the entire issue–no doubt their idea of “balance.”  The perspective is offered by Dr. Ralph Harnishfeger, a biology professor at Lock Haven–someone who knows and cares about nature and the environment. He recounts how he and his wife (also a professional biologist) and his neighbors “did it right” by banding together, working out a lease that protects them all and protects the environment, while at the same time allowing drilling on their property. A win/win for everyone. He acknowledges there is always some environmental impact from drilling, but when done right, the negatives can be minimized. Slogging through the entire Hemlock issue is worth it just to read his short contribution. He concludes his perspective with this:

We believe that energy development can occur responsibly and in a manner consistent with good environmental stewardship. Farmland has been significantly altered by man from what existed prior to the arrival of Europeans on this continent and such change has dramatically improved food production and the resulting quality of life for many humans. This transition has increased habitat for some species and decreased habitat for others. It is unrealistic to expect a return to primeval forest and in the context of our highly altered environment we prefer well-managed and planned land use with the additional protections guaranteed through our lease.

It seems at its core much of the debate over drilling in the Marcellus, as is the debate for most environmental issues, is a clash of philosophies, as Dr. Harnishfeger alludes to in his summary statement. Many people erroneously believe we can return “nature” to it’s pre-man condition. They view man and his activities on this planet as an infestation rather than as a species with the God-given (or Nature-given, if you’re a non-believer) right to manage the resources around us. It is not only impractical, but idiotic to ignore the energy needs of humans and think we can return to animal skins and clubs and give up electricity, machinery and the many advances of the last 500 years of human-kind. That view is truly unsustainable.

Does drilling for natural gas impact the environment? Sure does. Do accidents happen along the way? Yes. Do we throw the baby out with the bathwater with respect to drilling because of some negatives? No way! Although The Hemlock issue is long, I encourage you to read it, particularly Dr. Harnishfeger’s contribution (especially if you’re a landowner) so you get some insights into how to “do it right” when it comes to creating a lease for your land.

Read the issue here: The Hemlock, Volume 2, Issue 6 (March 2009)

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Centre Daily Times Runs Anti-Marcellus Editorial

The Centre Daily Times (State College, PA) recently ran an editorial with typical scare-tactic, kindergarten logic, while at the same time supporting the obscene taxation of drilling in the Marcellus in Pennsylvania.

The editorial recounts how a number of so-called conservation groups have their greedy hands out and want a piece of the pie (my words, not theirs). So in the tortured logic of these groups, they want to tax tax tax the Marcellus. On one hand conservation groups and the Centre Daily Times decry drilling and paint a nightmarish picture of water and noise pollution, road damage, and general malaise. In the next breath they say, “Oh well, if it’s gonna happen, let’s at least grab a piece of the action for ourselves.” It’s thuggish thinking and thuggish behavior. A protection racket–pay to play. And newspapers like the Centre Daily Times fall right in line, along with their Democrat co-conspirators in Pennsylvania state government.

Perhaps this is a teachable moment? The taxarati (the taxing class), will tell you energy companies will have to pay the tax, and that there’s more than enough money going around that “a little tax won’t hurt anyone,” with the justification that “39 other states do it too.” Wrong. Natural gas prices have come down dramatically in the past 12 months and new exploration is at best a break-even affair at this point.

Point #1: Drilling will slow or stop. Making drilling more expensive by adding more tax may tip the scales and make it an unprofitable venture, and the drilling will stop. There are already indications that new drilling has slowed throughout the Marcellus.

Point #2: Landowners will not escape the tax. Do you think energy companies alone will bear the tax? Wrong! Landowners will also be part of this tax. The energy companies will not bear the burden alone. More tax means less in landowners’ pockets.

Point #3: Consumers will ultimately pay. Do you think corporations simply “live” with making smaller margins of profit? They do not. They pass along increases in higher prices. There truly is no such thing as a tax increase on business that is paid by anyone other than the consumer. It is always the case. You may think you’re “soaking the rich” by increasing taxes on businesses, but those taxes are treated as a cost of business and factored into the price consumers will pay. By taxing business, you have just taxed yourself. Doh!

Wake up PA, and reject the notion of a severance tax on Marcellus drilling.

Read the Centre Daily Times editorial: Tax the source of the mess

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Pennsylvania Democrats Still Hell-bent on Taxing Natural Gas

The Scranton Times-Tribune reports that Pennsylvania Democrats, including Gov. Ed Rendell, are on a mission to tax natural gas drilling in the Marcellus. Let’s name some names, shall we?

House Finance Chairman David Levdansky, D-39, Pittsburgh, and Environmental Resources Chairman Camille George, D-74, Houtzdale, joined with statewide conservation groups Monday to widen the debate over proposed state taxation of natural gas produced by drilling deep pockets in the Marcellus Shale formation, underlying much of western and Northeast Pennsylvania.

Gov. Ed Rendell has proposed a 5 percent severance tax in hopes of generating an estimated $107 million for state coffers. The tax would be levied on the value of natural gas at the well.

Not to be outdone by the government, the so-called conservation groups have their hands out too:

The conservation groups, including PennFuture and Pennsylvania Federation of Sportsmen’s Clubs, say some of that revenue should go for conservation projects, the state Game and Fish and Boat Commissions and to help local governments repair roads.

The coalition isn’t suggesting a specific amount at this point, said Andy Loza, an official with the Pennsylvania Land Trust Association.

And the pièce de résistance:

“Implementing a severance tax on natural gas is a no-brainer,” said Mr. George, who is drafting legislation to set standards for treating water used in drilling.

Taxing the fledgling PA gas industry into oblivion is a real no-brainer for those with no brains!

Read the full article: Shale tax ideas debated

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Gastar Exploration’s 42,000 Acres in the Marcellus – No Development Until a Partner is Found

Energy company Gastar Exploration reports the following about their Marcellus commitment in a recent quarterly financial filing:

In the Marcellus Shale we hold approximately 42,000 net acres in northern West Virginia and southwestern Pennsylvania. To date, we have drilled 10 shallow wells, which will allow us to hold the related leases with production. Currently, we are seeking a joint venture partner to help us further develop this play. We do not expect to drill additional shallow wells until we secure a joint venture partner or until natural gas prices improve. We will continue to maintain our leases through renewals, extensions and renegotiations of drilling commitments.

Read the press release: Gastar Exploration Reports Fourth Quarter and Full Year 2008 Financial and Operational Results

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Texas Billionaire George Mitchell is Betting on the Marcellus in PA

According to the Forth Worth, TX Star-Telegram:

George P. Mitchell, the billionaire who pioneered development of shale gas in the Barnett formation of North Texas, is betting that the Marcellus Shale of Pennsylvania will be similarly prolific.

The 89-year-old oilman…said he expects Marcellus to be a “big boom” to Pennsylvania, birthplace of the U.S. oil industry. The natural gas prospect may stretch across about half the state, he said.

“Pennsylvania looks like a hell of a play, and I can’t understand how in 150 years we found it just now,” Mitchell said Wednesday in an interview at his office in downtown Houston. “Pennsylvania is a tough play right now, but I think in my geological opinion, it has tremendous potential.”

The article also says that Mitchell is providing backing for Alta Resources to drill in the Marcellus. Alta is right now investing in 45,000 acres in the Marcellus region.

Read the full article: Barnett Shale pioneer now betting on Pennsylvania shale

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Oil & Gas Industry Issues Statement on Proposed Local Property Tax

Below is a joint press release issued by the Independent Oil & Gas Association of Pennsylvania and the Pennsylvania Oil & Gas Association about the ridiculous legislation proposed by PA Democrats.

PITTSBURGH, March 9 — The Independent Oil & Gas Association of Pennsylvania and The Pennsylvania Oil & Gas Association today released the following joint statement in response to Rep. Bill DeWeese’s proposed legislation to impose an oil and gas property tax at the local level. A more thorough evaluation of this proposal will be conducted in the coming days.

“The natural gas and crude oil industry has sustained the economic base of many rural Western Pennsylvania communities for more than 100 years, and with the prospect of the Marcellus Shale, it is the brightest spot in the Commonwealth for job growth and economic development. Yet before we even begin to develop the Marcellus Shale, state and local governments are anxious to tax it, potentially jeopardizing its growth in the process and hundreds if not thousands of Pennsylvania jobs. Tens of thousands of Pennsylvanians are currently employed by the oil and gas industry and contribute significant revenues to local taxing authorities. The potential for many new jobs as drilling activity increases will only add to these benefits.

“We strongly believe the legislature wants Pennsylvania to be a leader in the development of this important energy source. The Marcellus Shale could provide an economic boost for the Commonwealth for many generations, but not if it is prohibited from developing through a hastily imposed property tax.

“There is never a good time to slap unnecessary taxes on job-creating industries, but with the current state of the global economy any new taxes will certainly stunt economic growth and send a bad signal to the business community. The price of natural gas sold for $13.105 per Mcf just last July and is now selling at $3.87 per Mcf. At the same time, the number of national onshore natural gas drilling rigs stood at 1,306 last September and has since fallen to 917 with more rigs expected to drop in the coming weeks and months.

“History has shown that crude oil and natural gas drilling does not place a burden on local services that needs to be made up with new taxes. Even still, companies investing in Pennsylvania Marcellus Shale development have and will continue to work with local officials to minimize impacts and address and/or provide compensation for any impacts caused by operations. For instance, the industry has invested millions of dollars across the Commonwealth in constructing new roads — at no cost to taxpayers or local governments.

“Repairs to roads are made at the expense of the drilling company and insured through bonding arrangements; frequently resulting in better roads than what existed prior to drilling. Drilling places no burden on counties, which would collect a large share of an imposed property tax.

“Pennsylvania is blessed with rich natural resources, including a potentially large natural gas field in the Marcellus Shale. Although the associations strongly oppose new forms of taxation, especially while the development of the Marcellus Shale is in its infancy, the industry remains willing to work with the legislature on issues to promote the development of the resource.”

About IOGA-PA

The Independent Oil and Gas Association of Pennsylvania (IOGA) is the principal non-profit trade association representing Pennsylvania’s Independent oil and natural gas producers, marketers, service companies and related businesses.

About POGAM

The Pennsylvania Oil & Gas Association is the non-profit trade association of the Commonwealth’s independent oil and gas producers. The association promotes the general welfare of Pennsylvania’s crude oil and natural gas exploration and production industry. The association and its members are committed to the economical and environmentally responsible development, production and use of the Commonwealth’s crude oil and natural gas resources.

About MSC

Formed in 2008, the Marcellus Shale committee represents the oil and gas industry in Pennsylvania on matters pertaining to the acquisition, exploration, drilling, and development of the Marcellus Shale natural gas resource and provides a unified voice before all state, county, and local government or regulatory bodies. The committee, sponsored jointly by the Pennsylvania Oil and Gas Association and the Independent Oil and Gas Association of Pennsylvania, includes independent producers with historical expertise in the Pennsylvania oil and gas fields and national companies dedicated to bringing their industry experience and resources to achieve common goals.

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PA Democrats Trying to Tax Natural Gas Still in the Ground

The tax-you-to-death Democrats in Pennsylvania are like big spending Democrats everywhere: They lie about who new taxes will affect, and their appetite to get their hands on YOUR money is insatiable. Case in point from the Pittsburgh Tribune-Review:

HARRISBURG — Natural gas from the vast Marcellus Shale reserve will be taxed under the ground and when it is extracted, if Democratic lawmakers and the governor have their way.

Fifty-four of 67 counties would be able to levy real estate taxes on the underground value of natural gas and oil under a bill proposed Monday by House Majority Whip Bill DeWeese, D-Greene County.

Of course, taxing natural gas deposits in the ground is not enough (never mind how you can even come close to calculating the size of a deposit before you pump it out), let’s tax it when it comes out too:

Gov. Ed Rendell last month proposed a state severance tax on extracted natural gas. Rep. Bud George, D-Clearfield County, is expected to propose the severance tax in legislation.

Here comes lie Number One: “It’s for the children.”

Forty-five of the poorest school districts would benefit from levying a real estate tax on natural gas, said Timothy Allwein, an official with the Pennsylvania School Boards Association, one of several groups that joined DeWeese at a news conference.

And lie Number Two: “It won’t affect the landowner.”

DeWeese said the real estate tax on natural gas would hit developers and drillers, not landowners and farmers.

And lie Number Three: “It’ll keep your taxes low.”

David Coder, chairman of the County Commissioners Association of Pennsylvania, said the revenue would be used to lower property taxes or prevent the rise of property taxes.

Really? You think energy companies will not adjust their lease terms and royalties to account for this rape of their profits? Do you really think any single locality in PA will either hold the line, or reduce your property taxes, if this legislation is passed? Come on. Don’t fall for the same, tired old lies trotted out by the Democrats!

Here’s what will happen: If the Democrats in PA pass this legislation, energy companies will stop expanding and drilling in PA and instead go to New York, Ohio, West Virginia and other Marcellus locations. If you’re a landowner living in PA, make some noise with your state representatives about this issue before it’s too late.

Read the full article: Bill revives tax on gas, oil underground (Pittsburgh Times-Review)

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Range Resources Hands Out $1.2M in Royalty Checks in PA

Breaking news, this just in from the Wilkes Barre Times-Leader:

A leading company drilling on the Marcellus Shale natural gas formation in Pennsylvania says it handed out nearly $1.2 million in royalty checks last week.

Range Resources Corp. spokesman Matt Pitzarella said Monday the distribution is the first significant royalty the company has paid from its 120-plus Marcellus shale wells.

People in the exploration industry say they haven’t yet heard of such a large distribution of royalties from Marcellus shale gas wells in Pennsylvania.

The money went to 31 landowners who have wells on or near their land and live near Range’s gas-processing plant about 20 miles south of Pittsburgh.

Read the article: Marcellus shale wells royalty checks go out (Wilkes Barre Times-Leader)

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PA Gov. Ed Rendell Justifies New Tax on Marcellus Shale Drilling

In a Times-Tribune editorial about Pennsylvania’s impending budget deficit, which is now projected to be $2.3 billion, Gov. Ed Rendell is quoted saying a proposed tax on drilling in the Marcellus Shale won’t be more “severe” than in other states:

The governor is ready to propose a first-time severance tax on natural gas produced at the wells being sunk across the Marcellus Shale formation.

“The industry is used to paying severance taxes,” he said. “Our tax will not be more severe than other places.”

Scranton Times-Tribune: Feds could ease pain for states

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Former PA Rep Dan Surra Appointed to “Protect Interests” of Non-Landowners in Marcellus Shale Drilling

Pennsylvania Gov. Ed Rendell has violated his own hiring freeze and appointed an ally, former Democrat State Representative Dan Surra, as senior adviser on the Pennsylvania Wilds to DCNR (Department of Conservation and Natural Resources) Secretary Michael DiBerardinis. The position pays $95,000 per year and includes “protecting interests” with regard to Marcellus Shale drilling.

In his new position, one of Surra’s responsibilities will be to focus on protecting the interests of recreationists and sportsmen as Marcellus Shale drilling expands.

“The Marcellus Shale gas deposits represent an enormous economic opportunity for the state if done correctly,” [State Rep. Camille “Bud”] George [D-Houtzdale] said. “I think Dan Surra will do a bang-up job in the position. His work with me on the House Environmental Resources and Energy Committee dovetails perfectly for this position. He’s a sportsman who is also well versed on mineral extraction.”

And this comment from State Sen. Mary Jo White, R-Oil City:

“I don’t know enough about the PA Wilds to know if this particular job is needed. My understanding from the governor is that Mr. Surra will be doing work regarding the Marcellus Shale natural gas development,” White said. “This is an important economic opportunity for Pennsylvania, so to that end I am hopeful that he is successful in working with all affected parties.”

Courier-Express/Tri-County: Lawmakers react to ex-Rep. Surra’s $95,000/year new job