Ascent Resources’ Marcellus Unit Files for Chapter 11 Bankruptcy
Please see comments from Ascent Resources below in the 2/7/18 update…
We have to confess, we did not see this one coming. Ascent Resources Marcellus, a company founded by Aubrey McClendon after he left Chesapeake Energy, has filed for Chapter 11 bankruptcy. Note that Ascent, which was spun off from the McClendon company American Energy Partners, has a split corporate structure. On paper there are a number of “Ascent Resources” companies: Ascent Resources, LLC; Ascent Resources Utica Holdings, LLC; Ascent Resources – Utica, LLC; Ascent Resources Management Services, LLC; and, Ascent Resources Marcellus Holdings, LLC. Same management team for all and frankly, as a practical matter, they are all one company. But it is the last one in the list, Ascent Marcellus, that is seeking bankruptcy protection. According to the company website, Ascent Marcellus focuses its drilling activity on 43,000 leased acres in West Virginia. Ascent Marcellus has a couple of loans it can’t repay, so it’s taking the bankruptcy route which will transfer ownership of that portion of the company from existing shareholder to debtholders. We’ve seen this movie before. Nobody gets screwed except existing shareholders–at least, that’s the theory. According to an announcement by Ascent, the “restructuring” as it’s called, will not affect landowners or vendors. This is “an operational restructuring and is not intended to restructure or compromise any vendor, service provider, contractor, lessor, working interest owner or royalty owner obligations.” Of course “intent” and reality are sometimes two different things. We’ll keep a close eye out as this develops…
2/7/18 Update: Ascent Resources sent clarifications to our statements and assumptions above. Below are Ascent’s comments as provided, verbatim. We thank Ascent for taking the time to comment.
Regarding the comment that they are basically the same company:
It isn’t all the same company. This is a very important distinction. There are several different companies with similar names that are managed by another separate company that also has a similar name. The Marcellus company always had separate assets in West Virginia, a separate capital structure and separate debt that was collateralized solely by the West Virginia assets. It’s not all the same company.
Regarding the comment that “Nobody gets screwed except existing shareholders–at least, that’s the theory.”
You should know that Marcellus private equity owners hold more than 75% of the stock and control the board, so they were integrally involved in determining the most appropriate outcome for shareholders as part of the Chapter 11 discussions. So “in theory” does not apply to the detailed plan of reorganization that has been worked out between the company’s owners and the creditors. Read More “Ascent Resources’ Marcellus Unit Files for Chapter 11 Bankruptcy”
As predicated, a co-tenancy bill has been introduced in this year’s 60-day session of the West Virginia legislature (see 
In another MDN post today, we do a deep dive into West Virginia House Bill (HB) 4268, the “Co-tenancy Modernization and Majority Protection Act” (see WV Co-Tenancy, Royalty Transparency Bills Make Progress). One of the organizations closely watching the progress of that bill is the WV Farm Bureau, which lobbies for the best interests of mineral owners, farmers and rural residents. What does the Farm Bureau think of the bill so far? Last week, on the very day HB 4268 was introduced, Farm Bureau director of Governmental Affairs, Dwayne O’Dell, penned an editorial in which he lends tepid support for the bill, IF there are protections built in for landowners. O’Dell begins his editorial by stating he’s worried that WV legislators are, “allowing oil and gas developers to take private property rights unfettered.” That is, they are literally “giving away the farm.” O’Dell is favor of “providing oil and gas companies with a reasonable platform to succeed.” But not at the expense of his members. Here’s a big, fat caution flag being waved by the WV Farm Bureau with respect to the co-tenancy bill, along with a call for the legislature to revisit the issue of “at the well head” pricing…
A newly introduced bill in the West Virginia legislature–Senate Bill (SB) 295–appears to give WV counties the power to impose their own “impact fee” on the oil and gas industry. We say appears because the words “oil” and “gas” never appear in the bill–but those words do appear in a newspaper article discussing the bill. WV counties are in a bind. In PA, counties and towns get a healthy stream of revenue from PA’s “impact fee” (equivalent of a severance tax). When drilling comes to town roads get a lot of heavy truck traffic. Public services of all kinds–police, fire, government buildings–see more use. PA’s impact fee helps with those things. In Ohio, towns sign RUMAs with drillers–Road Use Maintenance Agreements. But in WV, the tax money counties did receive from the oil and gas industry was reduced in 2011 when the state legislature granted discounts to companies spending more than $50 million in the state. Want to fix or build a new road to handle traffic? Good luck! Enter SB 295 which (again) appears to grant counties the ability to assess certain fees, including an “impact fee,” on certain companies in order to assist with things like building and fixing roads. Here’s what we could find about SB 295…
In December MDN told you that Dominion’s $5 billion Atlantic Coast Pipeline (ACP) project had asked permission from the Federal Energy Regulatory Commission (FERC) to begin clearing trees along the path of the pipeline in all three states where the pipeline will run: West Virginia, Virginia, and North Carolina (see 
It’s looking more and more like co-tenancy legislation will pass this year in West Virginia (see 
It never ceases to amaze us at how an unshakable belief in the myth of man-made global warming drives normally sane people to do insane things. Like using millions in taxpayer dollars (“grants”) to figure out a way to convert shale gas into a more “environmental friendly” form of fuel for energy usage–explosive hydrogen. Methane (i.e. natural gas) has one carbon atom along with four hydrogen atoms–CH4. What do you do with that carbon atom when you split methane into its component parts? We can’t have that carbon atom mating with a couple of oxygen atoms and forming CO2 (carbon dioxide)! Perish the thought!! (Even though CO2 is what you exhale every time you breathe, CO2 has been bastardized into being considered a pollutant by the general population thanks to the efforts of Big Green.) West Virginia University, along with Southern California Gas Company and Pacific Northwest National Laboratory, is launching new research this month that aims to convert “methane to CO2-free hydrogen and solid carbon nanotubes”–that is, into hydrogen and “good” carbon, not “bad” CO2 carbon. Whatever…
At the beginning of each new year the West Virginia legislature meets for a 60-day session. This year the session runs from Jan. 10 to Mar. 10. For the previous maybe 6-7 years, the shale industry has pushed for some sort of forced pooling legislation. Each year those bills, as close they sometimes got, were defeated. This year the industry is staying well away from saying anything about “forced pooling.” Last time around (in 2017) we came close with something MDN calls forced pooling lite–a bill that would have allowed for co-tenancy and joint development. That bill was eventually defeated (see 
Once again Marcellus Drilling News is happy to partner with and support the 
A relatively small number of landowners in West Virginia is using a novel legal argument to try and stop Mountain Valley Pipeline (MVP) from beginning construction. MVP is a $3.5 billion, 303-mile natural gas pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA. The Federal Energy Regulatory Commission (FERC) issued a final approval for the project in October (see 
Just yesterday MDN told you that Mountaineer NGL Storage wants to be THE main ethane/NGL storage hub for the Marcellus/Utica region (see 
In September a group of 57 gentry landowners in Virginia and West Virginia, backed by an out-of-state Big Green group, sued the Federal Energy Regulatory Commission (FERC) in an attempt to gut the 80-year old Natural Gas Act that gives FERC the right to grant eminent domain for pipeline projects (see 
Ridgetop Energy Services, headquartered in Canonsburg, PA, was started in early 2016 by Ridgetop Capital Partners. Ridgetop Capital is an energy and real estate investment firm. Since 2007, Ridgetop Capital has purchased 30,000 acres in the PA, WV and OH, and has invested $130 million in the region (often partnering with big drillers like EQT, Antero, Chesapeake, Range Resources and others). In addition to investing in acreage, Ridgetop also wanted in on some of the drilling action, so the company formed Ridgetop Energy Services in 2016 to buy up service companies that work in the shale space. In June, Ridgetop Energy bought Keystone Wireline (see 