Corp Raider Jana Partners Admits Defeat Ahead of EQT/Rice Vote
The guy who runs the investment firm Jana Partners, Barry Rosenstein, is a corporate raider. He invests millions in a company he’s targeted in order to get one or two people elected to the board of directors. Those people then agitate and force the company to lay off hundreds or thousands of employees, and sell off assets, in a bid to make the stock price jump. When the price does jump, corporate raiders like Rosenstein then sell their shares, making a profit on the new/higher price (buy low sell high). It may be legal, but we consider it immoral. In June, EQT, one of the biggest drillers in the Marcellus/Utica, announced a deal to buyout and merge in Rice Energy, another sizable M-U driller (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). A few weeks later Jana targeted EQT in an attempt to stop the deal (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Jana believes it could make a whole lot more money if the deal doesn’t go through, and instead if EQT splits itself in two–one half a drilling company, the other half a pipeline company (firing a bunch of people along the way). So Jana went on a smear campaign, making all sorts of wild accusations against EQT, including calling EQT management’s compensation structure “perverse,” and accusing the company of using “deceptive” maps of EQT and Rice acreage positions (see Corp Raider Continues to Trash Talk EQT/Rice Merger, Vote Set Nov 9). All the trash-talking and bullying didn’t worked. The deal will happen–this week–and Jana is now officially throwing in the towel. They will still vote against the deal with their shares, but they have withdrawn their proxy fight to enlist enough other shares to vote down the deal…
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Rice Energy, while not the biggest, is certainly one of the best-operated drillers in the Marcellus/Utica. Rice issued their third quarter 2017 update last week. It will be the last quarterly update for the company as Rice shareholders will vote this week to sell out to larger competitor EQT. Because of the impending vote this Wednesday, Rice elected not to conduct an analyst phone call with the release of their 3Q17 update–we only have written statements to go by. The latest quarterly report shows Rice hit yet another record-high for production for natural gas and equivalents, producing 1.44 billion cubic feet equivalent per day (Bcfe/d). During 3Q17 Rice drilled 25 Marcellus wells and 7 Utica wells (32 total). The company lost $107 million during 3Q17, versus making a profit of $66 million in 3Q16. Rice is and always has been run by young guys (and gals). The Rice boys are Millennials. So in this last quarterly update, they displayed some of their trademark irreverent humor by coining a new word: shalennial. Dan Rice, CEO, said this in a quote in the release: “Our success is a testament to the core assets that we have acquired and developed with our shalennial team and I am highly confident that our operational momentum, as evidenced by our record third quarter results, will meaningfully contribute to EQT’s future success. We are excited to combine our core assets with EQT’s to create one of the most complete energy companies in the United States and derive even more long-term value for our shareholders.” A footnote next to the word shalennial defines the term thus: “Shalennial /SH?l?en??l/ noun: (1) an evolving, tech-driven leader of the shale generation; (2) an employee of Rice Energy.” We’ll sure miss Rice’s humor, and their go-get-em, can-do attitude, around the Marcellus/Utica shale patch…
Last week National Fuel Gas Company, headquartered in Western New York State with drilling subsidiary Seneca Resources and pipeline subsidiary Empire Pipeline, issued its fourth quarter (everyone else’s third quarter) 2017 update. In the accompanying analyst phone call, CEO Ronald Tanski blamed the delay of the Northern Access Pipeline project (delayed by the NY Dept. of Environmental Conservation) for lower earnings than the company would have otherwise realized. Thanks, business UNfriendly NY! You may recall in July NFG filed a lawsuit against the DEC for arbitrarily rejecting the project (see 
Although there is still quite a bit less drilling than there was in 2014-2015, for a number of reasons, there are plenty of jobs to be had in the Marcellus/Utica Shale–especially in southwest PA. Companies that do work in the industry held a job fair last Thursday night at the Deer Lakes High School, looking for truck drivers, roustabouts and construction workers. Seems like a week doesn’t go by now that we don’t read about a job fair somewhere in the Pittsburgh region. Yes, there may be less drilling, but there’s still plenty of jobs to be filled, especially with Shell’s cracker plant construction ramping up. Below is news about last week’s job fair–who was looking, and what they’re willing to pay…
Recently the profoundly biased mouthpiece for Big Green groups, PBS StateImpact Pennsylvania, ran an article about the political fallout around the construction of what will be Pennsylvania’s largest natural gas-fired electric generating plant, located near Scranton. Invenergy is currently building the Lackawanna Energy Center, a 1,480 megawatt plant in Jessup, PA that will cost “well over $1 billion” according to an exclusive MDN source working on the project. The PA Dept. of Environmental Protection (DEP) approved the plant in December 2015 (see 
Events related (or of interest) to the Marcellus and Utica Shale, primarily pro-drilling events.
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: More permits, more drilling equals more PA natgas; Sen Baker’s One Call bill regulating gathering pipelines signed into law; Renovo Energy submits application for 1,000 MW gas plant air permit to PA DEP; Green, OH refuses to give up fight against NEXUS Pipeline; new pipelines won’t help gas prices at Dominion South hub; Shell keeps talking about how much they love their new cracker; the battle for Dawn Hub natgas; China plans to cut gas supplies to some users due to shortage; and more!
Yesterday the 800-pound gorilla in the natural gas space, Chesapeake Energy, issued its third quarter 2017 update. One of the highlights during the analyst phone call was CEO Doug Lawler’s bragging about the “world class” Marcellus Shale. During 3Q17 Chessy drilled and put online two Upper Marcellus wells in Susquehanna County, PA that turned in peak initial flow rates of 29.6 and 29.8 million cubic feet per day (Mmcf/d) of natural gas, which is 50% higher than previous Upper Marcellus wells drilled by Chessy. The company used 3,000 pounds of sand per foot in fracking the wells. On the down side, Chesapeake lost $41 million for the quarter after making $470 million in profit during the previous quarter. However, when compared with the same quarter last year (3Q16), losing $41M ain’t so bad. In 3Q16 Chesapeake lost $1.3 billion. The company’s stock price continues to be low, bumping along in the mid-$3 range ($3.66/share as of this morning when we checked). One odd statement from Lawler on the phone call. He said this: “I’m pleased to report our production has started to decline as forecasted following the previously announced weather-related operational delays experienced during the quarter.” He’s “pleased” production is down?! Yes, the company did previously forecast a drop in production–but how can you be “pleased” with that? Converting all hydrocarbons Chessy produces (natural gas, oil, condensate, NGLs) into barrels of oil per day, Chessy produced 542,000 barrels of oil equivalent per day (boe/d) in 3Q17, versus producing 638,000 boe/d in 3Q16–a drop of 15%. Combining the Marcellus and Utica, Chessy produced 246,000 boe/d in 3Q17 versus producing 261,000 boe/d in 3Q16–down 5.7%. The company currently operates 14 drilling rigs across all plays–two of them in the Marcellus/Utica. Below is the full 3Q17 update, including financials, select portions of the analyst phone call, an updated slide deck, and analysis by Reuters…
In September 2016, Chesapeake Energy filed disclosure forms with the Securities and Exchange Commission which says the U.S. Dept. of Justice (DOJ), a number of states, and even the U.S. Postal Service have served the company with subpoenas for information (see 
Antero Resources turned in their third quarter 2017 update earlier this week. On the ubiquitous analyst phone call, Antero CEO Paul Rady spoke at length about the company’s long laterals. Antero has been a leader in drilling long laterals with nearly 900 wells drilled at an average lateral length of 8,250 feet–with some 230 of those drilled with a lateral length longer than 10,000 feet. Of all the shale wells drilled in the Marcellus/Utica that are over 10,000 feet, Antero has drilled more than 30% of those wells. According to Rady: “Longer laterals at 9,000 plus feet generate materially higher well economics.” But long laterals aren’t the whole story. Antero is also bumping up the amount of sand they use in fracking. In 2016 they used 1,500 pounds per square foot. From there they moved to 1,875. Today? They use 2,500 pounds per foot. The company continues to be one of the best in the business with hedging, or pre-selling their gas on long-term contracts for prices higher than they would get on the day-to-day spot market. After hedging, Antero got $3.39 per thousand cubic feet (Mcf) for gas and equivalents (oil, NGLS) last quarter. Antero drilled and brought online 31 Marcellus wells and 6 Utica wells in 3Q17. Below is the full update, extracts from the analyst phone call, and the the latest slide deck…
Gulfport Energy, which has drilled the second-highest number of Utica wells in Ohio (331 so far, second only to Chesapeake Energy), issued their full third quarter 2017 update earlier this week. Gulfport, which drills mainly in the Utica (but also in Oklahoma and Louisiana), reported 3Q17 production was up an astonishing 63% over the same period last year, and up 16% from 2Q17. Gulfport produced an average of 1.2 billion cubic feet per day (Bcf/d) of natural gas equivalent in 3Q17. The vast majority of that production (82% of it) came from the Ohio Utica. You can safely say Gulfport has broken into the 1 Bcf/d Club in the Ohio Utica! On the financial front, the company swung into profitability during 3Q17 by making $18.2 million in profit, versus losing $157.3 million in the same quarter last year. The company has four rigs operating in the Utica, and they drilled 23 Utica wells in 3Q17. Below is the full 3Q17 update, excerpts from the analyst call, and the latest slide deck…
In January of this year, the Federal Energy Regulatory Commission (FERC) voted to approve and issue a certificate to Columbia Pipeine’s Leach XPress and Rayne XPress pipeline projects (see 
Exciting! We have a brand new pipeline project to tell you about–located in the Greater Philadelphia area. Although the project is new, the pipeline is old–already in the ground. Talen Energy, birthed in June 2015 from a combination between PPL Energy Supply and certain assets of Riverstone Holdings, is one of the largest competitive energy and power generation companies in North America. Talen’s core business is building and operating electric generating power plants. One of the assets Talen inherited in the merger is an 84-mile pipeline called the Interstate Energy Company which runs from Northampton County, PA through Bucks, Montgomery, and Chester counties, terminating in Delaware County at Marcus Hook. Talen announced yesterday they’ve sold the Interstate Energy Company (the pipeline) to Adelphia Gateway, a subsidiary of New Jersey Resources, for $189 million. The northern 34 miles of the pipeline was converted to flow natural gas back in 1996. The southern 50 miles currently flows oil, but Adelphia (NJ Resources) announced yesterday they will convert the oil portion of the pipeline to instead flow natural gas. The bottom line is that a wide swath of Greater Philly is about to get a new source of clean-burning, abundant fracked PA natural gas…
The odious Sierra Club is at it again. Using what appears to be endless supplies of money from people like the Rockefellers, the Sierra Club, along with a mishmash of other radical environmental groups, filed an emergency motion in federal court on Monday, asking the court to stop any further work on the Atlantic Sunrise Pipeline. Atlantic Sunrise is a $3 billion, 198-mile natural gas pipeline project running through 10 Pennsylvania counties to connect Marcellus Shale natural gas from northeastern PA with the Williams’ Transco pipeline in southern Lancaster County. Williams, the company building/owning the project, broke ground in September (see 
The Pennsylvania Dept. of Environmental Protection (DEP) continues its quest to put Mariner East 2 (ME2) Pipeline construction under a microscope. Two days ago MDN told you that the DEP had issued a Notice of Violation (NOV) for ME2 work in Lebanon County, PA, for spilling LESS THAN 1 gallon of non-toxic drilling mud (see 
In July, President Trump nominateed Kevin McIntyre, co-leader of the global Energy Practice at the Jones Day law firm, as the fifth (and final) FERC commissioner (see