Chesapeake Energy Hands Over Keys to Barnett Shale to Someone Else
Chesapeake Energy had some big news on Tuesday. The company is selling off its Barnett Shale assets, and in the process lightening the company’s future debt load considerably. This is a bit complicated, but we’ll try our best to break it down. Chesapeake announced Tuesday they are handing over the keys to 215,000 Barnett Shale acres (some developed, some not), along with 2,800 operational wells–giving it away to Saddle Barnett Resources LLC, a Dallas-based firm backed by First Reserve Corp. In return, Saddle Barnett is taking on renegotiated midstream contracts with Williams. The net result for Chesapeake is that the deal will “incinerate” about $1.9 billion in payments they would have had to make to Williams and others. As we said, it considerably lightens the stress on Chesapeake’s balance sheet. Williams is trying to put a happy face on the fact they will get less money after the deal than before. But then again, a solvent Chesapeake (and/or Saddle Barnett) paying something less is better than a bankrupt Chesapeake paying nothing. Why cover this story on MDN, a Marcellus/Utica focused website? Because if Chesapeake did it in the Barnett in Texas, they (or someone else) may try to do something similar in the Marcellus/Utica…
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On Monday utility and midstream giant Dominion announced it would offer 25 million “equity units” at a price of $50 for each unit. They hope to raise $1.25 billion “for general corporate purposes, including the buyout of Questar Corporation (see 
Yesterday MDN brought you the story of how New York’s disgusting Attorney General, Eric Schneiderman, has been colluding “unlawfully” with other AGs, including the equally disgusting Massachusetts AG Maura Healey (see 
Unfortunately a Pittsburgh-area newspaper, the Washington (PA) Observer-Reporter, has fallen prey to a lie. Somehow the paper’s editors think because there’s not something called “severance tax” in the tax code of Pennsylvania, that means the state doesn’t have one–when in fact they do. It’s called an Impact Fee coupled with a corporate income tax. Add the two together, and PA’s drillers pay a “severance tax” rate that is higher than Texas and other shale states. In a recent editorial published in the Observer-Reporter, the editorial board admits that a severance tax is (for now) dead in PA. That’s the good news. When your opponent admits defeat, that’s a good sign. However, the editors still whine for a nosebleed-high severance tax anyway, accusing the drilling industry of getting a “sweetheart deal” that, they say, should end when gas prices go up again…
Virginia doesn’t have the Marcellus/Utica under it–at least not very much. But Virginia does have another shale layer–the Taylorsville. We commented back in 2014 that the state is inching closer to allowing fracking in the Taylorsville and other potential basins (see 
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Pipeline takeaway capacity in the Marcellus/Utica; a few people show up to protest NEXUS pipeline in OH; Mariner East 2 pipeline hearing draws a big crowd; energy industry driving higher business bankruptcies in Pittsburgh; Trump pledges an energy “revolution”; $245 billion coming in o&g investments; and more!
We have been making the point, loudly, for the past year, that IF New York State blocks the Constitution Pipeline, as they have now done, the state runs the very real risk of having the federal government strip away their right to make such decisions about any federally-approved pipeline project. We’ve previously warned that New York is in grave danger of losing their power by attempting to block the Constitution. We wrote the following in October 2015: When MDN editor Jim Willis attended the Shale Insight conference in Philadelphia in September, he listened to a panel discussion of midstream (pipeline) experts, including a former FERC commissioner. He got to ask a question and the question, roughly, was this: “The NY DEC is currently holding up the FERC-approved Constitution Pipeline. What if the DEC refuses to issue the necessary permits? What happens next?” The answer Jim got was, “It depends.” The bottom line seems to be that it’s likely FERC (and Williams) will need to take the DEC to court. The DEC frankly has no legal right to prevent a federally approved project from being built. That’s the bottom line. It may take a court to force the DEC (and Gov. Cuomo) to act, but in this matter the law is on our side. This is not a question of “if,” it is a question of “when” the pipeline will get built (see 
Time to do a happy dance. THE (arrogant) Delaware Riverkeeper has lost yet another court case–one of many such cases they continuously file to stop any fossil fuel-related project in the northeast. In March MDN told you that THE Delaware Riverkeeper had sued the Federal Energy Regulatory Commission, challenging their decision to approve the Williams Transco Pipeline’s Leidy Southeast Expansion from PA to New York City (see 
A landowner couple in Bradford County, PA, Edward and Kathleen Ostroski, filed a royalty lawsuit against Chesapeake Energy claiming Chesapeake was screwing them out of money by conducting “creative” accounting and deducting expenses that shouldn’t be deducted. Seems like there’s hardly a state where Chessy drills where someone has not filed a similar lawsuit against the company. However, in the Ostroski case, the couple claimed (or rather, their lawyers claimed) the case should be a class action. That there are in fact some 2,000 other landowners similarly affected by Chesapeake’s actions. A U.S. Middle District judge ruled on Monday that the Ostroskis may pursue their case–but only for themselves. There will be no class action. If other landowners feel cheated, they will have to bring their own lawsuits against the company…
WellDog (what a great name!) announced on Monday the launch of a new service called Shale SweetSpotter (another great name!). Clever marketing folks at WellDog, we’ll grant them that. Shale SweetSpotter is “the first commercial reservoir-evaluation analysis technology specific to unconventional natural gas.” In English please! “We’ve just developed a way to tell drillers where oil and gas is locked away in shale layers in the acreage they’ve leased.” Apparently it’s pretty darned good. WellDog partnered up with Shell to test their service in the Marcellus and the field trials were declared “successful”…
Investment firm SailingStone Capital Partners recently purchased enough stock that the firm now owns 11% of Range Resources. That’s more than enough to exert great power and control. And so they have. That 11% stake in the company has “encouraged” (forced?) Range to grant SailingStone a seat on the board of directors. We were, at first, concerned. Is this yet another corporate raider out to force a company (Range) to layoff employees and sell assets in a bid to force the stock price higher so they can dump it and make a big profit? We don’t think so. We find no evidence that SailingStone is anything other than an investor with a lot of money who likes what they see in Range. Below is the official announcement, followed by commentary on SailingStone’s motivation for buying up Range stock…
Last week MDN highlighted and shared with you a top notch new report just issued by the Pennsylvania Dept. of Environmental Protection–the PA Oil and Gas Annual Report for 2015 (see 
Earlier this week Williams announced a deal to sell its Canadian businesses and assets to Inter Pipeline for $1 billion. Williams is wasting no time following the aborted merger attempt by Energy Transfer Equity to buy Williams. Following that aborted attempt, nearly half of the Williams board quit because they couldn’t get their grubby hands on big piles of money (see 
In June MDN told you about another sham “study” on the way from an anti-drilling “researcher” from Yale University, funded by Big Green groups (see 
Ohio Gov. John “foreigner hunter” Kasich is finally getting back to work after it has sunk in he’s not going to be the Republican Party’s nominee for president. One of the first things up on the agenda for Kasich: Issue executive orders. On August 9th Kasich issued Executive Order (i.e. Edict) 2016-04K which forces companies in the oil and gas industry to immediately report o&g emergencies to the Ohio Dept. of Natural Resources’ (ODNR) Division of Oil and Gas Resources Management. The ODNR will then figure out who else needs to get notified and who should respond. Kasich’s Edict will expire in four months and is a band aid solution until the ODNR can adopt a formal, final rule…