CARBO Ceramics 1Q16: $25M Loss, Drillers Not Completing Wells
In addition to watching companies that operate drilling rigs, like Patterson-UTI Energy (see today’s companion story) for indications of how well (or not) the drilling industry is doing, another type of company to watch is a proppant company–the companies that supply sand and ceramic beads used in fracking. CARBO Ceramics is one of the premier such companies. Yesterday CARBO issued their first quarter 2016 update. Like Patterson, the news wasn’t so good. CARBO lost $25 million in 1Q16. In some cases E&Ps (exploration and production companies, or “drillers” here on MDN) are electing to complete previously drilled wells–and that’s good for CARBO. But in many cases drillers are electing to leave already-drilled wells uncompleted, i.e. not fracked, and that’s bad for CARBO. Here’s more of the good, the bad and ugly for CARBO Ceramics in 1Q16…
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In November, MDN told you about Pilgrim Pipeline Holdings, developing an East Coast pipeline to carry refined petroleum products such as gasoline, diesel, heating oil, and jet and aviation fuel northbound from Linden, New Jersey to Albany, New York (178 miles). In addition, a second Pilgrim pipeline will carry crude oil from Albany south to NJ and other locations. Two pipelines, side by side, liquids flowing through them in different directions (see 
In MDN’s daily trawl of the news, we came across a resource for landowners from Ohio State University (OSU), a program called “Pipeline Easement and Right-of-Way Agreements.” Apparently OSU’s Extension service conducts workshops on occasion for landowners and other interested parties. We don’t have a list of the workshops, but we do have copies of the resources they hand out–very useful resources, including four different fact sheets that we think landowners in any state will benefit from…
Teresa Heinz-Kerry, affectionately known on MDN as Mamma Teresa, is a well-known anti-fracker. In 2013 Mamma Teresa fired the head of the Heinz Endowments, Bobby Vagt, after he had the temerity to support the Center for Sustainable Shale (see 
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Cuomo’s righteous regulators nix pipelines; NY state bans stymie prosperity; OH o&g expo draws thousands; horizontal drilling advances in the PA Marcellus – “mile a day” wells; antis pressure MI over NEXUS pipeline; pipelines next to feel the bust; dire news for Canada’s o&g industry; and more!
We have more evidence that Shell’s Monaca (Beaver County), PA cracker plant is now a go. MDN previously told you that Shell has already spent upward of half a billion dollars out of the projected $2-$3 billion it will take to build the project (see 
You can count on one hand the number of cases where fracking a shale well over top an active underground fault (never a good idea) has caused a detectable earthquake. Can we now add one more case in western PA? Officials from the PA Dept. of Environmental Protection are investigating whether or not fracking by Hilcorp in well in Lawrence County, PA caused two 1.9 earthquakes in the area on Monday. Just so you know, you can’t feel a 1.9 earthquake on the surface. The only way you know of such an earthquake is through special monitors maintained by the U.S. Geological Survey (USGS). A football stadium full of fans stomping their feet at the same time can (and has) caused earthquakes greater than 1.0 (see 
Not only is PA’s Gov. Wolf stubborn, he’s stupid too. Dangerously so. Wolf and those he has surrounded himself with are hellbent on enacting a severance tax on the Marcellus industry in the state, as a way of paying back teachers’ unions for their support of him in the last election. Wolf, with the aid of willing liars in mainstream media, continuously repeat the same lie: PA is the only oil and gas state without a severance tax. They intentionally ignore the impact fee and corporate income tax on drillers in PA that together adds up to about the same rate of taxation as a severance tax in states like Texas and Louisiana. For the second year running Wolf has proposed a severance tax–this time RAISING it to a supposed rate of 6.5%. Yes, the new tax would allow drillers to deduct whatever impact fees they would still have to pay. The state’s Independent Fiscal Office (IFO) has run the numbers and compared Wolf’s proposal to other states. You know what they found? Wolf’s proposed severance tax would have an effective rate of 8.5%, not 6.5%. It would be the highest such severance tax in the country! Some 54% higher than the effective severance tax rate in either Texas or Louisiana. So tell us, how many drillers will stick around PA and continue to drill with a tax like that? Can you say “ghost town”?…
Yesterday Baker Hughes released its first quarter 2016 update. According to BH CEO Martin Craighead, “the industry faced another precipitous decline in activity” in 1Q16, which means it wasn’t good for BH. The company reported that revenues were down 42% year over year during the first quarter. Ouch. The company list $981 million for the quarter, nearly $1 billion! Double ouch. The company, which maintains THE rig count everyone watches, said rig counts will stabilize in the second half of the year, but the company expects 2Q16 rig count numbers to slide another 30%, to all-time historic lows. Triple ouch. What about the Halliburton buyout of BH? The deal expires in two days on April 30. BH says beyond that date the merger agreement does not automatically terminate–they may decide to continue riding the merger horse. Time will tell. Here’s the BH update from yesterday…
Antero Resources, one of the largest drillers in the Marcellus/Utica, continues to impress. Yesterday the company released its first quarter 2016 update and for all intents and purposes they broke even (financially) during 1Q16–they lost $5 million. Granted, they made $394 million in 1Q15, so that’s quite a swing the other way. But in a day when most drillers are racking up near billion dollar losses, Antero is a star performer. The company tweaked expected production for this year–up another 2% over their previous “guidance”. Where Antero really shines is with their hedging–a financial technique that allows them to lock in prices for natural gas they sell that are much higher than their competitors. With hedging, Antero got an average of $4.54 per Mcf in 1Q16, which is $2.45/Mcf above Nymex futures price. Crikey! Here’s the update from one of the Marcellus/Utica’s star performers…
Yesterday Hess Corporation released their first quarter 2016 update. A few years ago Hess sold off its downstream (refinery and filling station) business to Marathon Petroleum. Did you know the Hess Truck is no longer owned by Hess (see 
The Pennsylvania Dept. of Environmental Protection (DEP) said yesterday they will launch an “unprecedented expansion” of air monitoring near compressor stations and shale wells in the Marcellus. DEP Sec. John Quigley said the DEP will add 10 new monitoring sites to its existing network of 27 sites. Part of the $1.56 million it will take to install and maintain the sites for five years is coming from taxpayers’ federal government pocket, from a Federal Clean Air Act grant. What does Quigley expect to do with the data they collect from this effort? On a teleconference call he said, “We have no expectations here. The ambition is to get a more comprehensive dataset.” There’s a fine expenditure of taxpayer’s money–spend it with no expectations! Here’s the low down on the latest DEP boondoggle…
Ever hear of a legal doctrine called “estoppel by deed”? No, we hadn’t either. But if you’re an attorney who specializes in oil and gas mineral rights in Pennsylvania, you may have. The Pennsylvania Supreme Court recently decided a case that upholds state laws of estoppel by deed. The case, called Shedden v. Anadarko, revolved around landowners in Tioga County, PA who thought they owned all of the mineral rights to 62 acres, only to find out half the rights belonged to someone else going all the way back to the 1800s. From there it gets complicated. What we can tell you is that some attorneys were concerned that the newly reconstituted PA Supreme Court would overturn the estoppel by deed law in the state–but that didn’t happen. Estoppel by deed is safe and sound in PA. Here’s the details…
In January MDN told you about a $130 million, 30-mile natural gas pipeline proposed by New Jersey Natural Gas (NJNG) to connect NJNG’s distribution system serving customers in Ocean, Burlington and Monmouth counties (in NJ) and the interstate pipeline system adjacent to the New Jersey Turnpike. The idea came about after Superstorm Sandy. How can NJNG create reliable natgas service in the region, preventing major disruptions like that which happened after Sandy? The “Southern Reliability Link” pipeline project was the result, and in January the NJ Board of Public Utilities (BPU) approved it 5-0 (see 
A Washington County, OH man is not happy with Blue Racer Midstream’s construction work on a new pipeline in the area. Heavy rain washed out gravel used as fill for the project. The man was on his way home (rural area) and ran into a ditch because, he says, the work was not done well and is “destroying” area roadways. Here’s the story of a man, a car, a ditch and a rainy night…