Marcellus Drilling News

Commodity Price | Crude Oil | Industrywide Issues

US Shale Industry Puts OPEC on Notice: We’ll Drill at $40/Barrel
February 29, 2016February 29, 2016

We don’t often write or highlight stories about oil and OPEC. However, there is a connection between the price of oil and the price of natural gas–and there is a connection between OPEC and the price of oil. For more than a generation OPEC has been able to, pretty much single handedly, control the price for a barrel of oil. If OPEC wants the price to go up, they scale back production. Prices to go down–start pumping more. Then God blessed America one more time and gave us the shale revolution. At $100 per barrel, drillers are willing to pump all day long. OPEC (essentially Saudi Arabia) stepped in with a strategy of pumping more to drive the price into the basement in an effort to bankrupt U.S. shale drillers–thereby giving them back their monopoly. Nice people those Saudis. Such great friends to the U.S. (NOT) When prices hit below $30 per barrel, many companies (most) stopped drilling here at home. They can’t make any money on those prices–in fact they lose money. The received wisdom is that you can’t make money pumping shale oil below $70/barrel. But the thing about Americans and American ingenuity is that we tinker and create and experiment. And now we’ve figured out how to make money when the price is low. How low? The shale industry is now sticking its finger in OPEC’s eye and saying that $40 is the new $70 when it comes to the price at which they’re willing to fire up the drilling rigs. So take that OPEC…
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Chesapeake Energy | Energy Companies

Fitch Ratings Downgrades Chesapeake Energy from B to B-
February 29, 2016February 29, 2016

Last week we told you that Chesapeake Energy CEO Doug Lawler had pulled a rabbit out of his hat with fourth quarter and full year 2015 financial news (see Chesapeake Loses $14.9B, Suspends New Utica/Marcellus Drilling). The stock market got all excited and boosted Chessy’s stock by 22% in a single day, from $2.19 to $2.67 per share. But then Fitch Ratings came along and downgraded Chesapeake’s rating from a B to a B-. Fitch says Chesapeake has an increased risk of not being able to put their hands on cash if they need it. Here’s what the Fitch people said last Thursday in downgrading Chesapeake…
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Energy Services | Hydraulic Fracturing | Industrywide Issues | Nine Energy Services

Fracking Tech Breakthrough – Go Big or Go Home
February 29, 2016February 29, 2016

Every now and again we’ll point out a technology story that we find interesting. This is one of those stories. Nine Energy Service, an oilfield services company that competes with companies like Halliburton and Baker Hughes, recently completed a 50-stage frac in a Bakken Shale well. Nine Energy operates in the Marcellus/Utica, which is why we’re interested in this Bakken well story. The length of the well was 10,000 feet long laterally (horizontally). Nine Energy completed the entire frack in 50 hours–about an hour per stage. They used 3.5 million pounds of proppant and 52,300 barrels of fluid during the fracking process. Once again American ingenuity at work. A true “go big or go home” moment!…
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About MDN | Calendar

Calendar of Events for Feb 29 – May 28 (90 Days)
February 29, 2016February 29, 2016

Below are upcoming events for the next three months (90 days). To see the full list of future events, visit this page: //marcellusdrilling.com/calendar/.

NOTE: To have an item included, please email it to: calendar@marcellusdrilling.com.
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Best of the Rest

Marcellus & Utica Shale Story Links: Mon, Feb 29, 2016
February 29, 2016February 29, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Maryland stuck in the mud with natgas ban; interesting stuff from Antero & Rice Energy earnings calls; Range drops to 3 rigs; PA agencies hurt by drop in royalty payments; Cheniere refinances Sabine Pass plant; natgas rigs barely above 100; Chesapeake’s liquidity; IEA says US heading for “all time high” oil production in 5 years; and more!
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Atlas Energy | Energy Companies | Industrywide Issues | Jobs | Pennsylvania | Statewide PA

Atlas Energy Issues 2015 Update + More Details on Company Layoffs
February 26, 2016February 26, 2016

Yesterday Atlas Energy issued its fourth quarter and full year 2015 update. Atlas, as we’ve pointed out in the past, has sold most of its Marcellus assets in two huge deals: a $4.3 billion deal with Chevron in 2011 and in a $7.7 billion deal with Targa Resources in 2014. Atlas operates mostly conventional (some unconventional) oil and gas wells in a number of states: New York, Pennsylvania, Ohio, West Virginia, Virginia, Tennessee, Indiana, Alabama, Colorado, Oklahoma, Texas and New Mexico. Sizable company. Recently, as MDN has exclusively reported, the company laid off a number of its employees (see Atlas Energy Update – 125 Layoffs Companywide). We’ve since learned, from a highly placed source with knowledge of the layoffs, that the number of companywide layoffs is closer to 150–approximately 20% of the Atlas workforce. There’s no mention of that in yesterday’s update. So what does the update show? Atlas lost $240 million in 2015–but if you back out the paper losses of impairments and depreciation, the company actually made money. In the update Atlas mentions they shut in their prolific Marcellus wells in Lycoming County, PA during 4Q15 due to low prices. Below is the Atlas update, and more details about how many Atlas employees were laid off–and where…
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Energy Services | Energy Transfer Partners | Industrywide Issues | M&A | Williams

ETE Wants Out of Williams Merger/Takeover, Offering $2B Breakup Fee
February 26, 2016February 26, 2016

It was a long courting period before Energy Transfer Equity finally cajoled, harangued, and eventually forced the board of Williams to agree to a merger/takeover. ETE’s billionaire CEO Kelsy Warren revealed he had been propositioning Williams for over six months–offering Williams $64 per share to buy the company, totaling $48 billion (see Energy Transfer Makes “Indecent Proposal” to Buy Williams for $48B). Williams resisted, but eventually they caved and agreed to the deal–although the deal price went down $10 billion by the time they accepted (see Williams Accepts ETE’s “Indecent Proposal” – Price Went Down $10B). Like a lover who finally had his way and then finds out it wasn’t “all that”, it seems Warren is having second thoughts. The New York Times is reporting that the deal “has become a nightmare” and Warren wants out and is offering to pay Williams a $2 billion break-up fee…
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Energy Services | Industrywide Issues | Pennsylvania | Pipelines | Statewide PA | Sunoco Logistics

Sunoco LP Delays Construction of Mariner East 2 Pipeline
February 26, 2016February 26, 2016

On a quarterly analyst phone call yesterday, Sunoco Logistics Partners CEO Mike Hennigan admitted applying for and receiving “hundreds of permits” has delayed construction of the Mariner East 2 pipeline. There is no worry that the project won’t happen–it will. It’s just that the timetable for when construction begins (and ends) has changed from a year ago when they first announced the project. In prepared remarks, and then later under questioning from several analysts, we have discovered that Sunoco LP will not make a definitive go/no go decision on whether to build a second pipeline as part of the Mariner East 2 project, until the backhoes begin to dig for the original Mariner East 2 pipeline. When will that be? Hennigan was hard to pin down. One analyst made a reference to ME2 being ready in either first or second quarter 2017–but Hennigan would not verify that timeline. Below are select portions of the phone call transcript where Hennigan and others are talking about Mariner East 1, 2, 2X and the Marcus Hook refinery…
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Chesapeake Energy | Energy Companies | Energy Services | Southwestern Energy | Williams

Southwestern, Chesapeake Negotiate Lower Midstream Rates from Williams
February 26, 2016February 26, 2016

Used to be when a driller signed a contract with a midstream company to gather, process and transport the company’s gas (or oil) to market, the driller was locked in for a minimum of 15-20 years. The rates NEVER change. Midstream companies will build expensive pipeline systems and all of the associated infrastructure only if they’re guaranteed a certain return. Which is why investors love midstream companies–it’s like investing in an annuity, a guaranteed rate of return for 15-20 years to come. And then the bottom fell out of the market. As we wrote about Wednesday, some bankrupt drillers are seeking court action to dissolve those contracts (see Shock: Judge May Allow Drillers to Cancel Gathering Pipeline Deals). We have another new development to tell you about: drillers not in bankruptcy are renegotiating once sacrosanct, set-in-stone contracts, to reduce the amount they pay midstreamers. Southwestern Energy and Chesapeake Energy have both recently negotiated lower rates with Williams. The beginning of a trend?…
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Anti-Drilling/Fossil Fuel | Coterra Energy (Cabot O&G) | Energy Companies | Industrywide Issues | Litigation | Pennsylvania | Susquehanna County

Dimock Trial Update: Scott & Monica Ely’s Testimony Destroyed
February 26, 2016February 26, 2016

There was a ton of news coming out of the trial two Dimock families have brought against Cabot Oil & Gas in Scranton, PA yesterday. But you wouldn’t know it if you read the Democrat-controlled (and anti-drilling) Scranton Times-Tribune–the newspaper of “record” in the very place where the trial is being held. They’ve quit writing about the trial because the news is so bad for anti-drillers. Both Scott and Monica Ely testified and under cross examination their testimony was obliterated–their claims exposed as lies. Here’s the latest from FrackNation filmmaker Phelim McAleer who has been following the trial from the beginning, and from Natural Gas Now…
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Electrical Generation | Industrywide Issues | Ohio | Trumbull County

Lordstown, OH May Get Second Utica Gas-Powered Electric Plant
February 26, 2016February 26, 2016

An $800 million electric generation plant planned for Lordstown (Trumbull County), OH that will be powered with Utica Shale gas won village approval last summer (see Lordstown $800M Gas-Powered Electric Plant Gets Village Approval). The Lordstown plant then won state approval in the fall (see Lordstown $800M Gas-Powered Electric Plant Gets OH State Approval). Now comes word that the company planning to the build the plant–Massachusetts-based Clean Energy Future–is considering building a second plant at the same location. Here’s an update on the first plant, scheduled to break ground on April 1, and the rumors swirling about a second plant…
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Industrywide Issues | Regulation

EPA’s McCarthy Addresses O&G Industry: Arrogant, Clueless, Both?
February 26, 2016February 26, 2016

Federal Environmental Protection Agency (EPA) Administrator was invited and to her credit showed up at IHS’ annual CERAWeek conference earlier this week–a gathering of energy companies (particularly oil and gas companies). She gave the opening plenary speech and following that speech she was interviewed by IHS Vice Chairman Daniel Yergin. In response to a question about EPA regulation of the oil and gas sector, she said the EPA, “doesn’t regulate the oil and gas sector the way we do other sectors.” Does she REALLY believe that? If she does, she’s even more clueless than we thought. The Gas Processors Association isn’t having any of it. They responded with a prime statement…
Read More “EPA’s McCarthy Addresses O&G Industry: Arrogant, Clueless, Both?”
Energy Companies | Range Resources Corp

Range Resources 2015: $714M Loss, Sells Non-Operated Marcellus
February 26, 2016February 26, 2016

Range Resources released their fourth quarter and full year 2015 financial and operational update yesterday. Some interesting items of note. The company lost $714 million for the year, much of that a paper loss of impairments and depreciation. Also of note, the company sold non-operated wells and leases in the Marcellus in Bradford County, PA for $112 million. Range has reduced the 2016 drilling budget by 45% over 2015, down to just $495 million. Hey, it’s better than not spending at all. Below is the 2015 update…
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Energy Companies | Southwestern Energy

Southwestern Energy 2015: Record Production, Big Paper Loss
February 26, 2016February 26, 2016

Southwestern Energy, one of the largest drillers in the Marcellus (and Utica) issued their fourth quarter and full year 2015 update yesterday. The company reports hitting a new record in production: 976 billion cubic feet equivalent, up 27% compared to 2014. A lot of that was driven by a huge 42% increase in their northeastern Marcellus production (they purchased new acreage in NEPA from WPX last year). The new acreage they acquired in West Virginia from Chesapeake is also a big factor in the production spike. Southwestern was one of the few companies that counterintuitively increased drilling in 2015. How did it work out financially? Nnnnnot so good. On paper the company lost $4.6 billion in 2015–but like other large drillers, most of that was a paper loss (not out of pocket money loss). Here’s the update from Southwestern, with lots of details on their Marcellus/Utica operations…
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Best of the Rest

Marcellus & Utica Shale Story Links: Fri, Feb 26, 2016
February 26, 2016February 26, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: OH wells cost Chesapeake average $7.2 million to drill; OH State Sen. calls on U of C to release study; EQT gets $430 for new stock offering; WV DEP opposes bill to relax drilling permit standards; CT’s last coal plant converting to natgas; Chesapeake partners want cash up front before cutting deals; Halliburton laying off another 5,000; natgas hits 17-year low price; research proves global warming isn’t happening; Canada’s oil industry threatened by US & Mexico; and more!
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Energy Services | GreenHunter Resources | Industrywide Issues | Regulation | Wastewater

Coast Guard Caves to Political Pressure, No Wastewater Barging
February 25, 2016February 25, 2016

What a major shame and disappointment. The Obama bullies have gotten to the U.S. Coast Guard (USCG) and convinced the once-proud protector of our waterways to withdraw a proposed policy they previously floated in 2013 to allow frack wastewater to be shipped on barges down rivers, like the Ohio. The USCG has officially withdrawn their previously published draft policy–a policy that never went into effect–and says drillers and barge operators can still potentially barge wastewater–but it will be on a case by case basis (they’ve yet to approve a single case). Lots of red tape and hoops to jump through, making it virtually impossible to get a shipment approved. It was one year ago this month that a controversy erupted when GreenHunter Resources said an existing USCG regulation from 1987 already grants them the right to barge produced water–i.e. brine, or the water that comes out of the hole long after frack wastewater or flowback is done coming out. The USCG disagreed (see GreenHunter/Coast Guard War of Words — MDN Explains It). GreenHunter kept up the pressure and said they would begin brine shipments without authorization from the USCG (see GreenHunter to Coast Guard, We’re Barging While You Fiddle Around). It is unclear to MDN whether or not that ever happened–we don’t believe GreenHunter ever did send a brine shipment via barge. What happens now? Can GreenHunter and others potentially barge brine “case by case”?…
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