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    Gastar Leaving Marcellus/Utica, Sells Assets to Tug Hill for $80M

    Gastar Exploration is throwing in the towel in the Marcellus/Utica. Gastar is selling its Marcellus/Utica assets–mainly located in Marshall and Wetzel counties in West Virginia, to Tug Hill for $80 million. Gastar has seen the light and that light is in becoming a “pure play” company focused solely on the Oklahoma STACK Play. Why sell what they admit are “high-quality”? Because they can’t get enough money for their gas in the northeast–and they can’t get enough money because there aren’t enough pipelines to move the gas to other markets. So they’re throwing in the towel and calling it quits. In addition to the sad news that they’re leaving the Marcellus, Gastar also delivered the bad news that their proved reserves went down 45% in 2015 due to lower commodity prices…
    Read More “Gastar Leaving Marcellus/Utica, Sells Assets to Tug Hill for $80M”

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    PA Gov. Wolf Bans Leases on State Land & Busts DCNR Budget

    What happens when anti-drilling lib Dems, like PA Gov. Tom Wolf, get their way? Revenues dry up and the lib Dems have to raid other sources to make up for it. And that’s just what’s happening with the Pennsylvania Department of Conservation and Natural Resources (DCNR). Tom and the Dems made a big deal about not leasing nor allowing any more drilling on or under PA state lands. In fact, one of the first things Wolf did upon taking office in early 2015 was to slap a moratorium on any new state land drilling (see PA Gov Wolf Signs Exec Order to Ban Drilling Under State Land). What followed? No more lease payments for the DCNR, and royalties have fallen dramatically on land previously leased and drilled on/under. Now the DCNR faces a budget shortfall of $51 million–because of no new leases courtesy of Wolf. Wolf’s solution? Steal $61.3 million from the “general fund” to prop up DCNR. Typical…
    Read More “PA Gov. Wolf Bans Leases on State Land & Busts DCNR Budget”

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    Marcellus/Utica Gas May Head to GA & FL via Alabama Pipeline

    Marcellus and Utica Shale gas will get access to an important new market, but not until 2019. Northeast gas will be able to service the very populous southeastern states of Georgia and Florida in about three years’ time with the construction of two new pipelines. The first pipeline is called the Sabal Trail, a 516-mile pipeline from Alabama through Georgia and then through much of Florida. Sabal Trail is a Spectra Energy, NextEra Energy and Duke Energy joint venture with Spectra taking the lead. Two weeks ago, after a 2 1/2 year-long process, the Federal Energy Regulatory Commission (FERC) approved the Sabal Trail project. But how would northeast gas get to Alabama? Good question! That’s where a shorter intrastate (Alabama only) pipeline project comes into play. Yesterday American Midstream Partners announced an “open season” to elicit shippers to sign up for capacity on a 45-mile extension of the Magnolia Intrastate pipeline. If built, the Magnolia expansion would connect Kinder Morgan’s Tennessee Natural Gas Pipeline’s 500 Line, which brings gas from north to southwest, with Williams’ Transco pipeline. Transco has a number of branches in the south, including a connection to the Sabal Trail when it gets built (see the map below). The Magnolia expansion, if built, will not be in service until 2019…
    Read More “Marcellus/Utica Gas May Head to GA & FL via Alabama Pipeline”

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    DEP Gives All Clear for JKLM-Contaminated Water Wells in PA

    Last September MDN told you about an accidental spill (or rather migration) of soap into a local water aquifer in Coudersport, PA (see JKLM Energy Accident Contaminates 5 PA Water Wells with Soap). JKLM Energy was trying to free a drill bit stuck in the hole about 570 feet down. The soap they used migrated into a local water aquifer and contaminated five nearby private water wells with very low levels of soap. Not long after the PA Dept. of Environmental Protection (DEP) issued a Notice of Violation to JKLM (see PA DEP Issues Notice of Violation to JKLM Energy for Spilled Soap). Throughout the “crisis”, if you can call it that, JKLM communicated constantly with local residents to get them what they need, and share full information. Since last October we’d not heard anything about the situation until yesterday when the DEP issued a press release saying two of the wells are now cleared to be used again. Apparently the other three wells belong to the hospital (on whose land JKLM was drilling) and the hospital switched to municipal water so they’re in no hurry to begin re-using those wells again–if ever…
    Read More “DEP Gives All Clear for JKLM-Contaminated Water Wells in PA”

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    Dimock Plantiffs Warned by Judge to Keep Their Yaps Shut

    Borrowing an old Washington, DC inside joke about Chuck Schumer, the most dangerous place in Scranton, PA is standing between Dimock resident Scott Ely and a television camera. As we told you yesterday, two Dimock families finally made it to their day in court to accuse Cabot Oil & Gas of contaminating their water supplies (see Dimock Trial Starts Today – 2 Families Try to Shake Down Cabot). What was the first thing Scott Ely, one of the landowners, did? On a lunch break, Ely and the other plantiffs headed straight for the reporters to attempt to influence the jury pool with a storyline of being bullied by a big, mean corporation. After lunch, the judge warned the plaintiffs’ attorney that the plaintiffs were not to run their yaps outside of the courtroom…
    Read More “Dimock Plantiffs Warned by Judge to Keep Their Yaps Shut”

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    Stone Energy 2015: $1.1 Billion Loss, Quit Drilling in Marcellus

    Stone Energy, an independent oil and natural gas exploration and production company (E&P) headquartered in Lafayette, Louisiana drills mainly in the Gulf of Mexico but also has a presence in the Marcellus/Utica Shale. Last year they quit drilling in the northeast and actually shut-in part of their production due to low prices (see Stone Energy 3Q15: Shut Down 110 Mmcfe/d of Marcellus Production). However, Stone does have around 75,000 acres of leases–so they’re an important player in our neck of the woods. So we keep tabs on them. In December Stone said they would spend 3-5% of their $200 million budget in 2016 in the Marcellus/Utica–about enough to drill one well. Which led to our conclusion they’re in maintenance-only mode for this year. And no wonder why. Yesterday Stone released their fourth quarter and full year 2015 operating and financial results, and it’s not a pretty picture. In 2014 Stone lost $190 million for the year. In 2015, they lost a huge $1.1 billion for the year. You can’t rack up losses like that for long. Here’s yesterday’s update from Stone Energy…
    Read More “Stone Energy 2015: $1.1 Billion Loss, Quit Drilling in Marcellus”

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    Supersize Me: Cabot Floats 50.7M Shares of Stock to Raise $1B

    Yesterday we told you that EQT had decided to float a new round of stock–up to 7.5 million shares–hoping to raise a good chunk of cash, $437 million (see EQT Floats ~7.5M New Shares of Stock, Hopes to Raise $437M). Seems EQT isn’t the only driller taking that approach. Yesterday Cabot Oil & Gas announced their own plan to issue a new round of common stock. This one is a doozy. Cabot originally announced they’re floating 38 million new shares of common stock, with an option to issue another 5.7 million shares to the banks underwriting the offering. That’s a total of 43.7 million shares that may get sold. A short time later Cabot issued a second press release saying they’ve “upsized” the offering–to 44 million shares and an option for another 6.6 million shares for the underwriters. A total of 50.6 million shares. How much is Cabot asking per share? $20/share–which works out to be a staggering $1 billion! Supersize Me baby!…
    Read More “Supersize Me: Cabot Floats 50.7M Shares of Stock to Raise $1B”

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    Rice Sells 8.5% Ownership of Rice Midstream to EIG for $375M

    Rice Energy has sold an 8.5% ownership stake in Rice Midstream to EIG Global Energy Partners for $375 million. Rice plans to use the money to help fund its 2016 pipeline expansion program in the Marcellus/Utica. EIG is also on the hook for another $125 million investment in the next 18 months if Rice chooses to exercise it. Here’s the details for how Rice Midstream is dealing with the downturn in the market…
    Read More “Rice Sells 8.5% Ownership of Rice Midstream to EIG for $375M”

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    The Marcellus Landman Leaveth

    The person who negotiates leases for drilling and pipelines (and for other oil and gas related transactions) is called a landman–regardless of whether the person doing the negotiating is a man or a woman. Landmen play an important part in the shale business–including here in the Marcellus/Utica. Sometimes they’re reviled as being “high pressure”–as in “sign this lease now while I’m here, I won’t come back, this is your one and only chance.” We don’t like landmen like that. But there are those who do the job and do it well–and we cherish them. They don’t use high pressure tactics, they wait for you to run your lease by a lawyer (as you ALWAYS should). They come back. They keep at it. They’re the best kinds. Thing is, landmen in the Marcellus/Utica are now a dying breed. They’re changing jobs. Why? Because there’s so little leasing going on these days. A recent article highlights the situation of what we call the Landman Leaveth…
    Read More “The Marcellus Landman Leaveth”

  • Marcellus & Utica Shale Story Links: Tue, Feb 23, 2016

    The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Managing mineral rights another option for landowners; NGI’s REX Tracker updated; PA rig count bottoms out; natgas flowing to Sabine Pass LNG export plant; Obama’s oil fee disaster; Bernie Sanders’ frack ban disaster; IEA predicts price spike coming; how U.S. shale will bounce back; Baker Hughes-Halliburton deal 50/50 at best; questions continue to dog Williams re Chesapeake bankruptcy; the energy industry’s “day of reckoning”; and more!
    Read More “Marcellus & Utica Shale Story Links: Tue, Feb 23, 2016”

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    MarkWest’s Mobley Processing Plant Spills Hazardous Oil into Creek

    There’s been an accidental release of a hazardous chemical at the MarkWest Energy cryogenic processing plant in Mobley (Wetzel County), WV. The spill was discovered Saturday morning by MarkWest workers. MarkWest’s Mobley plant separates natural gas from natural gas liquids (NGLs). The NGLs are sent on for further separation into their component parts at a fractionation facility. The fluid in question is DOWTHERM™ MX Heat Transfer Fluid, a chemical used as as a heat transfer fluid meant for closed-loop systems. An estimated 3,000 gallons of the fluid spilled, some of it reaching the North Fork of Fishing Creek and some of that entered the water intake for the community of Pine Grove, WV. The fluid was contained at the water plant and did not get into the public’s water supply–but just to be absolutely safe, some 360 households connected to the public water supply were cautioned to not drink or bathe in the water until further notice. MarkWest is providing bottled water to residents. Here’s what’s known so far…
    Read More “MarkWest’s Mobley Processing Plant Spills Hazardous Oil into Creek”

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    Cabot O&G 2015: $114M Loss, Drilled 142 Wells, Production Up 13%

    We consider Cabot Oil & Gas one of the bellwether Marcellus drillers that provides a good measuring stick for where the industry is heading. Last Friday Cabot released their fourth quarter and full year 2015 financial results. What did it show? In 2014 Cabot made $104 million after expenses. In 2015, the company lost $114 million after expenses. But that’s not the whole story. Cabot has been disciplined in their spending. If you look at net income or loss for the fourth quarter, in 2014 Cabot lost $222 million–but in 4Q15 they lost $111 million. That is, they’re getting better at reigning in costs. And Cabot is already a low-cost leader. The big battle they faced in 2015 and continue to face is lack of pipeline takeaway capacity. NY Gov. Andrew Cuomo is punitively withholding approval of stream crossing permits for the Constitution Pipeline and that is damaging Cabot (we think they have a good case for a lawsuit). Because Cabot must sell most of their gas locally, they get bottom of the barrel prices. In 2015 they averaged a price of $2.15 per thousand cubic feet (Mcf) for the gas they sold. Hence, they began to shut-in some of their wells and vastly slowed down drilling. In 2014 Cabot drilled 200 wells. In 2015, that number slide to 142 wells. Even with shut-in wells and less drilling, Cabot still managed to grow production by 13% in 2015 over 2014. Here’s Friday’s Cabot update…
    Read More “Cabot O&G 2015: $114M Loss, Drilled 142 Wells, Production Up 13%”

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    Dimock Trial Starts Today – 2 Families Try to Shake Down Cabot

    Dimock, PA is the story that just doesn’t die. We thought the story of methane migration into nearby water wells in a small area of Dimock, PA (from Cabot Oil & Gas wells) had long since been put to bed. There were 14 families along the Carter Road area that reportedly experienced turbidity in their water from methane migrating from drilling operations nearby. The state Dept. of Environmental Protection investigated in 2010 and declared Cabot guilty and imposed some pretty stiff fines and requirements, including a requirement to install permanent water treatment systems at each home and even an offer to each of the families to pay twice what their property was worth at the time (see PA DEP Takes Aggressive Action Against Cabot Oil & Gas over Dimock Township Methane Contamination). We won’t recount all of the twists and turns we documented over the years, including research that showed Cabot wasn’t responsible for the methane migration. All of the properties either sold to Cabot or got their water systems repaired–except for two holdout families who are riding the horse of hope that they can sue Cabot for big money and retire millionaires. Of course the only people making money on the lawsuit are their lawyers–but that doesn’t seem to bother them. The final two holdouts in Dimock get their day in court beginning today. Except their lawyers sleazily tried to sneak in a bunch of “evidence” at the last minute–and the judge has ruled they can’t use it. In fact, the judge called the move a “sad and shocking spectacle.” No one can predict the court’s outcome for sure, but given what’s happened so far, it’s pretty easy to predict that Cabot will win this one and then the final chapter will be written in the long, sordid tale of how anti-drillers tried to demagogue the Dimock situation–and lost…
    Read More “Dimock Trial Starts Today – 2 Families Try to Shake Down Cabot”

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    Residents of NEPA Village Want Marcellus Leasing & Drilling

    We’ve written in the past that in most cases villages and cities don’t participate in leases and being drilled under not because of any inherent danger (the drilling happens a mile or more down, through solid rock), but because of practical reasons. It’s far easier in time and effort and expense to lease the property of two or three farmers/landowners who own hundreds of acres than it is to lease tiny quarter-acre or less parcels you find in a village or city. One drilling unit is sometimes one or two landowners (maybe a half dozen at most), whereas a drilling unit of one square mile (640 acres) in the village may involve hundreds of landowners. Those hundreds all need to read and sign a lease, and their deeds need to be research to be sure it’s a clear deed and the person signing actually owns the mineral rights. It’s a daunting task. But some communities are up for the challenge. In some communities, like New Milford, PA (in Susquehanna County, about 20 miles from MDN headquarters), the village (in this case called a borough) some residents WANT to sign a lease and get drilled under. The borough held a meeting last week to discuss the possibility…
    Read More “Residents of NEPA Village Want Marcellus Leasing & Drilling”

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    Judge Tells NEPA Family to Let Williams Cut Maple Trees, Or Else

    Starting this week the sugar maples along the path of the Constitution Pipeline will come down. MDN previously told you about the Holleran family in New Milford, PA who make maple syrup by tapping the trees on their five acres of land (see Maple Syrup Farm in Path of PA Pipeline, Antis Make Most of It). While it’s unfortunate that Williams, the builder of the pipeline, could not find an alternate route (they did try), and unfortunate that media reports say up to 80% of their maple trees (~200) will need to be cut, we’re not sympathetic. The Hollerans have steadfastly refused any kind of offer from Williams to compensate them, instead aligning themselves with some of the most radical of radical anti-drillers in a publicity quest to pressure Williams to stop. It didn’t work and now a federal judge is telling the family if they prevent the trees from coming down, starting today, they’re going to the clink…
    Read More “Judge Tells NEPA Family to Let Williams Cut Maple Trees, Or Else”

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    EQT Floats ~7.5M New Shares of Stock, Hopes to Raise $437M

    Last Friday EQT, one of the largest Marcellus and Utica Shale drillers, announced they are floating 6.5 million shares of new common stock, and a potential extra 975,000 shares for the underwriter, Goldman Sachs, for a total of nearly 7.5 million shares. Not long after announcing the stock offering, they made a second announcement of the price–$58.50 per share. If EQT sells all 7,475,000 shares of stock for $58.50 per share, it will net the company $437 million in cash. What will they do with it? It will be used for “general corporate purposes” and potentially to pay down some debt. Here’s the twin announcements from Friday…
    Read More “EQT Floats ~7.5M New Shares of Stock, Hopes to Raise $437M”