The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: UGI keeping busy with low price of natgas; four universities to showcase new shale tech; Basic Energy’s rig days go over a cliff; LNG glut worse than oil glut; and more!
Read More “Marcellus & Utica Shale Story Links: Wed, Dec 16, 2015”
The politicization of the federal Environmental Protection Agency (EPA)–a government agency that should be, by law, devoid of politics–has caught up with the Obama Administration. The Government Accountability Office (GAO) has found that the EPA, in using social media to urge the public to back Obama’s aggressive new redefinition for Waters of the United States (or WOTUS), was in fact illegal. We previously wrote about this draconian new “rule” ginned up by the EPA and the Army Corps of Engineers (see EPA Power Grab: Redefines Waters of the U.S. to Include Everything). The EPA broke the law by engaging in overt politicking–pushing “propaganda” (the word used by the GAO) to support the WOTUS rule. The GAO has just released a sweeping opinion (full copy below) that details chapter and verse just how the EPA broke the law with their propagandizing on social media. The question we have is this: If somebody broke the law, will somebody go to jail? Fat chance. None other than the New York Times was forced to cover the EPA propaganda story–something distasteful and a bit beneath the erudite reporters at the Times…
Read More “EPA’s Use of Social Media Propaganda to Support WOTUS was Illegal”
EPA Administrator Gina McCarthy appears to be drunk on her own power. When quizzed about fossil fuel energy at the Paris Climate Conference, McCarthy, in answering questions about coal and its use in China and elsewhere, quipped, “Coal is no longer marketable.” She should know. She’s made it that way on purpose. You may think, “So what! It’s coal. It’s dirty. Natural gas is a better alternative.” Don’t think natural gas and oil aren’t next up on the hit list for McCarthy and the Obama gang: “McCarthy made it clear she is also working to limit methane emissions, particularly from oil and natural gas. Methane, the primary component in the product commonly known as natural gas, is 25 times more potent in trapping heat in the atmosphere than CO2.” These idiots will not stop until they have eliminated, BY FORCE, the use of fossil fuels for energy. That is the plan. They must be opposed, vigorously…
Read More “EPA’s McCarthy Brags Coal “No Longer Marketable” – Gunning for O&G”
Magnum Hunter Resources (MHR) is a company in trouble. We won’t recount all of the signs (read our MHR articles here). One of the silver bullets that was supposed to help pull MHR’s bacon out of the fire was the sale of their midstream/pipeline subsidiary Eureka Hunter. On August 14 MHR CEO Gary Evans announced there were three potential buyers for Eureka Hunter and that a deal would net the company somewhere around $600-$700 million. Evans said a deal was imminent. That deal never materialized. In November the company refinanced some of its debt to keep going and stopped holding quarterly conference calls with investors (see Magnum Hunter Refinances Again, Dodges a Bullet…Just Barely). Also in November, MHR told the Securities and Exchange Commission that the company is likely headed for bankruptcy (see Dire Straits: Magnum Hunter Tells SEC Heading for Bankruptcy). However, one of MHR’s investors has stated he’ll sue to prevent them from filing for bankruptcy (see Magnum Hunter Investor: We’ll Sue to Stop Bankruptcy Filing). Yeah, it’s complicated. So when we saw a new press release from MHR, a press release about Eureka Hunter, we perked up. What does it say?…
Read More “Magnum Hunter De-Listed from NYSE; Still Shopping Eureka Hunter”
Valuing an oil and gas or midstream/pipeline company is probably as much art as it is science. In any real estate or land or business valuation, in fact in any kind of transaction where something is bought and sold, something is worth as much as someone is willing to pay for it. But we all need guidelines…rules of thumb…markers that help us determine how much value something has. The “thing” under consideration in this post is the value of both driller Magnum Hunter Resources, and its midstream subsidiary Eureka Hunter. A stock analyst writing on the Seeking Alpha website tackled that question and came up with some interesting numbers…
Read More “How Much is Magnum Hunter & Eureka Hunter Worth Today?”
This one is downright fascinating for political junkies like MDN editor Jim Willis. For years now Jim has been saying that in very broad brush strokes Republicans (i.e. conservatives) typically support shale drilling and Democrats (i.e. liberals) typically oppose it. Yes, that’s very broad and there are certainly notable exceptions. But we’re talking on average, that’s how it sorts out, that has been our observation in closely watching this issue for years. And now we have objective, scientific research to back it up. A new research paper has just been published by three researchers, one from Bocconi University (in Italy), one from The Wharton School at the University of Pennsylvania, and one from the Carroll School of Management at Boston College. The paper, titled “Voter Preferences and Political Change: Evidence From the Political Economy of Shale Booms” (full copy below) documents where there is shale drilling, voters have shifted their votes away from Democrats and to Republicans, and that the voting behavior of elected officials in shale regions has become more conservative that it was previously. Cool! We always suspected as much–now we have proof…
Read More “Research: Shale Energy Turning Voters into Republicans”
In September Williams finally relented and accepted a buyout/merger offer from Energy Transfer Equity (see Williams Accepts ETE’s “Indecent Proposal” – Price Went Down $10B). Deals like this one, with ETE paying $37.7 billion for Williams, take time to complete. There are lots of regulatory hoops to jump through. The two companies said in their original announcement they expect the deal will be done in “the first half of 2016.” Smart move on their part to not commit to a specific date too early. From an announcement issued yesterday, we now have a much better idea of the timing. The announcement says the two companies are complying with certain regulatory requests and that they won’t get hitched before March 18, 2016. Which means if all goes well in regulatory hell between now and then, we’ll have a March wedding…
Read More “Looks Like a March 2016 Wedding for ETE & Williams”
In November, MDN told you that Warren Resources, a small, independent exploration and production company with an ongoing drilling programs in California, Wyoming, and in the northeast Pennsylvania Marcellus Shale, had finally chosen a new CEO nearly a year after the previous CEO abruptly resigned (see After Almost a Year, Warren Resources Gets New CEO). Yesterday Warren announced further “restructuring”–by which they mean “out with the old team, in with the new team.” In addition to a new CEO Warren has a new CFO and now a new VP for Accounting. The people who have been occupying those roles will be leaving the company by March. Here’s the details of the house-cleaning at Warren Resources…
Read More “Warren Resources Announces Departures/New Appointments in Key Roles”
In October Duke Energy, the largest electric power holding company in the United States and a utility with 7.3 million customers in the southeast and Midwest, announced they had cut a deal to buy Piedmont Natural Gas for $4.9 billion in cash and the assumption of $1.8 billion in existing debt–for a total deal price of $6.7 billion (see Duke Energy Buys Piedmont NatGas for $6.7B, Marcellus Connection). Piedmont is a midstream and natgas LDC, or local distribution company/utility, with operations primarily in North Carolina, South Carolina and Tennessee. At least one person is going to make a boatload of money from the deal. Piedmont’s CEO Tom Skains will get a $14.4 million severance check when the deal goes through. Looks like the color of Skains’ parachute is pure gold…
Read More “Piedmont Natural Gas CEO’s Pure Gold Parachute – $14.4M”
Once again we return to a recurring theme of reporting on “short selling” in Marcellus/Utica stocks. For a primer/explanation of what short selling is, read our previous story: “Short Selling” – An Important Signal for Marcellus-Related Companies. The boiled down version is this: Traders who sell stocks “short” are betting that the price of that company’s stock is heading lower. A lower stock price means the value of the company goes down, making it harder to borrow money, raising the rates on money borrowed, etc. Low stock prices mean it’s harder to do business in general. The average short selling of stocks for all companies in all industries is typically 5-6% of trading volume. Recently, oil and gas stocks, as an industry, have seen an average of 12% short selling of their stocks. When short selling picks up for Marcellus/Utica companies, we take note because it’s a signal about the potential value and future prospects for that company. If more than 12% of a company’s stock is being sold short, well, that’s just not a good “sitch” (as my Millennial kids say). We spotted notices that two important Marcellus drillers’ stocks are quite a bit above the 12% range–CONSOL Energy and Southwestern Energy…
Read More “Short Selling for CONSOL, Southwestern Energy Spikes Up”
The price of natural gas hit a 14-year low yesterday. Ouch. We don’t normally report on the ups and downs of natgas prices because, well, because it goes up and down–all the time. Broad trends in the price we report on, but not the day-to-day vagaries of natgas prices. But we are today. Why? Because there appears to be no end in sight for these low prices. MDN editor Jim Willis lives in the Binghamton, NY area. It’s usually cold and cloudy in Binghamton in the winter–from about the end of October to mid-April. No lie. Winter is typically that long around these parts. Yesterday? Mid-60s. Today? In the 50s and sunny. We do love it–but it’s beginning to freak us out! Point: As was predicted by natural gas weather guys we heard a few months ago at a Bloomberg meeting in NYC, the weather in the northeast during this monster El Niño winter will be drier than usual and warmer than usual. Translation: We’re going to use a whole lot less heating fuel and natural gas. More supply than demand means prices go down and they stay down. And that’s just what’s happening. Traders are giving up on a cold snap causing prices to rebound, and that capitulation is reflected in the price of natural gas…
Read More “Natural Gas Prices Hits 14-Year Low – When Will it Rebound?”
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Pipeline agitators agitating in Buffalo; OH Supreme Court debates question of void leases; the fractivism of Heinz Endowments; WV revenue from severance tax in the tank; how fracking helps climate change; OPEC keeps the spigot open; UK says get fracking; and more!
Read More “Marcellus & Utica Shale Story Links: Tue, Dec 15, 2015”
Hilcorp Energy, owned by billionaire Jeffery Hildebrand and founded in 1989, is one of the largest privately-held oil and natural gas exploration and production companies in the United States. Hilcorp is the largest oil producer in Louisiana. The company operates along the Gulf Coast of Texas and Louisiana, in Alaska and in the Marcellus/Utica Shale–in eastern Ohio and western Pennsylvania. Hilcorp is an important driller in our neck of the woods. The company is headquartered in Houston, TX and employs over 1,350 employees. Since the company is privately held and no one really knows much about its ownership, most people believe Hildebrand keeps all of the company’s stock for himself. But that doesn’t mean he doesn’t reward his employees. During one of the worst downturns in the industry in a generation (2015), Hildebrand is handing out a $100,000 bonus to each employee this Christmas. Talk about generous! Holy smokes. No wonder Hildebrand’s employees are some of the most loyal and hardworking in the business…
Read More “No Downturn Here: Hilcorp Gives $100K Bonus to Every Employee”
Where do Marcellus/Utica drillers believe the price of natural gas in the northeast is heading over the next few years? Wouldn’t you love to be a fly on the wall in boardroom meetings where gas price is discussed? We have the next best thing. It’s called hedging. Drillers (and others who buy and sell natural gas) often engage in a practice called hedging, which is, in a simplified explanation, a contract to sell (or buy) a commodity like natural gas at an agreed-on price at a future date. There is an element of risk in hedging. What if the price goes a lot higher? You have to sell at the lower price you agreed to. What if the price goes a lot lower? You’ve covered your derriere by locking in a higher price for the gas your produce. If you look at the hedging contracts gas companies strike, you get a sense for where they believe the price will go. We have an example from CONSOL Energy which has just released details of their hedging for the next few years. Where does CONSOL believe the price of natural gas is going from now until 2018? In a word, down…
Read More “Where Do Drillers Like CONSOL Think Gas Prices are Heading?”
A researcher and “Executive in Residence” from Cleveland State University, Andrew Thomas, writes about a new study produced by the University “to better understand the ramifications of huge quantities of natural gas and liquid ethane being produced in Ohio.” Unfortunately we were unable to track down a copy of the full study and its results, but we do have the summary as contributed by Thomas in writing for Crain’s Cleveland Business. And wow, what insights we gain! Thomas says the study he worked on concludes that even in this down market, Ohio’s production of natural gas liquids (NGLs), specifically ethane, is on a rocket ride to the moon. He says, “Ohio’s about to see an ethane tsunami.” He also says if all four ethane crackers that have been floated as possibilities for the region get built, that would only sop up one-third of the ethane supply projected to be produced in the Marcellus/Utica. Here’s the high-level but very exciting and insightful news coming from this study…
Read More “Poly(ethylene) Wants a Cracker: OH Study Predicts Ethane Tsunami”
Outside of Moundsville (Marshall County), WV is a Hare Krishna community called New Vrindaban. Hare Krishna is an offshoot of Hinduism. According to Wikipedia, “International Society for Krishna Consciousness (ISKCON) was formed to spread the practice of bhakti yoga, in which those involved (bhaktas) dedicate their thoughts and actions towards pleasing the Supreme Lord, Krishna.” We’re not here to make fun of any particular religion, but believe it or not, there is a tie-in between Hare Krishna in New Vrindaban and the Marcellus Shale. The community there (a commune, actually) used to have the opinion (still does) that “gas drilling is exploitative, that it is unsustainable and ‘contributes to the culture of death and toxicity.’ Somehow signing bonuses and royalties helped them to see past their disdain. The Krishnas in Moundsville used to use horse and buggies to get around. Those days are long gone and fossil fuel-powered cars are here to stay. The Krishnas in New Vrindaban signed leases, a couple of times, over the past few years and they haven’t looked back. They like the money that “toxic” gas has brought to the commune…
Read More “WV Hare Krishnas “Purify” Gas Money to Benefit Commune”