Marcellus Drilling News

Energy Companies | Southwestern Energy

Southwestern Cuts 2016 Spending 80%, Idles Marcellus Rigs (for Now)
February 29, 2016February 29, 2016

As we highlighted last Friday, Southwestern Energy reported a large paper loss of $4.6 billion for 2015, but also reported an increase in production of 27% over 2014 (see Southwestern Energy 2015: Record Production, Big Paper Loss). As part of the quarterly dog and pony show, Southwestern (like every other driller) hosted an analyst phone call to accompany the release of their numbers. As sometimes happens, further details came out on the phone call that weren’t evident in the official update. For example, in 2016 Southwestern currently does not plan to drill any new wells in the Marcellus/Utica. They have “idled” all of their drilling rigs. Southwestern CEO Bill Way said he specifically used the word idled because they are waiting to restart them when/if prices pick up again. The current plan is to complete 20-30 wells in the northeast, in the southwest and northeast Marcellus–and then wait and see what happens with prices…
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Eclipse Resources | Energy Companies

NYSE Threatens to De-list Eclipse Resources’ Stock – Price Too Low
February 29, 2016February 29, 2016

A number of companies involved working the Marcellus/Utica have received notices from the New York Stock Exchange warning those companies that the average trading price for their stock had fallen below minimum standards and is in danger of being de-listed from the exchange: Seventy Seven Energy (see Seventy Seven Energy’s Stock Threatened with Delisting from NYSE); EXCO Resources (see More Trouble for EXCO Resources – NYSE Threatens to De-List Stock); Atlas Energy (see Atlas Energy Luck Run Out? NYSE Threatens Company with De-Listing); and Halcon Resources (see Halcon Resources Put on Notice by NYSE; Refi Debt at Higher Rate). Two companies actually were de-listed by the NYSE: Nuverra Environmental (see Nuverra Environmental Delisted from NYSE, Now a Penny Stock) and Magnum Hunter Resources (see Magnum Hunter De-Listed from NYSE; Still Shopping Eureka Hunter). You can add another name to the list of companies being threatened with de-listing: Marcellus/Utica pure play driller Eclipse Resources. CEO Ben Hulburt explains why Eclipse’s stock price trading at under $1 doesn’t reflect true value of the company…
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Industrywide Issues | Regulation | Wastewater

Antis React to Coast Guard Barge Announcement as Bad Thing – Huh?
February 29, 2016February 29, 2016

Last week MDN brought you the sad news that the U.S. Coast Guard has caved to political pressure from The White House to withdraw a plan that would allow frack wastewater to be barged (see Coast Guard Caves to Political Pressure, No Wastewater Barging). The lame excuse used by the USCG is that they will approve such barge shipments on a “case by case” basis. Since they haven’t approved a single case, it means there will be no barging–not any time soon, if ever. Barge operators agree and said the decision by the USCG “effectively blocks” future barging of frack wastewater. So it was with some surprise when we spotted a press release from a group of anti-drilling zealots from the Ohio River Valley complaining about the USCG decision. Apparently they read the decision and concluded the USCG intends to move forward with allowing barge shipments. As usual, they’re wrong…
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Coterra Energy (Cabot O&G) | Energy Companies | Industrywide Issues | Litigation | Pennsylvania | Susquehanna County

Dimock Trial Update: Plaintiffs’ Expert Witness Exposed as Fracktivist
February 29, 2016February 29, 2016

The hits just keep rollin’ in from the Dimock “Cabot polluted my water” trial being held in Scranton, PA. It’s more like a comedy show than a trial. We wonder if the plantiffs will sue their own attorney for gross incompetence when it’s all done. Here’s the latest from last Thursday/Friday. The plantiffs’ attorney put an “expert witness” on the stand, Paul Rubin. Cabot’s lawyers proceeded to shred his testimony to pieces and show him as an anti-drilling activist with an agenda. Read MDN friend Tom Shepstone’s summary below–it’s prime. Also late last week the plantiffs’ attorney, for the second time admitted in open court, stated that the trial is not about frack fluid getting into well water–but rather about methane migration. For years people like Josh Fox of Gasland fame have falsely claimed frack fluids were the source of contamination in Dimock. That old lie is, once and for all, now exposed. Not even the plantiffs make that claim. We’d say this trial has served a useful purpose: to expose the anti-fossil fuel agenda and its peddlers as being truth-challenged…
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Ethane | Industrywide Issues | Processing Plants

Experts Say: If You Build One NE Cracker, More Will Come
February 29, 2016February 29, 2016

Elected officials, business leaders, labor union reps and people from several colleges gathered last week in Wheeling, WV to discuss the profound impact even one ethane cracker plant will have in the region. According to several who spoke, if the region lands even one cracker plant, it will have the effect of attracting others. There has been talk of four potential cracker plants in the Marcellus/Utica–three “world class scale” crackers and one smaller one. One expert speaking said he believes the region can comfortably handle up to six! Here was the excited cracker chatter from last week’s meeting…
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CNG/LNG | Commodity Price | Exporting | Industrywide Issues

LNG Exports to the Rescue in Northeast? Not So Fast
February 29, 2016February 29, 2016

The answer to low prices for natural gas in the Marcellus/Utica is more demand. More demand comes either from new sources using natgas within the region–like building power plants–or sending the gas out of the region. Sending it out involves pipelines, mostly. One of the great hopes for drillers and midstream companies has been the prospect of exporting our natural gas to other countries via LNG (liquefied natural gas). Dominion is right now building the Cove Point liquefaction facility in Maryland with the prospect of bringing it online in 2017. All of the LNG Dominion can produce at Cove Point will go to two countries: Japan and India (see Dominion’s Cove Point LNG Facility Achieves Important Milestones). More northeast gas will head to Japan via the Gulf Coast (see Marcellus/Utica Gas Going to Japan: TGP Signs 20-Year Export Deal). But here’s the thing: Japan is bringing their nuclear power back online, and they’re bringing a lot of solar sources online–meaning they don’t need as much natgas as they used to. In December we told you that LNG for delivery to northeast Asia (Japan and Korea) would average $7.397 per million British thermal units (MMBtu) for January delivery (see Platts Says LNG Heading to Japan & Korea Fetching $7.40/Mcf). Looking to March, LNG for delivery to Asia is down to $5.339/MMBtu–the lowest monthly price since September 2009. And there’s no indication it will go higher any time soon. Our point? LNG exports are not a panacea. Yes, Europe is somewhat interested (and that’s good). But world LNG supplies far outstrip demand at this time…
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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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