Marcellus Drilling News

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…
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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!
Read More “Marcellus & Utica Shale Story Links: Fri, Feb 26, 2016”
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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Atlas Energy | Energy Companies | Industrywide Issues | Jobs

Atlas Energy Update – 125 Layoffs Companywide
February 25, 2016February 25, 2016

On Tuesday, after receiving ongoing tips that layoffs had occurred at Atlas Energy (a company with assets in the Marcellus/Utica), we published a post with an unconfirmed rumor that Atlas had laid off 30 or more people in its Waynesburg, PA location (see Atlas Energy – Rumored Layoff of 30+ People in PA). We later received another tip that indicated the layoffs may have been more “surgical” than “mass” in nature. Since that time, we’ve received a fifth tip–this one from a highly place source that we trust implicitly. This new tipster could not verify the 30 layoffs in Waynesburg, but the tipster does have knowledge that recently the company laid off ~125 people companywide. Atlas has still not responded to our requests for comment. We’ll continue to update when/if we learn more.
Chesapeake Energy | Energy Companies

Chesapeake Loses $14.9B, Suspends New Utica/Marcellus Drilling
February 25, 2016February 25, 2016

Hats off to Chesapeake Energy CEO (and Carl Ichan lackey) Doug Lawler for pulling a rabbit out of his hat. Everyone has thought for weeks that Chesapeake is headed for bankruptcy, given that it’s stock value has plunged nearly 90% over the past year and it faces a big debt repayment soon. But the latest quarterly (and full year) report, released yesterday, shows the company is holding its own and will live to fight another day. That good news sent CHK stock soaring, to close up 22% (if you call “soaring” going from $2.19 to $2.67 per share, when those same shares traded at ~$20/share a year ago). The big news coming from Chesapeake’s release yesterday of their fourth quarter and full year 2015 update is this: The company experienced a paper loss (not an out of pocket money loss) of $14.9 billion–a staggering number that’s hard to get your head around. The largest loss of any oil and gas company we’ve heard of–ever. But most of that “loss” was Chesapeake devaluing their assets due to low commodity prices. As we said, it wasn’t money out of pocket. The other big news (for MDN) is that Chesapeake is halting their drilling program in both the Ohio Utica and Pennsylvania Marcellus in 2016. Chessy is Ohio’s #1 driller–has been since Aubrey McClendon declared the Utica was the biggest thing to hit Ohio since the plow. Chesapeake is also Pennsylvania’s #1 driller, depending on how you measure it (they produce more natgas in PA than any other driller). Below is Chesapeake’s 4Q15 and full year 2015 update, along with other bits and bobs we found commenting on Chesapeake’s update (including a reference that Chesapeake’s stock rise of 22% yesterday is a “dead cat bounce”)…
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Coterra Energy (Cabot O&G) | Energy Companies | Industrywide Issues | Litigation | Pennsylvania | Susquehanna County

Dimock Resident Scott Ely Takes the Stand in Lawsuit Against Cabot
February 25, 2016February 25, 2016

Yesterday the lead Dimock plantiff in the lawsuit against Cabot Oil & Gas, Scott Ely, was on the witness stand to talk about how Cabot destroyed his water supply. Except when you read even biased news sources like PBS’ StateImpact Pennsylvania, it appears Ely didn’t do a lot of talking about his water but about his own tenure in working for Cabot. Ely attempted to smear Cabot’s reputation by making wild claims about the reckless nature of their operations. Of course Ely’s attorney hopes the jury will infer that if Cabot was reckless in other activities, they were likely reckless when they drilled near Ely’s home and caused his water to become contaminated with methane–a problem that is fixable (although Ely wouldn’t allow Cabot to fix it). In addition to Ely’s testimony, his attorney asked the judge, yet again, to allow 300 new pieces of “evidence” that she tried to slip in at the last minute, an ambush of Cabot’s attorneys. And once again the judge said “no” to her request…
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Coterra Energy (Cabot O&G) | Energy Companies | Industrywide Issues | Litigation | Pennsylvania | Statewide PA

Guest Post: 7 Important Points to Know About Dimock Trial
February 25, 2016February 25, 2016

By Phelim McAleer

The Ely and Hubert families of Dimock, Pennsylvania are suing Cabot Oil & Gas for allegedly polluting their water. The case is hugely significant because Dimock has been characterized as “Ground Zero” for water allegedly contaminated by fracking. It was featured in the documentaries Gasland 1 & 2 and has been the subject of national and international news reports. Countless celebrities have also pushed the lie that Dimock’s water was contaminated with fracking fluid. But the case has thrown serious doubts on the narrative being spun by activists. The plaintiffs’ case is looking very shaky, indeed. Here are seven key points that have emerged as the case enters its second day.
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Coterra Energy (Cabot O&G) | Energy Companies | Industrywide Issues | Litigation | Pennsylvania | Susquehanna County

Guest Post: Dimock Plaintiff Exposed Under Cross Examination
February 25, 2016February 25, 2016

By Phelim McAleer

The Ely family in Dimock, Pennsylvania is suing an oil and gas company alleging they contaminated their water well through fracking. Dimock has become a focal point for anti-fracking activists with many calling it “Ground zero” for pollution. Dimock and the Ely’s have been featured in national and international news reports and documentaries. Celebrities such as Mark Ruffalo, Yoko Ono, and Susan Sarandon have visited the tiny community to sympathize. But yesterday in the first day of the trial, facts started to emerge that show the truth is much different from the previously reported stories. Questioned under oath, Scott Ely’s claims look a lot less certain and he looks a lot less credible. Below are five facts that emerged during the first day that expose serious problems with Ely’s claims that his water was contaminated by fracking.
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Antero Resources | Energy Companies

Antero Resources Stands Above the Rest – Nets $941M in 2015
February 25, 2016February 25, 2016

There’s at least one driller that’s figured out how to continue making money in one of the worst down markets in two generations: Antero Resources. Antero released their “good news” operational update back in January (see Antero Resources 4Q15 Update: NatGas Sales Averaged $4.40/Mcf). Earlier this month the company issued an update for 2016 that they will cut back spending by 23% (far less than others) with plans to drill 110 wells this year in the Marcellus/Utica (see Antero Resources 2016: Spending 23% Less, Drilling 110 Wells). We thought for sure when they finally got around to sharing their financial numbers it would be red as far as the eye can see. Nope! Yesterday Antero, one of the biggest and best drillers in the Marcellus/Utica, released their fourth quarter and full year 2015 financial update. And guess what? They made more money last year than the year before! Three years ago Antero lost $18.9 million. Two years ago, after expenses, Antero made $674 million. Last year, in 2015, Antero made, after expenses, $941 million. That’s nearly $1 billion in profit! Other drillers need to study Antero closely to see what they’re doing right…
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