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    Sad Day: Magnum Hunter Files for Chapter 11 Bankruptcy

    If you’ve read MDN for any length of time, you know since February of this year we’ve been hinting and warning that Magnum Hunter Resources (MHR) was heading for bankruptcy (see 19 Oil/Gas Companies on “Death List” – 8 are in Marcellus/Utica). Yesterday MHR, a driller totally focused on the Marcellus and Utica Shale, filed for bankruptcy. We consider it a sad day. Continuing low commodity prices coupled with more than $1.1 billion in outstanding debt (the biggest portion being unsecured IOUs or “notes” due in 2020–some $634.6 million worth), finally led the company to file for Chapter 11 bankruptcy protection. MHR says three-fourths of their debt-holders are on board with the bankruptcy filing and also on board with MHR seeking a new $200 million bridge loan to keep operating. Just about all of MHR’s various subsidiary companies are listed in the bankruptcy filing–except for Eureka Hunter, MHR’s midstream/pipeline business. Eureka Hunter is not part of the filing (for now) which likely explains the press release issued just a few days ago promoting Eureka Hunter’s latest stellar performance (see Magnum Hunter De-Listed from NYSE; Still Shopping Eureka Hunter). Here’s the sad news from MHR…
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    Genscape: Sabine Pass LNG Export Began Accepting Natgas on Dec 10

    Cheniere Energy’s Sabine Pass LNG (liquefied natural gas) export facility in Louisiana is in the process of ramping up for it’s very first shipment of U.S.-produced LNG that will head to a foreign destination. In fact, this will be the very first exported shipment of LNG from the Lower 48 states–ever. Cheniere itself is tight-lipped about the exact date it fires up the plant and begins liquefaction, the process of supercooling natural gas into liquefied natural gas. So how do we know the plant has been activated? Through the ingenious work and service from a company called Genscape. MDN editor Jim Willis sat in on a Genscape presentation at Bloomberg’s offices in New York City in early November. They have a really cool service. Using special cameras mounted on nearby properties, Genscape can tell if natural gas is flowing through a pipeline, or if a plant’s compressors are fired up and working, or even monitor truck and rail shipments into and out of facilities like Sabine Pass. Using their proprietary technology, Genscape says “the first substantial deliveries (46 million cubic feet) of natural gas flowed into the Sabine Pass facility on Dec. 10. Why does MDN care? Because some of that gas either already does, or soon will, come from the Marcellus/Utica…
    Read More “Genscape: Sabine Pass LNG Export Began Accepting Natgas on Dec 10”

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    Evil Corporate Raider Carl Icahn Claims Another CEO Scalp

    In what has become an all-too-familiar pattern, evil corporate raider Carl Icahn has struck again, claiming another CEO scalp. Like he did with Chesapeake Energy, Icahn increased his stake in another oil and gas company, Cheniere Energy, about to export the very first shipment of exported LNG from the Lower 48 states. After Icahn grabbed a big share of Cheniere (13.8%), he forced out the company’s co-founder and CEO, Charif Souki. It’s disgusting, it’s immoral, it’s unethical–but unfortunately, it’s legal and even vaunted by investors who worship at the alter of the Almighty Buck. Like the case of Aubrey McClendon being forced out of the company he founded, Chesapeake Energy, Souki was a maverick, and he erred by taking too much OPM–other people’s money. The firing of Charif Souki certainly takes the luster and excitement off the company’s pending first export shipment of LNG. If Cheniere goes bankrupt (not beyond the realm of possibility as Souki is credited with keeping the company afloat), it will be because of Icahn’s action. Investors can thank old Carl. What’s happening, of course, is that Icahn wants to put some new financial paint on the company so he can flip it in a year or two, adding more billions to his existing billions. Jerk. The company has appointed an interim CEO (board member Neal Shear) while they look for a new hatchet man like Ichan did at Chesapeake with Doug Lawler. Let the firings begin!…
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    Dartmouth Study: Fracking Causes Toxic Metal Wastewater

    We call attention to a newly published study from three researchers at Dartmouth College. The new research paper, recently published in the journal Applied Geochemistry, is titled, “Reductive weathering of black shale and release of barium during hydraulic fracturing” (sorry, we don’t have a full copy to share with you). In reading over the Dartmouth press release, it appears the researchers have found evidence that plain water itself, water without extra chemicals added to it, will, under pressure a mile or more down, facilitate or somehow combine with shale and cause barium to leach out of the shale. The research is based on samples from three drill cores from the Marcellus Shale in Pennsylvania and New York. Our understanding of just what they are saying is far from perfect. It seems to us the importance of what they claim to have found is that produced water, which is water that comes from the borehole long after the initial frack flowback water has returned to the surface, contains a lot of barium (and some mild radioactivity) and that produced water must be disposed of safely. You can’t just cart produced water to the local sewage treatment plant and drop it off. That seems to be what they’re saying with this research. You read the description for yourself and tell us what you think it says…
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    Don’t Know Jack: Politician Lobbies for High OH Severance Tax

    The Marcellus and Utica Shale industry, like all shale industries in the U.S., is getting clobbered. Prices are at historic lows for natural gas–with no prospects it will go higher anytime soon (see Natural Gas Prices Hits 14-Year Low – When Will it Rebound?). Drillers (otherwise known as producers or E&Ps) can’t make a profit. Those who are making a profit are realizing profits that are razor thin–like break-even. So what does a “brilliant” politician like Ohio State Rep. Jack Cera (Democrat) lobby and advocate and agitate for? Raising the severance tax on shale drillers in Ohio. How utterly dense can you possibly be to not see that doing such a thing in this low-price climate would essentially shut down the Utica industry in the state? Or perhaps that’s what Jack really wants?…
    Read More “Don’t Know Jack: Politician Lobbies for High OH Severance Tax”

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    Whispers Turning in Chorus, Halliburton/BH Deal in Trouble

    Just one week ago MDN alerted you to what were (then) whispers that the Halliburton buyout of Baker Hughes not be the done deal they portrayed it as (see Is the Halliburton Buyout of Baker Hughes in Trouble?). The whispers that there’s trouble in regulatory paradise around this deal are quickly becoming a chorus. Here are a couple of more articles, from reliable and respected news services, questioning whether or not the merger will happen…
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    New Dust Regulation Latest Obama Attempt to Regulate O&G

    The Obama Administration continues to push aggressive new regulations (i.e. unlegislated laws) to control the oil and gas industry in the United States. We’ve covered, extensively, the EPA’s egregious violations in this respect. Another agency that hassles the industry is OSHA–the Occupational Safety and Health Administration, part of the U.S. Dept. of Labor. Obama’s OSHA weenies are set to push through new dust regulations that will affect the drilling industry. These new standards apply to silica (or sand) dust. Silica is used in fracking. Here’s the latest attack on the industry…
    Read More “New Dust Regulation Latest Obama Attempt to Regulate O&G”

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    Time to Revoke Tax Exempt Status of Anti-Drilling Non-Profits

    MDN friend and ace blogger Tom Shepstone, writing on his always-excellent Natural Gas Now website, makes a strong case for the IRS to investigate and revoke the tax exempt status of the anti-drilling non-profit “charity” Clean Air Council (based in Philadelphia). The Clean Air Council is nothing more than a front group that uses money from the Heinz Endowments and William Penn Foundation in a shell game to keep their anti-drilling activities at arm’s length. Plausible deniability. We would add one more organization to the list for investigation and revocation of tax exempt status: THE Delaware Riverkeeper, which is also funded in part by Heinz and William Penn. Here’s a re-posting of Tom’s excellent article…
    Read More “Time to Revoke Tax Exempt Status of Anti-Drilling Non-Profits”

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    EPA’s Use of Social Media Propaganda to Support WOTUS was Illegal

    EPA-logo.jpgThe 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”

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    EPA’s McCarthy Brags Coal “No Longer Marketable” – Gunning for O&G

    Gina McCarthyEPA 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”

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    Magnum Hunter De-Listed from NYSE; Still Shopping Eureka Hunter

    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”

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    How Much is Magnum Hunter & Eureka Hunter Worth Today?

    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…
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    Research: Shale Energy Turning Voters into Republicans

    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”

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    Looks Like a March 2016 Wedding for ETE & Williams

    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”

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    Warren Resources Announces Departures/New Appointments in Key Roles

    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…
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