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    Rice Family Sells 5M Shares of Rice Energy Stock to Pay Off Debt

    Yesterday the Rice family offered up for sale up to 5 million shares of stock in Rice Energy–the first time that’s happened since the Rice’s founded the company in 2007. Rice Energy was founded by Dan Rice III and his boys Dan IV, Toby and Derek. In fact Dan III, who was the most successful mutual fund manager in the U.S. for 10 years, was unceremoniously dumped by his employer BlackRock because BlackRock screwed up by not telling investors Dan was bankrolling a new company (Rice Energy) while at the same time investing in other oil and gas companies that could be construed as competitors via his mutual fund transactions (see BlackRock’s Screw-up with Dan Rice & Rice Energy). Dan was completely up front and transparent and told his bosses at BlackRock what he was doing–it was his bosses who screwed up, and then fired Dan in a blame-shifting move. Dan has been laughing his way to the bank ever since. Rice Energy has been a huge success. Until the end of last year Rice Energy was a private company–the Rices held most all of the stock. They went public last year and began to take OPM–other people’s money (see Rice Energy IPO Soars, Brings in $84M More Than Expected). As part of the IPO process, the Rices took out a loan with Morgan Stanley. Yesterday’s sale of up to 5 million shares is most definitely NOT the Rices stepping back from their own company. It’s actually meant to defend the company from financial market gyrations, as the Rices explain below…
    Read More “Rice Family Sells 5M Shares of Rice Energy Stock to Pay Off Debt”

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    Final Decision: Axiall Building Ethane Cracker in LA…NE Ethane?

    Two years ago Axiall Corporation, the former Georgia Gulf/PPG, announced a plan to build a $3 billion ethane cracker/petrochemical facility in Louisiana. The facility, as we noted at the time, will almost certainly use at least some ethane coming from the Marcellus/Utica region (see Axiall Announces New Cracker Plant for LA, Fed by NE Ethane). As we know only too well, making a “final investment decision” (FID) about whether or not to spend $3 billion of a company’s money (or more correctly go into debt and spend other people’s money), and take upward of 3-4 years to build a plant, is not something you just decide to do willy-nilly. It takes a looooooooooong time to get to that point. Shell announced a cracker for Pennsylvania back in 2012 and they still haven’t made an FID. It was certainly a good sign from Axiall when they announced a partnership with Lotte Chemical for their new Louisiana cracker project (see 4th World Class Marcellus/Utica Ethane Cracker…in Louisiana??). Lightening has struck! Last Friday Axiall and Lotte announced an FID has been reached and indeed they are moving forward. Horray! Of course it would be more exciting if that plant were located in PA, WV or OH rather than Lake Charles, LA (where they have enough crackers already). But we’ll take these victories when and where we can. The expected startup date is 2019…
    Read More “Final Decision: Axiall Building Ethane Cracker in LA…NE Ethane?”

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    PA Auditor General to Investigate “Lost” $30M Marcellus Impact Fee

    On Monday MDN told you about the case of bureaucratic incompetence in keeping track of reports that detail where and how much money is getting spent from the Pennsylvania Act 13 impact fee (see $30M in PA Act 13 Money Missing – Theft or Bureaucratic Cock-up?). Local municipalities say they’ve filed reports with the state Public Utility Commission (PUC), but the PUC can’t seem to locate those reports. Typical. But what’s this? We have a knight in shining armor riding to the rescue to figure out this financial potential malfeasance. Our hero is (ta da ta da, trumpet fanfare): State Auditor General Eugene DePasquale (Democrat). DePasquale, you may recall, is an anti-driller who targeted the Marcellus industry from the very first day he took office (see Newly Elected PA Auditor General Targets DEP First Day on Job). Most of DePasquale’s ire seems to be directed at the state Dept. of Environmental Protection (DEP). He conducted a very thorough anal exam of the agency, over a period of years, and issued a “report” critical of the agency for shortcomings that were already fixed by the time the report was issued (see Anti-Drilling PA Auditor General Criticizes DEP in “Report”). DePasquale would like nothing better than to find a new Marcellus scab (i.e. issue) and pick it until it bleeds in an effort to smear the industry. DePasquale is a bully if ever there was one. In particular he likes to target charter schools, trying to shut them down with audit after audit. Nice guy. It’s that “hero” who has ridden in on his black horse to conduct an “investigation” (more like an inquisition) of local towns and how they are spending his, er, um, the state’s money…
    Read More “PA Auditor General to Investigate “Lost” $30M Marcellus Impact Fee”

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    CORN Questions Canadian Decision to Buy American NatGas via NEXUS

    cornballsOn Monday MDN told you that the Ontario Energy Board (OEB) has cleared the way for the Canadian portion of the NEXUS Gas Transmission pipeline by approving two 15-year contracts to use the pipeline to deliver natural gas to the Dawn Hub (see Canada Approves Marc/Utica NEXUS Pipeline to Dawn Hub in Ontario). A group of anti-fossil fuel radicals who call themselves CORN (Coalition to Reroute NEXUS) has popped up to manufacture a controversy where none exists. Apparently one or two staffers at the OEB offered a dissenting opinion (as is often the case) for why the two contracts for the NEXUS should not be granted. Somehow those internal documents were leaked to the CORNballs (our name for members of CORN) who are now attempting to claim the OEB ignored the recommendation of its own staff and approved the contracts when (according to CORN) it should not have. We wonder if the CORNballs know that an average 7 billion cubic feet of natural gas flows from Canada to the United States every day, and that an average 1.5 Bcf/d flows from the U.S. to Canada every day? Do they know that gas has been going back and forth across our border with Canada for decades? Why do they oppose this particular pathway of trade with Canada, which would strengthen ties with our friends to the north?…
    Read More “CORN Questions Canadian Decision to Buy American NatGas via NEXUS”

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    Turns Out “Foreigners” Working in OH are a Good Thing After All

    For years MDN has poked fun at RINO Ohio Gov. John Kasich for his jingoistic talk about not wanting “foreigners” in his state working at Utica drilling sites (see this story from three years ago – OH Gov. Kasich Continues Trash Talk Out-of-State Workers). Don’t tell Kasich, because he hates hearing this, but some are now saying that because Ohio has been employing “foreigners” from exotic places like Texas and Louisiana to work at Utica drilling sites, it has actually turned out to benefit the state. Why? Because in this downturn Ohio businesses are not as adversely affected. If all of those people now laid off had been Ohioans, the Ohio economy would have taken a much harder hit than it has. That’s one of the points in a Cleveland Plain Dealer article. Another point in the article is that because the Ohio Utica is much smaller and was just ramping up as the current price crash hit, when prices recover (and they will recover, eventually), Ohio will take off much faster than the big, old, decrepit Marcellus in Pennsylvania…
    Read More “Turns Out “Foreigners” Working in OH are a Good Thing After All”

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    Really Cool Maps & Charts Detailing Utica Drilling in Ohio

    In reading a story in the Cleveland Plain Dealer about the prospects for the Utica to rebound when prices recover (see today’s companion story Turns Out “Foreigners” Working in OH are a Good Thing After All), we came across several charts and maps that are embedded in the article, and shareable. It’s a great series. First and foremost is a time-sequenced map that shows which counties received Utica permits, by year, and as you mouse over them, you can see how many permits each county received. A very cool app. Also included is a chart showing overall number of permits by year, a chart showing Ohio’s natgas production by year, and a chart showing Ohio’s oil production by year. Have a look below!…
    Read More “Really Cool Maps & Charts Detailing Utica Drilling in Ohio”

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    PA NatGas Production Slowing Down Ever So Gradually

    Natural gas production in Pennsylvania is, ever so gradually, slowing down. This year the Pennsylvania Dept. of Environmental Protection (DEP) began monthly reporting of natural gas and oil production in January of this year. The most recently report available is October (they are delayed by several months). What does the October report show? Average production of natgas was 12.5 billion cubic feet per day (Bcf/d), down 1% from September. Some producers (i.e. drillers) are cutting back–shutting in wells. But others are pumping full speed ahead. It just depends on the producer and where their wells are located. Prices in the northeastern part of the Marcellus are in the basement right now (see today’s companion story). Here’s a high level overview of PA production as of October…
    Read More “PA NatGas Production Slowing Down Ever So Gradually”

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    Lawsuit Forces NOAA to Disclose Climate Data Tampering

    It turns out that the National Oceanographic and Atmospheric Administration (NOAA) has something to hide with respect to the data it collects on so-called climate change. NOAA is the point agency in the United States for collecting weather and temperature data and disseminating that data for others to use. Science should be science–facts should be facts. But there’s been funny business going on inside of NOAA, and now they’re trying to cover it up. The so-called data coming from NOAA, it’s now being discovered, has been tampered with. Changed. Modified. Cherry-picked. Use whatever term you want. We’d call it scientific fraud. It took a lawsuit by the valiant organization Judicial Watch to force NOAA to release internal documents at NOAA that prove NOAA has been playing fast and loose with climate data…
    Read More “Lawsuit Forces NOAA to Disclose Climate Data Tampering”

  • Merry Christmas from MDN

    Merry ChristmasMDN wishes you a very Merry Christmas/Happy Holidays.

    We will take off Christmas Eve day (Thursday) and Christmas Day (Friday) and will be back on Monday to catch you up on all the latest Marcellus and Utica Shale news. Meanwhile, please enjoy some superb Christmas music below–an entire album of Mannheim Steamroller.

    – Jim Willis

  • Marcellus & Utica Shale Story Links: Wed, Dec 23, 2015

    The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: What’s next for KM pipeline in NY?; western NY residents still fighting pipeline; OH rig counts go down; PR ain’t the problem for PA pipelines; Cabot responds to Binghamton newspaper smear-job; Duke gets a Yoho; US natgas outlook for 2016; NERC wants reliability; peak oil demand fallacy; Williams employees raise $5.4M for United Way; Chesapeake’s “stoke of genius”; and more!
    Read More “Marcellus & Utica Shale Story Links: Wed, Dec 23, 2015”

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    Fed Court Rules PA Wrongful Death Lawsuit Against Anadarko Proceeds

    court-gavel.jpgIn May 2012 a water truck driver delivering water to an Anadarko Marcellus Shale well pad in Clinton County, PA missed a turnoff for the road he was supposed to take, at 2:30 am in the morning. A couple of miles later he crashed and tragically died because the road he was on was not marked well and not conducive to the truck he was driving. There was a sign warning the driver not to go beyond a certain point. The driver had previously–that night–already delivered to the well pad and successfully turned onto the road he was supposed to take. Why did he miss it the second time? His widow maintains that even though he worked for a subcontractor, Anadarko was the company in charge and should have had a light illuminating the “No Anadarko Traffic Beyond This Point” sign. So she sued Anadarko, and the subcontractor, for wrongful death. Lower courts threw out the lawsuit but a federal appeals court has just reinstated a civil suit against Anadarko that will go to a jury…
    Read More “Fed Court Rules PA Wrongful Death Lawsuit Against Anadarko Proceeds”

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    Alpha Natural Resources Does NOT Own Nearly Half of Rice Energy

    It’s not often we get to set the record straight on a story run in the financial press–but we get to this time. A story appeared yesterday on the American Banking & Market News site that coal company Alpha Natural Resources (ANR), which has a joint venture with Rice Energy to drill in the Marcellus Shale, owns 42.8% of Rice Energy’s outstanding common shares of stock. Which made our eyeballs nearly fall out. How in the world could a coal company that filed for bankruptcy earlier this year (see Alpha Natural Resources in Bankruptcy – What about Marcellus?), own that much of Rice Energy? It made no sense to us. So we went digging. The story quotes from an extensive filing by ANR with the Securities and Exchange Commission. The 13D/A filing appears to make the claim that ANR owns 54,306,610 shares of Rice Energy (see below). However, if you read it closely, the language is dense and even misleading. We believe what it means to say is that ANR along with Rice Energy Holding, Rice Energy Family Holdings, and NGP Rice Holdings–all of them together–own 54,306,610 shares of stock. NOT just ANR by itself. We think the author of the story misinterpreted what is very obscure financial language. We reached out to Rice Energy and Rice’s president Toby Rice responded that he believes (is not 100% sure) that ANR owns less than 4 million shares of stock in Rice Energy…
    Read More “Alpha Natural Resources Does NOT Own Nearly Half of Rice Energy”

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    Rice Energy Sells Part Ownership in Rice Midstream for $500M

    Rice Energy announced yesterday they’ve pocketed a cool $500 million from an unnamed energy investment company in return for an ownership stake in their subsidiary Rice Midstream. Rice Energy (the mother ship) will use $375 million of that new cash to pay off debts, and the other $125 million will get used for drilling new Marcellus and Utica Shale wells…
    Read More “Rice Energy Sells Part Ownership in Rice Midstream for $500M”

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    Canadian Summertime Earthquake Said to be Tied to Fracking

    This is not strictly a Marcellus/Utica story, but interesting and relevant nonetheless. Last summer a 4.6 magnitude earthquake hit northeast British Columbia (Canada). The BC Oil and Gas Commission has confirmed that the quake was as a result of fracking shale wells in the area. This is perhaps the fifth or sixth time fracking itself–and not a wastewater injection well–has been tied to an earthquake. Ever. Worldwide. Which means fracking causes earthquakes, statistically speaking, 0% of the time. Of course that kind of context won’t get reported as the meme of “Canada confirms fracking caused quake” bounces around the mainstream mediasphere. Which is why we bring you the news here on MDN–to provide context that an instance where fracking actually does cause an earthquake is as rare as hen’s teeth. The truly amazing aspect of the story is this: BC authorities didn’t shut down the fracking operation! They took a very adult, mature approach: Back off a bit on the pressure you’re using to frack the well with, and if another quake then happens, we’ll shut it all down and think through another approach…
    Read More “Canadian Summertime Earthquake Said to be Tied to Fracking”

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    Energy Investor Jennison Ups Ownership in PDC Energy

    PDC Energy, with leased acreage in the Ohio Utica Shale, paused their Utica drilling program in 2015 but recently announced plans to restart that program and drill five wells in 2016 (see PDC Energy to Restart OH Drilling in 2016, Drilling 5 Utica Wells). So when we spotted a notice that investment firm Jennison Associates had boosted its stake in PDC, we noticed. Anything that may affect a Marcellus/Utica driller is of interest to us. Jennison has upped their investment in PDC and now owns 6.95% of PDC Energy stock worth $147,721,000. That’s a far cry from the 42.8% of Rice Energy stock owned by Alpha Natural Resources (see today’s companion story about that deal). Typically when investors increase their stake to the 7-8% range, they begin asserting their influence on the company–getting a board member elected, etc. Not always, and not every investor pursues that course of action. But it’s worth watching for, which is why we bring you this news about Jennison’s investment in PDC…
    Read More “Energy Investor Jennison Ups Ownership in PDC Energy”

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    Problem: Some Marcellus/Utica Drillers Entering 2016 Not Hedged

    A recent report issued by Standard & Poor’s Ratings Services sounds an alarm over the issue of hedging for 2016–in particular for independent producers in the Marcellus and Utica Shale region. What’s hedging and why do we care? 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. From a driller’s perspective, if you strike an agreement to sell your gas in the future and the price goes a lot higher, you have to sell your gas at the lower price you agreed to. That’s the down side. But if the price goes a lot lower in the future, you’ve covered your derriere by locking in a higher price for the gas you produce–making money when your competitors aren’t. Drillers and others who buy and sell gas use hedging as a way to guard against price swings. It’s a “risk management” function in a company. Unfortunately most of the hedges previously arranged more than a year ago are now expiring. And nobody but nobody is willing to strike a contract right now for $3 or $4/Mcf gas a year or more down the road. No one believes the price will recover that much. Which means many drillers (in our neck of the woods) are entering 2016 without their production being hedged–a very scary proposition…
    Read More “Problem: Some Marcellus/Utica Drillers Entering 2016 Not Hedged”