Marcellus Drilling News

Energy Services | Industrywide Issues | NGLs | Pipelines | Sunoco Logistics

Sunoco Logistics has Best Quarter Ever, Thanks to Marcellus NGLs
August 6, 2015August 6, 2015

In contrast to the bad news we read in quarterly report after quarterly report for exploration and production (E&P) companies, i.e. “drillers”, it’s a starkly different story for some pipeline companies. Take Sunoco Logistics Partners, for example. Sunoco LP’s second quarter 2015 update boasts record earnings for 2Q15. That is, Sunoco LP made and distributed more profit to shareholders in 2Q15 than ever before. What was the “key contributor” to their growth, according to Sunoco LP’s CEO? The company’s three NGL (natural gas liquids) pipelines: Mariner West, Mariner South and Mariner East 1. Both the Mariner West & East pipelines are located in the Marcellus/Utica region. In addition to the rosy financial picture, we learn in the 2Q15 update that Sunoco LP has decided that the Mariner East II project will be two pipelines. We previously told you of Sunoco’s “tentative” plans to build two Mariner 2 pipelines (see Mariner East 2 Giving Birth to Twin Pipelines). Judging from the language in the Q215 update, tentative is sounding a lot more like definite…
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Energy Companies | Stone Energy

Stone Energy 2Q15: Increased % Ownership in Marcellus JV Wells
August 6, 2015August 6, 2015

Stone Energy, an independent oil and natural gas exploration and production company (E&P) headquartered in Lafayette, Louisiana drills mainly in the Gulf of Mexico but also has a presence in the Marcellus/Utica Shale. Earlier this year the company released the one active Marcellus rig they were running and said they would not resume drilling in the northeast until receiving a hybrid rig in late 2015/early 2016 that can drill both Marcellus and Utica wells (see Stone Energy 1Q15: No New Marcellus Drilling, But More Production). Stone issued their second quarter 2015 results yesterday. Interestingly, some of Stone’s joint venture partners elected not to exercise rights to own more of the wells drilled by Stone, leaving Stone with a higher percentage ownership for a number of Marcellus wells. Stone said they expect production in the Marcellus region (currently 144 MMcfe per day) to tapper off over the rest of the year because they aren’t drilling or completing any new wells. Even so, they expect 2015 production to exceed 2014 production in the northeast. Despite cost-cutting measures, Stone’s net income (which includes expenses), like that of so many other drillers across the country, took a dive in 2Q15–going from $4.4 million net income in 2Q14 to minus $152.9 million in 2Q15…
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Energy Services | Marathon Petroleum | MarkWest Energy

MarkWest Energy 2Q15: Operating Inc. Up 26%, Net Inc. Down 562%
August 6, 2015August 6, 2015

MarkWest Energy, the premier midstream (pipelines and processing plants) company in the Marcellus/Utica, issued their second quarter 2015 update yesterday. MarkWest, you may recall, is in the process of selling itself to Marathon Petroleum (see Midstream Bombshell: MarkWest Sells Itself to Marathon Petroleum). MarkWest shows a slight decrease of 11% in revenue from 2Q14 to 2Q15. But after expenses, income from operations actually went up 26% on record volumes flowing through their pipes and processing plants. But after you add in all of the accounting machinations including things like “loss on redemption of debt”, MarkWest had a net income loss of $86.4 million for the quarter (down 562% from 2Q14). However, that’s not what really interests us. What interests us is an operations update for the Marcellus and Utica regions and what this midstream giant has been up to…
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Crestwood Midstream | Energy Services

Crestwood Midstream 2Q15: Slight Net Loss; MARC II Still Alive
August 6, 2015August 6, 2015

Crestwood Midstream Partners issued their second quarter 2015 update yesterday. Unlike Sunoco Logistics Partners which generated and distributed the most money ever in a single quarter (see today’s Sunoco LP story), Crestwood experienced a net loss of $42 million over the same quarter last year. But when you dig deeper you find that $40 million of that was a devaluation of its assets on paper. In other words they only lost around $2 million of cash in operations. Compared to the deep hole drillers are in, Crestwood’s shortfall is nothing. Crestwood has operations in the Marcellus as well as several other major shale plays. One bit of news we noticed from this update: Crestwood “continues to move forward with customer discussions and preliminary design work for the 1.0 Bcf/d MARC II pipeline project to interconnect with the announced Penn East Pipeline project in 2017.” We first told you about the MARC II in October 2014 (see Crestwood Announces Successful Open Season for MARC II PA Pipeline). No mention in the 2Q15 update about the Seneca Lake propane storage project that is still, inexplicably, not approved by the NY Dept. of Environmental Conservation now going on six years…
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CONE Midstream | Energy Services

CONE Midstream 2Q15: Revenue & Net Inc. Almost Double
August 6, 2015August 6, 2015

CONE Midstream, the pipeline joint venture between CONSOL Energy and Noble Energy, is a small but growing company. Yesterday’s second quarter 2015 update shows both revenue and net income for the company just about doubled year over year between 2Q14 and 2Q15. Below is the good news update from CONE, with details about their expansion projects in southwestern PA and the northern panhandle of WV…
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Anti-Drilling/Fossil Fuel | Industrywide Issues | Regulation

The Hill: Obama’s “Love Affair” with Natural Gas is Over
August 6, 2015August 6, 2015

Further analysis of President Obama’s draconian new EPA Clean Power Plan rule that, if allowed to stand, will gut natural-gas fired electric generating plants in this country. The analysis comes from the left-leaning DC newspaper The Hill, which characterizes it this way: “President Obama’s love affair with natural gas is over.” They also note that the natural gas industry is “furious” at Obama’s betrayal. We have to ask: Were you really that dumb? Did you really believe Obama’s lying words when he said he (somewhat) supported natural gas like it was “the other white meat”? We never believed it–not for a minute. Here’s a cold splash of reality for those who still have a hard time believing that yes, Obama has just thrown natural gas under the bus…
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Best of the Rest

Marcellus & Utica Shale Story Links: Thu, Aug 6, 2015
August 6, 2015August 6, 2015

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:
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Chesapeake Energy | Energy Companies

Chesapeake Energy 2Q15: Low Prices Take Big Bite, $5.6B in Red
August 5, 2015August 5, 2015

Chesapeake Energy released their second quarter 2015 operating and financial results today. Chessy, as you know, is a big company involved in a number of shale plays–although the Ohio Utica and the Pennsylvania Marcellus are its biggest and most important areas of operation. The good news: Chessy’s OH Utica production increased by 13% from 1Q15–even while curtailing much of their Utica production. Overall, across all of their shale plays, converting oil and natural gas into barrels of oil equivalent production, Chesapeake held the line. In 2Q14 they produced 63.2 million barrels of oil equivalent per day (mmboed) of production, and 63.9 mmboed in 2Q15. The company continued to lower costs over the past year–so it stands to reason if you produce and sell the same amount but lower costs, you make more in profit, right? Wrong. Prices the company received for both oil and natural gas collapsed over the past year. In 2Q14 Chesapeake got an average $2.45 per thousand cubic feet (Mcf) for their natural gas. In 2Q15? They got a piddly $1.01/Mcf. Ouch. You can understand why net income (which includes expenses) swung from $371 million in the black for 2Q14 to $5.6 BILLION in the red (a loss) in 2Q15. No wonder Wall Street is telling Chesapeake to sell itself (see today’s companion story)…
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Chesapeake Energy | Energy Companies

Chesapeake Energy Takeover Rumors Run Rampant
August 5, 2015August 5, 2015

Chesapeake Energy, the largest natural gas driller (by number of wells drilled and by production) for both the Marcellus and Utica Shale plays, released their second quarter financials today. The stock market expected it to be more bad news for the natural gas giant–and indeed it was (see today’s companion story about Chesapeake’s 2Q15 update, going $5.6 billion in the red). In fact, the speculation is that the company is ripe for a takeover–thanks in no small part to current CEO Doug Lawler and his actions in slashing jobs and selling off everything but the kitchen sink. The market’s view (not our view) is that Chessy co-founder and previous CEO Aubrey McClendon left the company in a mess and Lawler has been working tirelessly to untangle that mess and put things right. Some of Lawler’s “putting it right” actions included plunging 1,200 families into economic hardship when he fired them (see Chesapeake’s CEO Celebrates Axing 1,200 People Making Carl More $). Better the peons get fired than corporate raider Carl Icahn, the man who installed Lawler, be prevented from adding a few more million (or billion) to his bank account, right? The funny thing is, if Chesapeake sells now, old Carl is hosed. He bought when the market was high and if they sell now, he’ll take a big loss. Just deserts anyone?…
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Energy Services | Industrywide Issues | NEXUS Pipeline | Ohio | Pipelines | Statewide OH | Summit County

NEXUS Pipeline Sends Armed Guards with Surveyors to Protect Them
August 5, 2015August 5, 2015

The City of Green (Summit County), OH is proudly working to prevent a much-needed pipeline, the NEXUS pipeline, from crossing through any of its residents’ properties. Proudly ignorant, we’d day. It’s a shame, but these days workers doing their job–surveying for a pipeline–are sometimes threatened (see FBI Investigates Death Threats Against PennEast Pipeline Workers and Medina, OH Landowner Says He’ll Meet NEXUS Surveyors Packing Heat). So some pipeline companies, like NEXUS, now send armed security guards out with surveyors and pipeline workers–to protect them. City of Green officials seem to imply the armed guards are there to intimidate residents who don’t want to allow a survey of their property. Not true. The guards are there to protect the surveyors who feel threatened for simply taking measurements for a pipeline. What has this world come to?…
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Energy Companies | Rex Energy

Rex Energy Financial Update for 2Q15: Rev Down 37%
August 5, 2015August 5, 2015

We now have “the rest of the story” for Rex Energy for second quarter 2015. Last week Rex released a partial update for 2Q15. At the time we used the production numbers they released with the prices they received for that production to calculate simple, back-of-the-envelope numbers for revenue, predicting Rex would show a revenue slide of around 16% from 2Q14 to 2Q15 (see Rex Energy 2Q15: Production Up 61%, MDN Provides Missing Rev # s). Yesterday Rex released their financials for 2Q15. How’d we do? Seems our estimate was rather rosy. Rex’s revenue went down 37% year over year–due to the lower commodity prices they received ($72.9 million in 2Q14 to $45.8 million in 2Q15). Rex’s revenue slide is typical of drillers across the country. However, when you factor in all of Rex’s expenses, the picture becomes a bit cloudier. Rex’s net income (net loss) year over year was minus 1,990% ($8.96 million for net income in 2Q14 compared to to minus $151.8 million in 2Q15). But when you scratch beneath the surface you find Rex took a one-time “impairment” hit of $117.8 million in 2Q15. What’s that? Essentially the value of their leases and assets went down–on paper. That $117.8 million “loss” was not a cash loss–just an accounting loss on paper. If you remove the impairment charge from the mix, Rex’s net income for 2Q15 would have been minus $34.0 million, a “mere” 279% decrease year over year…
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Electrical Generation | Industrywide Issues | Pennsylvania | Regulation | Statewide PA

PA Gov Wolf Salutes Obama, Eagerly Buys into Clean Power Plan
August 5, 2015August 5, 2015

On Monday President Obama and his rogue Environmental Protection Agency made another power grab, infringing on our freedom and liberty, with the release of a so-called Clean Power Plan (see Obama Stabs Natural Gas Electric Plants in Clean Power Plan). As we pointed out, natural gas use in electric generating plants is one of the casualties in Obama’s latest “brilliant” strategy, much to the consternation of those in the oil and gas industry. But two very important people in Pennsylvania love Obama’s overreach–America’s most liberal governor, Gov. Tom Wolf, and his minion PennFuture Sec. of the Dept. of Environmental Protection, John Quigley. They think Obama’s Clean Power Plan is just dandy–and they intend to plunge Pennsylvania down the same rat hole Obama is taking the rest of the country…
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CNG/LNG | Electrical Generation | Energy Services | Industrywide Issues | PennEast Pipeline | Pennsylvania | Pipelines | Statewide PA | UGI Energy Services

UGI Provides Update on PennEast & Other New PA Pipeline Projects
August 5, 2015August 5, 2015

During the AmeriGas Partners quarterly analyst conference call yesterday, Pennsylvania utility giant UGI Corporation CEO John Walsh gave an update on several projects of interest for those in the PA Marcellus Shale. Oh! We should point out AmeriGas is the country’s largest propane company and a subsidiary of PA-based UGI, which is why Walsh was on the call. And what did he say? Walsh provided an update on UGI’s $60 million project to build a new LNG production plant in Wyoming County, PA (see UGI Building LNG Plant in NEPA, Local Marcellus Gas to Feed It). He also spoke in glowing terms about the PennEast Pipeline and how he sees that project unfolding (it should be operational by late 2017). Walsh also updated analysts on several pending pipeline projects that will feed electric plants being built in the Marcellus. Here’s what he said yesterday…
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American Energy Partners | Ascent Resources | Energy Companies

McClendon’s American Energy Partners Gets a New CFO
August 5, 2015August 5, 2015

American Energy Partners, Aubrey McClendon’s new company founded after he was unceremoniously tossed from Chesapeake Energy (the company he co-founded), continues to befuddle us. As we noted in June, some of the subsidiary companies under Aubrey’s AEP umbrella are leaving the nest–even to the point of changing their name so it’s completely dissimilar to AEP (see McClendon’s New Empire Continues to Separate and Leave). Is that Aubrey’s plan playing out? Or are people running as far and fast as they can from McClendon? Frankly, we don’t know. We tend to think it’s the later, to be honest. One of the folks who has left Aubrey behind was AEP’s Chief Financial Officer (CFO) Jennifer Grigsby. She recently left AEP to became CFO of Ascent Resources. Ascent operates in the Marcellus/Utica and used to be American Energy Appalachia Holdings. They are now 100% independent and free from AEP. So McClendon dipped into the Chesapeake talent pool and lured away an old mate he used to work with at Chessy to become the new CFO for AEP–Elliot Chambers…
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Anti-Drilling/Fossil Fuel | Industrywide Issues | Pennsylvania | Pipelines | Statewide PA

Grimm’s Fairy Tales: Rural PA Pipelines Pose “Hidden Risks”
August 5, 2015August 5, 2015

Another anti-pipeline screed from PBS reporter Susan Phillips at the taxpayer-funded StateImpact Pennsylvania website. This is another propaganda piece in a series meant to smear the superb safety record of pipelines, which happen to be the safest form of transportation on earth (see StateImpact: PA Pipelines “Risky” & “Mystery” – Might Kill ‘Ya Too). The latest “pipelines will kill ‘ya” fairy tale begins this way…
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Baker Hughes | Energy Services | Halliburton | Industrywide Issues | M&A

Update on Halliburton/Baker Hughes Wedding Plans
August 5, 2015August 5, 2015

Whatever happened to the Halliburton merger/buyout (i.e. shotgun wedding) with Baker Hughes? As we told you in July, the two “love birds” have set a December 1st wedding date (see Halliburton & Baker Hughes Announce a December Wedding Date). In the meantime there’s a lot to do: caterers have to be contracted, a DJ, wedding photographer–you know the drill. Oh! And let’s not forget the Dept. of Justice. They have to be consulted too. It appears that (so far) everything is on track with both the DOJ here at home, and with the European Commission overseas. Both groups have to grant their permission for the two companies to wed. There may be one slight wrinkle (last minute nerves?): Notice in the latest Halliburton update below that the two love birds may decide to push off the wedding date until early 2016–but only if absolutely necessary (they’re just so in love)…
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