Nuverra 1Q20 Results: “Stormy Like Most of Us Have Never Seen”
Nuverra Environmental Solutions (formerly Heckmann) is one of the largest companies in the United States that handles transportation and disposal of shale drilling wastewater and leftover rock and dirt from drilling. The company has major operations in the Marcellus/Utica region. In April the company laid off roughly 100 employees (see Nuverra Environmental Cuts Budget 30%, Lays off 100 People). Yesterday the company finally released first-quarter 2020 results. Revenue was down and losses were up.
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This is one of those “follow the bouncing ball” stories with lots of names. Bear with us because there is a connection to the Marcellus/Utica region. BP Energy Partners, a private equity firm based in Dallas, TX, invests in (and ultimately controls) a number of companies. Two of their portfolio companies are Thigpen Solutions and Blue Roads Solutions, both virtual pipeline companies delivering CNG and LNG to different types of customers. BP is merging the two into one company and renaming it Sapphire Gas Solutions.
MARCELLUS/UTICA REGION: Construction worker “lucky to be alive” following incident at Wellsburg Bridge site; OTHER U.S. REGIONS: DTE Energy extends net zero goal to include gas company; Minnesota sues Exxon, Koch over climate change; NATIONAL: U.S. commercial crude oil inventories reach all-time high; Oil at $30 may be enough to revive shale activity, say drillers; Shale fracking returns, tapping huge glut of idled equipment; INTERNATIONAL: BP sells petrochemicals business to Ineos for $5 billion; India courts foreign investment to boost natural gas use.
We’ve told you for months to expect it. Yesterday (on Sunday) Chesapeake Energy finally filed for Chapter 11 bankruptcy after lining up a $925 million loan to keep the doors open, the lights on, and the drill bits chewing away. Pipeline companies (and other vendors) that have contracts with the company should be concerned. The opening paragraph of Chessy’s press release says, “Chesapeake intends to use the proceedings to strengthen its balance sheet and restructure its legacy contractual obligations to achieve a more sustainable capital structure.” That means they’re looking to break existing contracts, using the bankruptcy filing as an excuse.
A landowner in Allegany County, NY who tried to block National Fuel Gas Company (NFG) from crossing her property with its Northern Access Pipeline to flow PA fracked gas into the Empire State, has failed. Last week New York’s highest court, called the State Court of Appeals, overturned a lower court ruling. The high court decision clears the way for NFG to use eminent domain to cross the woman’s property when (not if) the pipeline gets built.
We’re still steamed about a totally fake/manufactured “report” issued by Pennsylvania Attorney General Josh Shapiro last week bashing the shale industry (see 
National Grid, a huge utility company that supplies natural gas to all of Long Island, including two New York City boroughs (Queens and Brooklyn) has both a short-term and long-term gas supply problem. Corrupt Gov. Andrew Cuomo single-handedly decided to deny National Grid new natural gas supplies via a new pipeline (see 
In February we told you the fix is in. A bankruptcy judge in Delaware announced he would award the sale of the closed Philadelphia Energy Solutions (PES) refinery to a Chicago developer that has plans to demolish the East Coast’s largest and oldest refinery–and replace it with big, smelly, noisy warehouses with trucks coming and going day and night (see 
Yesterday Pennsylvania’s corrupt Attorney General, Josh Shapiro (who is running for governor trying to curry favor with Big Green wackadoodles) issued a 243-page report (full copy below), the result of two years of muckraking “investigations” into the Marcellus Shale drilling industry. Shapiro announced a new hotline where people can call and complain about frackers. And he had the gall to issue his own legislative agenda to further restrict fracking! In normal, sane states prosecutors uphold laws created by the legislature (and signed by the executive). In PA, Shapiro (in the judiciary) wants to make new laws. The man is out of control and needs to be locked in a padded room for his own safety.
The Pennsylvania Independent Fiscal Office (IFO) does a good job of guesstimating how much impact fee revenue will get generated in the coming year, based on permit and producing wells activity in the current year. Impact fees are PA’s equivalent of a severance tax–a fee paid by drillers for each new well they drill, paid over a 15-year period. This year IFO is offering up two scenarios for how much money the state will receive in impact fee revenues next year (based on wells drilled and active this year). One scenario is based on natgas prices averaging at least $2.25/MMBtus (million British Thermal Units) on the NYMEX, and the other scenario assumes gas prices slip below that level.
McCandless, a township in Allegheny County, PA (near Pittsburgh) is attempting to block any and all shale drilling within its borders by getting creative. The town is in the process of adopting changes to its zoning laws that make it illegal to drill a well in land zoned for commercial development. Since towns have to allow drilling in at least one zone, McCandless will allow it only in “institutional districts.” That means drilling will only be allowed on land with schools, hospitals, universities, and parks. Fat chance any drilling will ever happen in those places!
EQT Corporation, the largest natural gas-producing company in the U.S., is also a very generous company. Through its EQT Foundation charitable giving arm, EQT recently distributed $500,000 in grants to nonprofit organizations and programs in southwestern Pennsylvania, eastern Ohio, and northern West Virginia–regions where the company operates. In addition, EQT has given out more than $500,000 in scholarships to high school seniors looking for a career in the oil and gas industry, and another $360,000 in COVID-19-related relief grants to community foundations and food banks.
Reuters is reporting natural gas prices “collapsed” over 7% and hit a “near 25-year low” yesterday. The article says demand destruction from the coronavirus and worldwide shutdowns, along with an excess supply in storage caverns which are “expected to be full by the end of the summer season,” is the reason. Gas in storage is currently 18% above the 5-year average. The July futures NYMEX natural gas price contract, which expires today, was down -9.5% yesterday to $1.44/MMBtu. The August contract closed down -7.9% to $1.53/MMBtu.
We feel as though we keep talking to an empty room. That nobody is hearing, or if people are hearing, they don’t believe what we say when we tell you that Joe Biden and the people surrounding him are promising the total destruction of the fossil fuel industry in the U.S.A.–if he gets elected. All you have to do is listen to what he says! We’re not exaggerating nor overstating the case. If you work for the oil and gas industry, if you sell to the industry, if you care about freedom, you simply cannot vote for Joe Biden for President. To do so is to vote for the destruction of our country as we know it. The stakes are that high! Biden is signaling loud and clear his intent to block all new pipeline and LNG projects if he gets elected.