Weatherford Sells U.S. Fracking Business to Schlumberger for $430M
Schlumberger is the world’s largest oilfield services (OFS) company. Weatherford International is the world’s fourth largest OFS company. They both have operations in the Marcellus/Utica region. We’ve posted a number of stories about Weatherford’s financial troubles–and seemingly inevitable march toward bankruptcy (see our stories here). However, Weatherford got a reprieve from its much larger competitor. In March 2017, Schlumberger and Weatherford announced they had formed a joint venture called OneStim, “to deliver completions products and services for the development of unconventional resource plays in the United States and Canada land markets. The joint venture will offer one of the broadest multistage completions portfolios in the market combined with one of the largest hydraulic fracturing fleets in the industry” (see Schlumberger Throws Weatherford a Lifeline, Challenges Halliburton). However, in December, Weatherford signaled they want to/need to sell off parts of the company in order to claw their way out of a $7.9 billion debt hole (see Weatherford Looks to Sell Off Pieces of the Business). First on the chopping block? The JV with Schlumberger. Weatherford announced in late December that instead of a joint venture with Schlumberger, they’re just going to sell their U.S. pressure pumping and pump-down perforating assets to Schlumberger for $430 million in cold, hard cash. In other words, Weatherford has just exited the fracking business in the U.S….
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Vapid Hollywood stars and starlettes are always amusing. They often display their total ignorance in very public ways. Thing is, they’re stupid and they don’t even know it. They fall prey to their own publicity, thinking that because millions of people know who they are and love them (for their acting abilities), that gives them above average intelligence. The latest Hollywood dumb dumb to make a fool of herself is Jodie Foster. In a recent interview, Foster trash-talked the current trend of big budget superhero movies. She calls them the cinematic equivalent of fracking. Foster doesn’t even know what fracking is, or that the clothes she wore while uttering such inanities are the result of fracking. Or that the plastic microphone she spoke into was created as a result of fracking. Or that the jets she flies on, the Hollywood mansion she lives in, etc. etc. are all a result of fracking. What a glittering jewel of colossal ignorance is Jodie Foster…
We have a really big “best of the rest” today – stories that caught MDN’s eye over the break that you may be interested in reading. In today’s lineup: Lawyer asks PA Supreme Court to ride roughshod over Commonwealth Court; Atlantic Coast Pipeline inched closer in 2017; power plants bloom even as electricity prices wilt; the U.S. just burned the most natural gas–ever; Gulfport Energy gets a new COO; cold temps test natgas market; Jim Cramer’s energy picks for 2018; are longer laterals the best option; OPEC deal didn’t stop Russia from record oil production in 2017; and more!
Chesapeake Energy is holding out an olive branch to Pennsylvania landowners–the offer of settling a years-old class action lawsuit for $30 million–as reparations for shafting PA landowners out of royalties. But–and it’s a big but–Chesapeake is also snatching the olive branch away unless/until the PA Attorney General’s office resolves its separate lawsuit against Chesapeake for the same thing. No deal with the AG? No final settlement. Chesapeake’s lawyer calls it “global peace”–which we find amusing. The lawyer said “we need global peace,” meaning both lawsuits must be settled. His comment reminds us of the recent song blaring on the radio over the holidays called, “My Grown-Up Christmas List.” Yeah, don’t we all want “global peace.” Chesapeake’s proffered deal will give the average PA leaseholder (some 14,000 of them) a one-time $2,140 payment–adjusted up or down for the size of their acreage. Frankly, it’s chump change. The big concession by Chesapeake in the proposed deal is that it gives landowners the right to clarify the terms of their leases: “Every Chesapeake lessor will get to pick how their royalties are paid going forward.” Landowners can choose to continue letting Chesapeake market the gas outside of the region (theoretically for a higher price) but requiring the landowner to share in post-production expenses with Chessy as has been the case, OR landowners can rework the lease so there are no post-production expenses deducted. In the second case royalties will be based on the local price of gas in that landowner’s area (typically in the basement). It’s a tough decision. So, landowners got shafted in the past, but the past is the past. Going forward, let’s not get shafted any more. That’s what this proposed deal seems to boil down to. Oh, and throw in a few grand as the cherry on top. The billion dollar question is whether or not the AG’s office will go for it. The AG’s office is signaling it may settle, IF Chesapeake picks a number higher than $30 million as a settlement number…
1/3/18 Update: We received a cordial call from Eclipse Resources’ vice president Douglas Kris to alert us that our original headline and interpretation below misses the mark. We are happy to issue this correction. MDN’s interpretation of Eclipse’s JV news can be summed up in two points: (1) Eclipse got less than originally announced for this deal, and (2) the deal took longer than announced to get done. Both points need clarifying. Doug said on the first point, the original announcement quoted a range for the investment by Sequel, with the high end being $325 million. Due to the complicated structure of the deal, this first part of the deal which just happened (for $285 million) is less than the high end, but well within the originally quote range. AND the deal is not completely done, yet. By the time it is done, the total deal may be $325 million. As for the second point we made about a delay in the deal, Doug said the deal actually was done by September as originally forecast, but got held up by a delay with the Securities and Exchange Commission. A big “thank you” to Doug for alerting us. We like to make sure the information you read on MDN is correct! – Jim Willis, Editor
The Pennsylvania Dept. of Environmental Protection (DEP) has fined CNX Resources (formerly CONSOL Energy/CNX Gas) $433,500 for violations at four shale well sites in Greene County, PA. The violations, which happened in 2015/2016, include failure to control and dispose of wastewater properly and failure to prevent erosion. Some of the flowback/wastewater ended up in a small stream called Jacobs Run. We always find the language of these announcements by the DEP somewhat strange: “CNX Gas Company, LLC (CNX) has agreed to two civil penalties totaling $433,500 for violations at well sites in Greene County.” Really? The company getting fined has to “agree” to accept the fine? Apparently we don’t fully understand how regulatory agencies work in PA. What if CNX didn’t agree to the fine? Would the DEP come back with a lower amount, “Will you accept this fine instead?” But we digress. CNX themselves noticed the problems and self-reported the violations. After doing so, they fired two of the service companies they were using. The unnamed service companies were obviously guilty of cutting corners that resulted in improper disposal of wastewater. Interesting factoid: Half of all the wells CNX has drilled in PA are located in Greene County…
Pittsburgh’s oldest still operating steel mill, U.S. Steel Corp.’s Edgar Thomson steel mill, may soon be home to more than just a foundry. A privately owned oil and gas company headquartered in New Mexico–Merrion Oil & Gas Corp.–has signed a lease with U.S. Steel to drill a series of six (possibly more) shale wells on the Edgar Thomson Works property in Allegheny County. The plan is to drill one Marcellus well to begin with, and after testing, expand that with five more Marcellus wells. However, Merrion is not ruling out deeper wells to tap the Utica. Even though the location for the wells is as industrial as industrial gets–with noisy steel making (and the air pollution that goes along with it), antis are complaining that drilling a few shale wells will turn their lives into a dung heap. Nothing new about their reaction. What is new is Merrion. This is their first entry into the Marcellus/Utica region. Until now, Merrion has concentrated on other regions. According to one biased news outlet, Merrion has “no experience drilling into deep, tight, shale formations like the Marcellus.” Whether or not that’s true, we don’t know (we tend to doubt it). What we do know is that Merrion is a privately owned, family company started in 1960 by a former petroleum engineer. Merrion is not some upstart company that doesn’t know anything about the oil and gas business–quite the opposite. Merrion has already had preliminary meetings with the PA Dept. of Environmental Protection about their plans. An official permit request should be coming any time over the next three months…
Huntley & Huntley (H&H), a shale driller headquartered in Monroeville (Allegheny County), PA plans to drill Marcellus Shale wells in neighboring Murrysville (Westmoreland County), PA. H&H has filed for state permits for the Titan Well Pad project. This is will be the first Marcellus wells to be drilled in Murrysville. On May 3, 2017, Murrysville Town Council passed a new drilling ordinance that requires a 750 foot setback from the edge of the well pad–not from the bore hole (see 
It’s been a long road, but we’re finally close to startup for the first phase of what will be Pennsylvania’s largest gas-fired electric generating plant near Scranton, PA. The Invenergy plant, dubbed the Lackawanna Energy Center (located in the community of Jessup), will produce 1,480 megawatts of electricity when it’s fully built and running. Construction crews are hard at work in frigid temperatures, working to complete the first of three combined-cycle generator units. The work is 80% done on the first unit and on track to be completed by February. The plant is certainly having an impact on locals–both good and bad. On the bad side, we previously reported that antis in the Jessup community exacted their revenge on local political leaders for approving the plant by removing them from office (see 
Baby it’s cold outside! This was predictable (and indeed, MDN did predict it). With the arrival of an extended cold period, because of a lack of natural gas pipeline capacity in New England, recent spot prices for natgas near Boston have spiked to more than $35 per thousand cubic feet (Mcf). It gives New England the dubious distinction of paying the highest average price for natural gas in the entire WORLD. The price for the same gas about 250 miles away in the Marcellus? Between $1-$2/Mcf. And yet the dunderheads in New England, like U.S. Sen. Elizabeth “Pocahontas” Warren, continue to block new pipelines in the region. “Stupid is as stupid does,” as Forrest Gump said. We hope our friends in New England enjoy paying through the nose and every other orifice they possess over the next few weeks, until the arctic blast subsides…
Events related (or of interest) to the Marcellus and Utica Shale, primarily pro-drilling events.
PTT Global Chemical, based in Thailand, continues to delay a final investment decision (FID) regarding their much-ballyhooed ethane cracker project in Belmont County, OH. In April 2015, PTT announced they are interested in building a ~$5 billion ethane cracker plant complex in Belmont County, OH (see 
Yesterday a Pennsylvania federal judge denied a group of 600+ Marcellus Shale landowners’ request to form a class action in arbitrating a royalty case against Chesapeake Energy. Although the judge’s decision is a disappointment for landowners, his decision should come as a surprise. In April, the same judge, U.S. District Judge Matthew Brann for the Middle District of PA, telegraphed that the landowners, under the law (and under the leases they signed) did not have a right to form a class action (see 
Ultra Petroleum, based in Houston, TX, is an independent exploration and production (E&P) company mainly focused on drilling in the Green River Basin of Wyoming. Ultra also drills for oil in the Uinta Basin/Three Rivers area in Utah. In addition, Ultra maintains a “non-operated” (someone else does the drilling) position in the Pennsylvania Marcellus shale with leases on 72,000 net acres–no small amount. As recently as May of this year Ultra CEO Michael Watford signaled that the Marcellus acreage is not a drain on their budget, so they would just hold on to it and see what happens (see