The year 2020 is in the rearview mirror, and the U.S. oil and gas industry is thrilled to kick the ultra-tumultuous year down the basement steps.
A product demand plunge, investors turning up their collective noses to funding anything related to O&G, and, of course, the ongoing impact of the COVID-19 pandemic combined to pummel the industry.
Through the year, companies were forced to go beyond what had been the norm concerning ESG, environmental, social and governance criteria, as socially-conscious investors place more importance not just on the bottom line, but how their investment reached that result.
Through the first 11 months of the old year, 45 E&Ps, 57 oilfield services firms and five midstreamers filed for bankruptcy, with total debt pegged at more than $95.76 billion, according to law firm Haynes and Boone.
“We have tried to determine which E&Ps operating in the Appalachian Basin, primarily Pennsylvania, could be the next to buy a rival, sell some or all of its assets, or hunker down even more and ride through the current chasm,” stated Joe Barone, President and Founder, Shale Directories.
Big, small, publicly- or privately-held, we peered into our crystal ball to give our readers a feel for what could happen in 2021.
Potential Buyers
EQT Corp. is Pittsburgh-based, and Toby Z. Rice is president, CEO. The company owns/leases more than 1 million net acres in PA, Ohio, WV. Rice has publicly stated there must be massive consolidation in the Appalachian Basin. Late last year, he helped get things rolling with the $735 million deal for all of Chevron’s Basin assets. It’s been rumored for months Rice wants to add fellow Pittsburgh-area based competitor CNX to his portfolio.
Ascent Resources is based in Oklahoma City, with Jeff Fisher its CEO. The company holds an acreage position of 340,000 net acres of leasehold and mineral acreage in Ohio’s portion of the Utica Shale play, primarily in the counties of Belmont, Jefferson, Guernsey, Harrison and Noble.
Ascent is one of several producing companies the late Aubrey McClendon launched after being forced out at leaving Chesapeake Energy in 2013. It’s last big deals were in 2018, when Ascent acquired assets from CNX, Hess and Salt Fork Resources for $1.5 billion. Backed by deep-pocket funds managed by The Energy & Minerals Group and First Reserve, Ascent, the eighth-largest gas producer in the U.S., could be a big buyer in the new year.
PennEnergy Resources, led by Chairman & CEO Rich Weber, is based west of Pittsburgh, in Robinson Township. Controls more than 210,000 gross acres in the Marcellus, Utica and Upper Devonian Shale plays, with the core area located in Beaver, Butler and Armstrong counties in Western Pennsylvania. Weber and PennEnergy President and Chief Operating Officer Gregory Muse previously were executives with Atlas Energy, which was sold to Chevron in 2011 for $4.4 billion. In 2018, Penn Energy acquired substantially all the assets of Rex Energy out of bankruptcy for $600.5 million in cash. Backed by the deep pockets of EnCap Investment and Wells Fargo Energy Capital, PennEnergy looks like a buyer to Shale Directories.
Southwestern Energy, based in Houston, is led by President and CEO William Way. The producer controls more than 208,000 net acres in Northeast Pennsylvania’s Marcellus Shale dry-gas play, and 577,293 net acres in southeast Ohio and north and central West Virginia. Late in 2020, Southwestern completed the $857 million deal for Montage Resources, formed in early 2019, with the combination of Blue Ridge Mountain Resources (the former Magnum Hunter Resources) and Eclipse Resources. One of the largest producers in the Marcellus and Utica plays, and the largest condensate producer in the Appalachian Basin, look for Southwestern to continue building on its formula for success: “The right people doing the right things, wisely investing the cash flow from underlying assets to create value.”
Antero Resources, a Denver-based E&P, led by Chairman & CEO Paul Rady. Antero holds over 451,000 net acres primarily in the Marcellus Shale northern West Virginia, and over 91,000 net acres in the Utica Shale in eastern Ohio. Bills itself as the most integrated natural gas & liquids platform in North America, with E&P, midstream and transportation assets in its portfolio. Antero is the U.S.’s third-largest natural gas producer and second-largest liquids producer. Antero hasn’t made a sizeable acquisition in 4-1/2 years, but given its all-encompassing asset portfolio and strong balance sheet, it could be a strong buyer in Appalachia.
CNX Resources, headquartered south of Pittsburgh in Cecil Township, is led by President & CEO Nick DeIuliis. The company, once part of coal producer Consol Energy, CNX’s portfolio includes 563,689 net acres in the Marcellus Shale play, and 259,000 net acres in the Utica Shale. CNX also has full control of CNX Midstream Partners and CNX Water Assets LLC, with operations in the Appalachian Basin. Shale Directories sees CNX as a buyer or seller. Rumors persist fellow Appalachian competitor and Pittsburgh-area-based E&P EQT is pursuing a buyout. There is some speculation CNX could protect itself by acquiring another company.
JKLM Energy, based in Franklin Park, Pa., led by billionaire Terry Pegula. Controls over 120,000 acres, all in Potter County, Pa. Pegula made big money when he sold the majority of his former company, East Resources, in 2010, (Pennsylvania and New York assets) to Royal Dutch Shell plc (“Shell”) for $4.7 billion. In 2014, he was the majority owner of Ohio and West Virginia assets sold by HG Energy, LLC to American Energy Partners, for $1.75 billion. Pegula also is chairman, president and CEO of East Resources Acquisition Co., a so-called blank check company formed and funded to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more energy-related businesses. Pegula, who also owns the NFL’s Buffalo Bills and NHL’s Buffalo Sabres, among other businesses, is extremely media shy, but be prepared for a big media splash when he buys assets in 2021.
Seneca Resources, a Houston-based E&P, headed by President John McGinnis. Seneca, the E&P unit of National Fuel Gas, controls roughly 1.19 million acres in Northwest and Northcentral Pa., with much of the acreage available for Marcellus and Utica Shale drilling. Seneca/National Fuel last July acquired Shell’s Appalachian upstream and midstream assets for $541 million. Shale Directories says look for additional asset buys in 2021.
Northeast Natural Energy, based in Charleston, WV., led by founder, President and CEO Mike John. The E&P controls more than 49,000 acres primarily located on the Pa.-WV. Border and in Western Pennsylvania. In April 2017, NNE obtained $300 million of investment from investment firms Trioloma EIG Energy Income Fund and EIG Global Energy Partners. In November 2020, the company announced it received another $65 million to help fund more drilling and lease acquisitions from a group of investors that include Metalmark Capital, Wells Fargo and Prudential. Shale Directories sees NNE as a potential asset buyer in 2021.
Chesapeake Energy, based in Oklahoma City, led by President and CEO Doug Lawler. Controls roughly 580,000 net acres in Northeast Pa. Once the U.S.’s second-biggest gas producer, and led by the flamboyant Aubrey McClendon, Chesapeake was a voracious land acquirer. When McClendon was bounced in 2013, Anadarko executive Doug Lawler was hired to right what was soon an E&P Titanic, carrying at one time $13 billion in debt. Last June, Chesapeake field for Chapter 11 bankruptcy, hoping to get out from under some $7 billion of debt. Shale Directories sees Chesapeake as a buyer or standing pat, although the company still intends to sell roughly $500 million in non-core assets.
Tug Hill Operating, Fort Worth, Texas-based E&P, led by President and CEO Michael Radler, who also is CEO of XCL Midstream. The company currently operates on acreage in West Virginia’s Marshall and counties. Tug Hill maintains a non-operated asset position in Northeast Pennsylvania totaling roughly 600,000 acres in partnership with Chief Oil & Gas LLC, with Chief serving as operator. With the substantial backing of private equity firm Quantum Energy Partners, Tug could be in the market in 2021, to add to its portfolio.
Olympus Energy, based south of Pittsburgh in Cecil Township, headed by President & CEO Tim Dugan. Olympus, formerly known as Huntley & Huntley Energy Exploration, has 100,000 net operated dry gas acres in Western Pa., operating in Allegheny and Westmoreland counties, while holding acreage in Butler and Washington counties. Given that Olympus’s financial backer is one of the premiere home equity firms, Blackstone Group, which put more than $250 million in Huntley & Huntley in 2012.
On hold
Cabot Oil & Gas, Houston-headquartered, led by Chairman, President and CEO Dan Dinges. Cabot is all in in the Marcellus Shale play, primarily in Susquehanna County, Pennsylvania, with 173,000 of dry-gas acres.
Snyder Brothers Inc., based in Kittanning, Pa., led by President David Snyder. One of a number of small, privately-owned E&Ps doing business in Pennsylvania. Snyder operates in 10 Pennsylvania counties.
Range Resources, Fort Worth, Texas-based, led by President and CEO Jeff Ventura. Range controls roughly 470,000 net acres in Southwest Pa. – but nearly all the acreage is a triple-stack play, including the Marcellus, Utica and Upper Devonian Shale plays. Range, the Marcellus play’s Godfather (drilling the play’s first well in 2004) fared poorly with its largest deal ever in 2016. The E&P paid roughly $3.3 billion in stock for Memorial Resource Development Corp. and its Louisiana shale. In 2020, Range sold the Memorial assets to Castleton Resources for $245 million, with an additional $90 million contingent on higher commodity prices.
Apex Energy LLC, headed by CEO and founder Mark Rothenberg, does business in Southwest Pa. from its headquarters north of Pittsburgh, in Wexford. Another of the Basin’s small, privately-held E&Ps, Apex is backed by affiliates of Apollo Global Management, and concentrates its operations in Armstrong and primarily Westmoreland counties.
ARD Operating LLC, Houston-based E&P led by CEO Joseph Greenberg. The company is closely aligned with Alta Resources, which controls roughly 547,000 gross/239,000 net acres in the Marcellus Shale play in the Pennsylvania counties of Bradford, Wyoming, Sullivan, Lycoming, Clinton and Centre.
Repsol USA, The E&P is based in The Woodlands, Texas, with Marcellus operations led by Rick Kessy, Vice President of the Marcellus Business Unit. Repsol holds an interest in 168,400 net acres in Pennsylvania’s Bradford, Susquehanna and Tioga counties.
Hold or sell
Pennsylvania General Energy, a Warren, Pa.-based E&P led by President and CEO Doug Kuntz. The company reportedly owns drilling rights to 439,000 acres in Pennsylvania and New York, with much of the acreage prospective for Marcellus Shale drilling, including leases located in Pennsylvania’s Elk, Forest, McKean and Potter counties.
Beech Resources, Denver-based, led by President & CEO Charles Pollard. Beech is engaged in exploration and development activities near Williamsport, Lycoming County Pa.
INR Operating LLC (Infinity Natural Resources), based in Morgantown, WV. INR is headed by Zack Arnold, President and CEO. The E&P’s operations are concentrated in Fayette County, Pa.
STL (Shed the Light) Resources, based in Wexford, Pa., and led by Founder and Managing Principal William Dressel. STL controls roughly 8,000 acres in Pennsylvania’s Marcellus Shale dry-gas counties of Clinton and Tioga.
XPR Resources, formerly WPX Energy Appalachia LLC, is a Houston-based E&P which, together with Penn Natural Resources, holds over 50,000 acres of Marcellus gas rights in Southwest Pennsylvania, in the counties of Westmoreland, Indiana, Clearfield and Armstrong.
Campbell Oil & Gas, with corporate offices in Houston, is an O&G operator contracted by Penn Natural Resources and XPR Resources to operate their producing properties, which include over 50,000 acres of Marcellus gas rights in Southwest Pennsylvania, in the counties of Westmoreland, Indiana, Clearfield and Armstrong.
Sellers
Gulfport Energy, an Oklahoma City-based E&P, led by President and CEO David Wood. Gulfport has roughly 205,000 net acres in Ohio’s portion of the Utica Shale play, which contributes 80% of its total production. The company field for protection from creditors under Chapter 11 last November, looking to shed roughly $1.25 billion in debt.
Exco Resources, a Dallas-based E&P headed by President and CEO Harold Hickey. Exco in 2019 operated in roughly 389,000 net acres in Appalachia, including 234,800 net acres in the Marcellus, and 69,000 net acres in Pennsylvania’s dry gas window. The company filed for Chapter 11 bankruptcy in January 2018, and exited bankruptcy roughly 18 months later.
Chief Oil & Gas, a Dallas-based company led by founder and CEO Trevor Rees-Jones. Chief is believed to control roughly 200,000 dry gas acres in the Northeast Pennsylvania counties of Bradford, Lycoming, Sullivan, Susquehanna and Wyoming.
Greylock Energy, a Charleston, WV. -based E&P under the leadership of President and CEO Kyle Mork. Greylock’s Basin operations are located on more than 900,000 acres primarily located in Southwest Pennsylvania and southern and northcentral West Virginia. Greylock’s financial backer is private equity giant ArcLight Capital Partners.
XTO Energy, a Spring, Texas-based E&P owned by supermajor ExxonMobil since 2010, and headed by Keith Burke, Land Manager – Appalachia/East Texas/South Texas/Louisiana. XTO’s Appalachian assets include more than 534,000 acres in 15 Pennsylvania counties, more than 140,000 acres in nine West Virginia counties, and more than 56,000 acres in two Ohio counties. ExxonMobil said in late 2020, it plans to exit Appalachia.
