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Expo/Industry events for the next few months

Great Fallfest
Wyoming County PA
September 24, 2015

Midstream PA 2015
October 1, 2015
Penn State

WV Oil and Gas Expo
October 7, 2015
Morgantown, WV.

Utica Summit III
October 13, 2015
Canton, OH

DUG Eagle Ford + MIDSTREAM Texas
October 25-27
San Antonio, TX

PIOGA 2015 Eastern Oil and Gas
Conference and Trade Show

Latest facts and a rumor from the Marcellus and Utica Shale

  • SHALE INSIGHT.  Kudos to Dave Spigelmyer and his team at the Marcellus Shale Coalition for the very solid SHALE INSIGHT.  The conference provided great speakers.  Rudy Giuliani walking through the exhibit area on Wednesday evening certainly created some buzz.  

    We, at Shale Directories, had a good conference established old ties and met a number of good prospects.  While the numbers were down a little which was expectedly, the quality of the people walking the exhibit area was very good.  They were decision-makers who are the people you want to meet at a conference like this.
  • SHALE INSIGHT RUMORS.  As with any conference, expo or trade show, there are always rumors.  This is what I heard.
    • I heard from a number of sources that drilling will probably remain at the current levels through 2016.  Many E&P Companies expect 2017 to be big year.  Will it return to the early days? “NO,” but it will be much better than today. (RUMOR)
    • Hawbaker is getting some pretty good well pad work. (RUMOR)
    • Look for more drilling in the Upper Devonian and Utica in PA in 2016. It’s less costly to drill into those shales.  (RUMOR)
    • Ascent Resources (the old American Energy Utica), Gulfport and Eclipse are getting active in OH.  
    • Yes, the budget deadlock and the PA administration’s attitude toward the oil and gas industry is causing E&P Companies to delay drilling until the tax issues are resolved.  (RUMOR)
    • The drilling in Tioga County, PA will be primarily in the Utica.  Shell and
    • Seneca have hit some pretty big wells in the Utica in that county. (RUMOR)
  • More on CONSOL.  It does not appear that Noble will be taking over the joint venture with CONSOL.  

    CONSOL currently has one rig working in SW PA and will not be adding any rigs in the remainder of 2015.  Currently it is planning on drilling 10 wells in the Utica in 2016.

    As the result of the layoffs and cut backs in drilling, some of the talent is starting to leave CONSOL.  (RUMOR)
  • Chevron selling acreage in the Marcellus and Utica.  Chevron Corp. (CVX) is offering for sale packages of Marcellus and Utica shale acreage in Pennsylvania through sealed bid offerings.

    Subsidiaries of the San Ramon, Calif.-based company—Chevron USA Inc., Chevron Northeast Upstream LLC and Chevron Appalachia LLC—have retained EnergyNet to handle the transactions.

    In the Utica, Chevron’s interests in about 77,500 gross/net acres are for sale. The offer includes HBP and nonproducing leasehold.

    The company is also selling Marcellus interests in about 740 gross/net acres of HBP leasehold.

    All offers are due at 4 p.m. CDT on Oct. 7. For complete due diligence information visit, or contact EnergyNet’s Chris Atherton at 832-654-6612.
  • DOJ sees problems with Halliburton’s deal for Baker Hughes.  Halliburton’s efforts to gain regulatory approval of its $35 billion buyout of Baker Hughes may have gotten a bit tougher, the “New York Post” reported.

    Houston-based oil-field services company Halliburton must find a single buyer for roughly $7.5 billion of assets which must be divested — instead of selling them to different suitors, the Department of Justice has determined, two sources close to the situation said.

    Last November, Halliburton, in announcing the deal that would combine the No. 2 and No. 3 oilfield service companies (behind Schlumberger), agreed to sell businesses that generate up to $7.5 billion in revenue.

    Justice’s single-buyer mandate leaves the $31.7 billion market-cap company with few options other than selling the package of assets to General Electric or Siemens, sources said.

    “Finding a single buyer will be a challenge,” a source close to the situation — and not directly working for or against the deal — said, according to the Post.

    Last week, at a Barclays’ conference, Halliburton Chief Financial Officer Christian Garcia hinted the company was looking to sell pieces of the assets to different companies.

    Justice is scheduled to wrap up its investigation of the merger on Nov. 25, Kallanish Energy finds.

    Justice and Halliburton declined comment.
  • Third Mariner East pipeline.  Sunoco Logistic Partners LP is holding a binding open season for a third Mariner East pipeline. The pipeline will deliver Appalachian natural gas liquids (NGL) to Sunoco's Marcus Hook Industrial Complex on the Delaware River south of Philadelphia, USA.

    Sunoco said shippers have expressed interest in expanding Mariner East to provide more NGL takeaway capacity from points in eastern Ohio, western Pennsylvania and West Virginia for delivery to Marcus Hook – a former oil refinery that's being repurposed for NGL storage, processing and distribution to local, domestic and international markets.

    Sunoco launched the current open season on 10 September.

    Sunoco revealed in June that it was considering constructing a third Mariner East pipeline. It would likely follow the 300 mile path of the company's existing Mariner East 1, which runs from Western Pennsylvania to Marcus Hook.
  • House to vote on exporting crude.  The U.S. House of Representatives will move a bill repealing the decades-old ban on exporting crude oil to a vote by the end of the month, the chamber’s majority leader announced in Houston on Tuesday.

    The vote is a victory for a coalition of Houston-based oil producers who have lobbied for the change since a glut of oil began flowing from U.S. shale.

    But while the bill is expected to pass through the House relatively easily, it will face significantly more opposition in the Senate. And on Tuesday, the White House signaled that it was unlikely to back legislation authorizing exports.

    Obama will again kill something that is good for American workers. He gives such lip service to the American middle class.   It could the Keystone Pipeline all over again.
  • Denton, Texas fracturing litigation ban resolved.  Litigation over the legality of a hydraulic fracturing ban between the Texas Oil & Gas Association (Txoga) and the City of Denton, Texas, is resolved, law firm Baker Botts LLP said Sept. 16.  

    The Denton County District Court granted an agreed motion to dismiss, filed by both parties, dismissing all claims as moot in the lawsuit concerning the legality of the ban, known as Initiative Ordinance No. 2014-01, and a drilling moratorium known as Ordinance No. 2014-137, in Denton.

    Denton repealed the first ordinance on June 17 and let the second one expire on Aug. 18. The Agreed Order can be found here.

    No further extensions of the drilling moratorium have been passed or proposed by the city, Baker Botts said.
  • Waterless fracking on hold.  Waterless fracking technology recently tested in eastern Ohio is dead – for now.

    The propane concoction designed and tested by GasFrac Energy Services Inc. in the Utica shale is not being pursued by the new owners.

    "The technology piece, the propane fracking, I like it," Step Energy Services CEO Regan Davis told Alberta Oil Magazine. "I think it’s a technology that has a place in the market. But for our purposes, we decided that we weren’t going to be in that business, so we mothballed that whole segment."

    STEP Energy acquired GasFrac's assets in March. Both companies were based in Calgary, in Alberta, Canada.

    GasFrac's alternative to using millions of gallons of water to hydraulically fracture oil and gas wells received a lot of attention and spurred optimism, but the company filed for protection from creditors in January.

    Before its sale, GasFrac partnered with some of the heavy hitters in Ohio to test its propane-gelled process. Partners in Tuscarawas County included Chesapeake Energy Corp. (NYSE:CHK) and EV Energy Partners (NASDAQ:EVEP). That company's chairman, John Walker, said the test well didn't perform up to par, considering its high cost of $22 million.

    Oil and gas producers and executives from GasFrac hoped the technology could help unlock the potential of the Utica shale play's oil window, which is much less developed than Ohio's gas window.
  • Midstream making the Appalachian more viable.  The Appalachian Basin by 2019 could have roughly 25 billion cubic feet per day (Bcf/d) of natural gas, natural gas liquids and condensate pipeline capacity — with 11 Bcf/d slated to come online between now and 2018, an executive with the basin’s largest midstreamer said Thursday.

    Randy Nickerson, the outgoing (early 2016 retirement) chief commercial officer for MarkWest Energy Partners, has been in the middle of most midstream growth in the basin over the last decade. He held court Thursday to talk about what was, is and will be in the basin during Day 2 of the Shale Insight 2015 conference, presented in Philadelphia by the Marcellus Shale Coalition.

    Addressing midstream buildout as the cavalry, coming to assist basin producers from their oversupply/lack-of-infrastructure dilemma, Nickerson said it’s easy to see why the cavalry is needed.

    “In 2009, [basin] producers were doing 3 Bcf/d of gas and that was something,” Nickerson told the audience. Today, the Marcellus and the Utica are doing over 20 Bcf/d – more than the Gulf of Mexico and one-quarter of all gas produced in the country.”

    For the last five years, takeaway capacity has been the bugaboo in the Pennsylvania Marcellus, with the spot market in the southwestern portion of the state regularly seeing natural gas priced under $1 per thousand cubic feet (Mcf).

    “Northeast Pennsylvania will be the first area to get out of the takeaway problem,” according to Nickerson. The area right now has 5 Bcf/d of takeaway capacity, but one year from now it will have another 2 Bcf/d of takeaway.”

    Again, five years ago, in Southwest Pennsylvania, the question was what to do with all the liquids being drilled – what about midstream infrastructure, Nickerson said.

    Today, there is 7.5 Bcf/d of gas processing capacity built, and 600,000 barrels per day (BPD) of fractionation capacity.

    “Within three to four years, we could have 1 million barrels per day of liquids fractionation capacity,” Nickerson said.
  • Exxon’s XTO looking for deals in the Permian (Bloomberg).  Exxon Mobil Corp. is adjusting the way it structures shale acquisitions as the global energy giant expands in West Texas, the largest U.S. oil-producing region.

    Executives with Exxon’s shale-drilling unit, XTO Energy, are meeting with small, closely held producers in the Permian Basin to negotiate possible purchases and joint ventures, according to three people familiar with the talks. The company is expanding its use of a new strategy first deployed in the region last year that offers operators a cut of future proceeds rather than big upfront stock or cash payouts, say the people, who asked not to be named because the meetings were private.

    Stung by the 58 percent plunge in U.S. oil prices since June 2014, many drillers face stark choices: shut down rigs to conserve capital and wait out the bust, or surrender some independence to a deep-pocketed savior in exchange for a shot at a future windfall. Exxon is expanding at a time when $40-a-barrel crude is crippling more-indebted companies.

    “You’re going to see more pain,” Ted Harper, a senior fund manager who helps oversee $10 billion at Frost Investment Advisors LLC in Houston, said in a telephone interview. “Some folks are going to be scrambling for alternatives.”

    The XTO executives dispatched from the unit’s Fort Worth, Texas, headquarters have been working since last year to structure prospective deals to provide long-term returns rather than up-front riches, the people said.

    Tough Terms

    The company is offering to cover all drilling and appraisal costs on a given parcel; in exchange, Exxon promises as much as one-third of revenue from any discoveries to its partner, with Exxon keeping the rest, the people said. The Permian Basin is a cluster of oil fields beneath Texas and New Mexico that pumps more crude than half the nations in OPEC.

    For Exxon investors, the new deals strategy provides an added bonus: because the company isn’t using stockpiled common shares to fund the transactions, there’s zero dilution to individuals’ portfolios.

    After acquiring XTO in 2010 to capture that company’s shale expertise, Exxon relied on the traditional corporate-buyout strategy to expand its holdings. One month after closing the XTO deal, Exxon paid $695 million for Haynesville Shale driller Ellora Energy Inc. The following year, it paid a total of $1.69 billion for Phillips Resources Inc. and TWP Inc., closely-held Marcellus Shale explorers.

    Spokespeople for XTO and Exxon’s corporate headquarters declined to comment on any possible deal talks. "We are always on the lookout for opportunities to enhance shareholder value," said Alan Jeffers, a spokesman for Exxon.
  • Tax breaks for gas-hungry manufacturers.  In an assist to the shale-gas industry, the speaker of Pennsylvania's House said Thursday that Republicans will propose a "Keystone Energy Zone" to extend tax breaks to gas-hungry manufacturers.

    Rep. Mike Turzai (R., Allegheny), speaking on the final day of the Marcellus Shale Coalition's two-day conference in Philadelphia, disclosed the tax-break concept as a counterpoint to Gov. Wolf's plan to create a natural-gas severance tax.

    "Let's quit talking about this severance tax, and let's talk about how we improve usage," Turzai said during an onstage discussion with David J. Spigelmyer, the coalition's president, and K. Scott Roy, a Range Resources Corp. executive who is the coalition's chairman.

    Turzai, an unvarnished supporter of the gas industry, used the friendly Shale Insight 2015 conference to bash Wolf's tax proposal, a centerpiece of the stalemated budget plan. The Democratic governor's $1 billion production tax would mostly fund education.

    Turzai and Republicans say the severance tax would impair the gas industry and drive out investment. They say government should fashion policies to encourage more drilling and growth of energy-intensive industries.

    Turzai said the Keystone Energy Zone would be modeled on the Keystone Opportunity Zone, which extends 10-year breaks on local and state taxes for businesses that locate in designated areas.

    He said the energy zone would "incent people to put in manufacturing facilities that would utilize natural gas as an energy source or would utilize natural gas as a feedstock for other products."

Visit our Blog for daily updates on what’s happening in the oil & gas industry

Rig Count

  • Baker Hughes Rigs count for the week September 18, 2015
  • PA
    • Marcellus 32 down 2
    • Utica 1 unchanged
  • Ohio
    • Utica 19 up 1
  • WV
    • Marcellus 17 unchanged
  • TX
    • Eagle Ford – 88 down 2
    • Permian Basin  207 up 2
  • NM
    • Permian Basin – 46 up 1
  • ND
    • Williston – 67 down 3
  • MT
    • Williston – 1 unchanged
  • CO
    • Niobrara –27 unchanged
  • TOTAL U.S. Rig Count 848 down 16

PA Permits for September 10, to September 17, 2015

      County               Township          E&P Companies

1.    Butler                Middlesex            Rex
2.    Butler                Middlesex            Rex
3.    Bulter                Middlesex            Rex
4.    Butler                Middlesex            Rex
5.    Butler                Middlesex            Rex
6.    Butler                Middlesex            Rex
7.    Greene              Richhill                Rice
8.    Greene              Richhill                Rice
9.    Greene              Richhill                Rice
10.  Greene              Richhill                Rice

OH Permits – week ending September 12, 2015

       County               Township             E&P Companies

1.    Monroe                Seneca                Antero
2.    Monroe                Seneca                Antero
3.    Monroe                Seneca                Antero
4.    Monroe                Seneca                Antero

Joe Barone 610.764.1232
Vera Anderson 570.337.7149

Northeast Supply Enhancement