BusinessCreator, Inc.


Expo/Industry events for the next few months

West Virginia Oil and Gas Expo
Oct. 5, 2016
Mylan Park's Expo Center
Morgantown, WV 

Midstream PA 2016
October 13, 2016
Penn Stater Conference Center
State College, PA    

Latest facts and a rumor from the Marcellus, Utica, Permian, Eagle Ford, Bakken and Niobrara Shale Plays 

  • FERC Gives Nexus Pipeline Favorable Report.  The Federal Energy Regulatory Commission has issued a favorable report on the Nexus Gas Transmission Pipeline, Kallanish Energy has learned.

    The federal agency that oversees interstate pipelines released a favorable draft on the Environmental Impact Statement for the pipeline that would cross northern Ohio and connect with pipelines in Michigan.
  • Positive Rig Move RUMORS.  It appears that everyone is starting to hear the same rumors.  This is what people have told us this week:  
    • SWN.  Some people are saying two rigs are coming in.  Others are saying 1 rig.  We will track this and let you know.
    • Range.  Two rigs are going into the Lycoming County, PA area.
    • Consol.  People are telling us two rigs from Consol.
    • Housing.  A company in the Williamsport area which rents out high-end furnished apartments is getting calls looking for apartments.  The gas workers are saying that their per diems are “back to their normal levels.”
  • Wall Street’s Getting Bullish on NatGas.  As many of you know, I’m a CNBC junkie and have it CNBC on when I’m in my office.  This past Thursday a couple of major brokerage firms issued buys recommendations on companies drilling in the Appalachian Basin.  These brokerage houses are forecasting a strong year for NatGas in 2017.  

    This is not a stock recommendation.  The companies recommended by the brokerage houses are Chesapeake Energy, WPX Energy (Many people still refer to as Williams.  We did put it in out newsletter last week.) and Antero Resources.    Please do not buy these stocks based on this comment.  

    Conclusion.  The 4th quarter of 2016 and the entire year of 2017 looks like they will be good for the oil and gas industry.  There are a number of reasons which we have stated in the newsletter. From what we hear in the field and what we see on CNBC and read in the WSJ, we think 2017 is going to be a good year for companies working in the Appalachian Basin.  This also coincides with comments made at DUG East. Information is valuable; attend seminars
  • FERC Appoves Draft for PennEast Pipeline.  Federal energy regulators on Friday approved a draft environmental impact statement for the hotly contested 118-mile PennEast Pipeline, which would deliver Marcellus Shale natural gas primarily to utilities in the Lehigh Valley and in New Jersey.

    The Federal Energy Regulatory Commission said that construction of the $1 billion pipeline would cause some adverse environmental impacts, but that "most of these impacts would be reduced to less-than-significant levels with the implementation of PennEast's proposed mitigation and the additional recommendations in the draft EIS."

    Environmental groups, which have sued FERC for its pipeline oversight, denounced the 1,176-page environmental study as inadequate. They have asked regulators to weigh the entire process of natural gas extraction into its decision.

  • Annova Building Terminal to Move Eagle Ford NatGas.  Annova LNG has filed with the Federal Energy Regulatory Commission (FERC), seeking approval to convert natural gas to liquefied natural gas and export it from a proposed terminal in Brownsville, Texas.

    The company is asking for the agency to approve the application by March 30, 2018, according to a July 13 letter from Annova LNG general counsel Brett Snyder to FERC reviewed by Kallanish Energy.

    Annova LNG plans to pipe gas from the Eagle Ford Shale play to the Port of Brownsville, at the southern tip of Texas.

    Once posted to the FERC website, the Annova LNG application will trigger a public comment period, during which project opponents, including the Sierra Club and Save RGV from LNG are expected to voice their opposition.

    Rebekas Hinojosa, an organizer with the Lone Star Chapter of the Sierra Club, said the city of South Padre Island, the city of Port Isabel and the Texas Shrimp Association are among their allies opposed to the project.

    “The Annova LNG facility would irrevocably scar the valley if it is built,” Hinojosa said, in a statement. “No minor shift in its footprint will change the fact that it will damage the local economies, from fishing to tourism that depends on a pristine and accessible coast and waterways.”
  • Seventy Seven Energy Exits Bankruptcy.  Oilfield services firm Seventy Seven Energy is close to exiting bankruptcy after a judge approved a reorganization plan that would give the Oklahoma City, Oklahoma-based company access to up to $100 million in new capital.

    Judge Laurie Selber Silverstein of the U.S. Bankruptcy Court in Wilmington, Delaware, said last week she would grant Seventy Seven Energy permission to put its reorganization plan into action.

    The plan allows bondholders owed $1.1 billion to become majority owners in the company, Kallanish Energy finds.

    “By converting all of the funded bond debt to equity under the plan and structuring the exit facility on the [current terms and conditions], [Seventy Seven Energy and its affiliates] have the means to withstand the volatility endemic in the current commodity market,” Cary Baetz, the company’s chief financial officer, said in court documents.

    Under the company’s reorganization plan, its unsecured debt would be fully paid, and shareholders would receive warrants for 20% of new common stock.

    Seventy Seven Energy filed for Chapter 11 bankruptcy on June 7, burdened with roughly $1.7 billion in debt.

    Dealing with sharp cutbacks by its customers, Seventy Seven Energy’s revenue plummeted, to roughly $1.1 billion in 2015, from $2.1 billion in 2014, according to court papers.

    The company’s workforce was slashed by 66%, to 1,500 as of March 31, from roughly 4,400 in December 2014.

    Seventy Seven Energy was created in 2014, when it was spun-off from Chesapeake Energy, which continued to use the company’s services and provided a majority of its first-quarter revenue.

    NatGas Training Center Opens in Monaca, PA.  The center is near Shell Chemical Appalachia’s proposed ethane cracker plant in Beaver County.

    Columbia Gas of Pennsylvania has opened a new $10 million training facility for natural gas workers at Monaca, Pennsylvania.

    The 22,000-square-foot facility is the first of four planned by NiSource, parent company of Columbia Gas. The others will be built by NiSource companies in Ohio, Massachusetts and Virginia, Kallanish Energy learns.

    The new facility will be used to train new employees and current employees moving into new positions. It will also be shared with local first responders.

    It was hailed as the next-generation training facility for utility workers, with 80% of the training outside the classrooms.

    It features training simulators, hands-on labs, demonstration areas, an excavator school and fire-safety training.

    It includes what is called an Emergency Response Safety Town, a mock neighborhood of mini-homes and businesses complete with underground utilities where instructors can create natural gas scenarios.

    Instructors will also teach line locating, leak detection, corrosion monitoring and re-establishing gas service.

    “Building these new centers is one way we’re being responsive and evolving our training,” said Mark Chepke, NiSource vice president of training, in a statement. “Our single-best asset is our workforce and this is an investment in their future.”
  • Pittsburgh Airport Benefitting from Consol Deal.  Officials from Consol Energy and Allegheny County announced Monday the start of natural gas production at Pittsburgh International Airport, a partnership that has already helped the offset operational costs at the airport. 

    The Cannonsburg-based energy company is now harvesting the natural gas on the land that was leased by the airport in 2013 in a 20-year, $500 million deal. The partnership has helped reduce the airport’s per-passenger costs since the company made an initial lease payment of $46 million in July 2013.

    With the current production, the airport will soon begin to receive its 18 percent royalty from natural gas produced at the airport.

    “It’s an innovative approach at generating non-aviation revenue for our local airport,” said Tim Dugan, chief operating officer of Consol Energy. “We are now producing and seeing the benefits of the last two years’ worth of work.”

    Consol officials expect to pay $450 million dollars in revenue to the airport in royalty payments.

    The deal between Consol, the Airport Authority and Allegheny County allows the energy company to drill 47 wells throughout six designated well pads on airport-owned property. Of the six pads, only Pad 2 is currently producing.
  • Eclipse Resources 2nd Qtr. Update.  Eclipse Resources reported second-quarter Utica Shale production increased by 17% from the previous quarter, Kallanish Energy has learned.

    Net production averaged 236 million cubic feet-equivalent per day (MMcfe/d), the company said in an operational update.

    That total was 18% above the company’s previously issued guidance and a 19% increase over second-quarter 2015 results.

    The production was 71% natural gas, 19% natural gas liquids and 10% oil.

    The company, based in State College, Pennsylvania, is also raising its full-year 2016 guidance by 7%, to between 220 MMcfe/d, and 225 MMcfe/d.

    Eclipse reported a second-quarter realized natural gas price, before the impact of derivatives and excluding transportation costs, averaged $1.56 per thousand cubic feet (Mcf). Crude oil averaged $36.74 per barrel (Bbl) and natural gas liquids averaged $13.60/Bbl.

    Since resuming drilling in the second quarter, Eclipse has drilled two Utica wells and is drilling a third in the Utica’s dry-gas area.

    In addition, it has completed four gross wells in Ohio’s liquids-rich Utica play. Those wells averaged 10 stages per day, all utilizing slick water, 150-foot hydraulic fracturing (frac) stages and higher sand concentrations (1,800 to 2,000 pounds per foot). The four wells will begin production in the next 30 days.

    The five-well Wheeler pad in Ohio’s Guernsey County is 50% hydraulically fractured – with the wells getting 2,000 pounds of sand per foot, the company said.

    Eclipse is working to extend the length of its laterals in the Utica dry-gas window, said CEO Benjamin Hulburt. He reported the company’s much-publicized Purple Hayes well in Guernsey County is producing at its managed choke target rates with flat production, shallower pressure declines and no major change on condensate yield.

    The well’s lateral is 18,500 feet long, reportedly the longest onshore lateral in the U.S.

    The company said the initial results from Purple Hayes are “indicative of better-than-anticipated performance and [the company] remains optimistic with the results to date,” Hulburt said, in a statement.

    The company has set its earnings call for Aug. 3.
  • Harold Hamm, Energy Secretary. Republican presidential candidate Donald Trump is considering nominating Continental Resources founder/CEO Harold Hamm as energy secretary if elected on Nov. 8, four sources close to Trump's campaign told Reuters.

    Hamm would be the first U.S. energy secretary picked directly from the oil and gas industry since the cabinet position was created 39 years ago, Kallanish Energy learns.

    Dan Eberhart, an oil investor and Republican financier, told Reuters he had been told by officials in Trump's campaign that Hamm, who has been an informal advisor to Trump on energy policy since at least May, was "the leading contender" for the position.

    Eberhart said he had discussed the possible appointment with top donors at the Republican National Convention in Cleveland this week, where Trump was formally nominated as the party's candidate in the Nov. 8 presidential election.

    Three other sources close to the Trump campaign confirmed to Reuters Trump were considering Hamm for the post. None of the sources was aware of who else Trump may be considering for the job.

    Hamm addressed the Republican convention Wednesday night, calling for expanded drilling and said too much environmental regulation threatened to limit U.S. oil production and increase the country's dependence on Middle Eastern oil producers.

    "Every time we can’t drill a well in America, terrorism is being funded," Hamm told the crowd. "Every onerous regulation puts American lives at risk."

    Past heads of the DOE have typically had a political or academic background.

    This is an interesting rumor that Kallanish Reports reported.  Harold Hamm has been a big supporter of Trump from the beginning.  We would certainly have an energy policy that will protect American security as well as enable our oil and gas industry to realize its full potential.
  • Good for North Dakota.  North Dakota is the first state to sue the Environmental Protection Agency over new methane emission rules for the oil and gas industry, Kallanish Energy finds.

    The state filed its lawsuit Monday in the D.C. Circuit Court of Appeals, arguing the new rule is “arbitrary, capricious, an abuse of discretion and not in accordance with law,” the Washington Examiner reported.

    The methane rule requires shale oil and gas producers to reduce methane leaks at new and modified drilling sites.

    The rule is part of President Obama’s climate change agenda, which seeks to reduce methane emissions 40%-45% by 2025.
  • Halliburton CEO Is Bullish.  Dave Lesar, CEO of Halliburton, believes there is now a sentiment within the North American oil and gas industry that trumps oil prices. “I can summarize this market in one sentence,” he told investors during the company’s second quarter update. “Today, our customers are focused on growing their businesses again rather than being focused on survival.”

    Based on recent improvements Lesar and Halliburton have seen in North America, he believes the second quarter will end up being the trough in overall activity levels and the company’s earnings cycle.

    For Q2, the company’s revenue declined by only 9 percent compared to the previous quarter and the company’s North American revenue declined by only 15 percent, numbers Lesar expressed optimism over.

    “There is a growing survivor mentality out there and you can’t estimate the positive change that we are seeing in our North American customers that we didn’t see earlier in the year,” Lesar said.

    According to Lesar, most talks with exploration and production firms include plans of adding rigs, buying assets or doing something accretive. “They are getting back to business,” he said.

    Oil reaching $50/b marked a crucial emotional time for exploration and production companies. The price point acted as a light at the end of a tunnel instead of a representing an oncoming trend.

    In Q3, Lesar believes Halliburton’s margins will improve. By Q1 of 2017, margins will be breakeven or positive.

    When activity and oil prices improve, North America’s unconventional shale plays will be the fastest to recover, he added. “During the coming recovery, we plan to scale up,” he said.

    We totally agree with what Lesar is saying per our comments above.
  • More Good News about Fracking.  Fracking opponents and proponents have long been concerned about the potential pollution and health hazards associated with radioactive materials flowing to the surface in drilling waste.

    WVU researchers studying the fracking process at two Morgantown gas wells may have some positive news about that concern. They’ve reported that drilling wastes produced at the two Northeast Natural Energy Morgantown Industrial Park wells are well below federal guidelines for radioactive or hazardous waste.

    The answer may be tied to the “green” drilling mud used at the site, they reported during the Appalachian Basin Technology Workshop in Canonsburg, Pa. A WVU press release summarized the findings presented by Paul Ziemkiewicz, director of WVU’s Water Research Institute.

    The wells are the centerpiece of the Marcellus Shale Energy and Environmental Laboratory (MSEEL), a partnership with Northeast Natural Energy, the National Energy Technology Laboratory, Schlumberger and Ohio State University.

    Kudos to WVU for having the courage to send out a press release that shows the fracking does not harm the environment.  As many of you know, the University of Cincinnati tried to conceal a study that it showed how fracking did not affect water in Ohio.  

    Register for Midstream PA 2016.

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

Rig Count 

Baker Hughes Rig Count the week of July 22, 2016

  • PA
    • Marcellus 14 unchanged
  • Ohio 
    • Utica 12 unchanged
  • WV 
    • Marcellus 10 unchanged
  • TX
    • Eagle Ford –35 up 2
  • TX & NM
    • Permian Basin – 168 up 8
  • ND
    • Williston – 27 unchanged
  • CO
    • Niobrara – 18 up 2
  • TOTAL U.S. Land Rig Count 440 up 18

PA Permits for July 14 to July 21 2016

       County            Township               E&P Companies

1.    Greene                Morgan                EQT
2.    Washington         North Bethlehem   Rice                

OH Permits for weeks ending July 9, 2016

       County            Township            E&P Companies

1.    Belmont            Colerain               Ascent Resources
2.    Jefferson           Ross                  Chesapeake
3.    Jefferson           Ross                  Chesapeake
4.    Jefferson           Ross                  Chesapeake
5.    Monroe              Washington        Gulfport
6.    Noble                Wayne                Antero        

Joe Barone 610.764.1232
Vera Anderson 570.337.7149

Northeast Supply Enhancement