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Expo/Industry events for the next few months

OOGA Technical Conference and Oil Expo
November 2
Pritchard Laughlin Civic Center
7033 Glenn Hwy
Cambridge, Ohio  43725
Visit us at booth #36
http://oogatechexpo.com/

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

Halliburton Coming Back to North Central PA.  Halliburton which had disassembled its concrete operations about 6 months ago.  It looks like Halliburton is moving workers back into the area. 

GE Talking to Baker Hughes.  GE said none of the options “include an outright purchase.”

General Electric said on Thursday it was in discussion with the No. 3 oilfield services provider Baker Hughes on potential partnerships.

“While nothing is concluded, none of these options include an outright purchase,” GE said in a statement.

Baker Hughes shares, which had jumped nearly 14% in extended trading after the Wall Street Journal had reported that General Electric was in talks to buy the company, pared some gains and were up about 7%.

We will watch this closely.  You know the DOJ will be looking at this especially in light how it blocked the Halliburton – Baker Hughes deal. 

Antero Midstream 3rd Qtr. Financials. Third Quarter Highlights Include:

  • Net income was $71 million, or $0.37 per limited partner unit, representing a per unit increase of 61% compared to the prior year quarter
  • Adjusted EBITDA was $111 million, a 55% increase compared to the prior year quarter
  • Distributable cash flow was $103 million, resulting in DCF coverage of 2.0x
  • Declared a cash distribution of $0.265 per unit for the third quarter of 2016, a 29% increase compared to the prior year quarter and a 6% increase sequentially
  • Completed private placement of $650 million of 5.375% senior notes due 2024 at par, resulting in $1.0 billion of liquidity to fund organic growth opportunities

Increase in Acreage Dedicated to Antero Midstream

Year-to-date, Antero Resources has acquired approximately 65,000 net leasehold acres in West Virginia in the high-graded core of the Marcellus Shale, 71% of which includes Utica rights. Substantially all of the acquired acreage is dedicated to Antero Midstream for gathering, compression, processing, and water services.  

On October 25, 2016, Antero Resources signed a definitive agreement for the sale of approximately 17,000 net acres primarily located in Washington and Westmoreland Counties, Pennsylvania for $170 million.  Approximately 20% of the 17,000 net acres was dedicated to a third party and $10 million of the proceeds is expected to be allocated to Antero Midstream as consideration for the release of its existing gathering and compression dedication concurrent with the acreage sale. The acreage is not included in Antero Midstream's five year infrastructure development plan based on Antero Resources' current five year drilling plan. The transaction is expected to close in the fourth quarter of 2016.

Range 3rd Qtr. Report; Shifting Focus to LA.  The Marcellus Shale in the northeastern U.S., long considered the cheapest and most profitable place to drill for natural gas, has a rival.

Fort Worth-based Range Resources, a pioneer in the Marcellus, told investors Wednesday that it can capture better returns on gas in a northern Louisiana field that it acquired with its purchase of Memorial Resource Development. The explorer’s rate of return in the so-called Terryville play is about 71 percent, compared with 59 percent at most in the Marcellus, according to company estimates based on forward prices as of June 30.

The comments came in a conference call to discuss the company’s third-quarter earnings report. Range reported a loss of $42 million, or 23 cents a share, as revenue declined by 14 percent to $413.2 million.

The potentially bigger profits in Louisiana underscore how much the glut of gas in the Marcellus and a lack of pipelines to deliver the power-plant fuel to market has depressed prices and squeezed drillers’ profits. By contrast, the Louisiana play is close to both demand centers in the Gulf Coast and a U.S. benchmark hub, allowing it to capture high prices with minimal shipping costs, according to Range.

“Like I’ve said many times over the years in the Marcellus, I don’t believe we’ve drilled our best well yet in the Terryville,” Ray Walker, Range’s Chief Operating Officer, said on the call with investors. The company is “already achieving some significant wins,” he said.

Range closed on its purchase of Houston-based Memorial last month. The deal, valued at $3.3 billion, marked Range’s biggest acquisition to date and signaled its diversification outside the Marcellus.

Range didn’t say Wednesday exactly how much money it expects to spend on wells in Terryville next year. It said it expects to average nine rigs in the fourth quarter — five in the Marcellus and four in Louisiana.

Murray Energy Selling in the Utica.  To help pay off debt in an effort to avoid bankruptcy, Murray Energy Corp. will sell more than 5,900 acres worth of Utica Shale natural gas reserves in Belmont and Monroe counties for $63.6 million.

Murray officials declined to identify the buyer, but public records show the firm leased approximately the same number of acres to Gulfport Energy Corp. for fracking in October 2014. Officials with Oklahoma City-based Gulfport could not be reached for comment.

The selling price would be approximately $10,800 per acre.

“We are pleased that we were able to reach this agreement, which will provide us with additional liquidity and will allow us to further focus our efforts on our core business and to de-lever our balance sheet,” said Robert D. Moore, Murray executive vice president, chief operating officer, and chief financial officer.

Panda Power Commission Liberty Plant.  Panda Power Funds and officials from across Pennsylvania marked the official commissioning of the Liberty gas-fired plant.

The plant is the first to take advantage of natural gas reserves discovered in the Marcellus Shale.

Liberty, a combined-cycle plant, has a total capacity of 829-MW.

Marathon 3rd Qtr. Report.  Marathon Petroleum reported earnings per share of US$0.58 for the third quarter, versus analyst expectations of US$0.81, with revenues also missing the consensus estimate, coming in at US$16.46 billion. Analysts had projected revenues of US$17.18 million.

The refiner, which yesterday said it will distribute a third-quarter dividend of US$0.36 per share, said the results were affected by a US$267-million impairment charge on its Sandpiper pipeline project, which the company exited earlier this year, after spending US$301 million on its construction. The project was later canceled when the lead partner in the joint venture for its construction, Enbridge, withdrew its application documents, saying it would delay it until market conditions make it viable.

When Marathon Petroleum opted out of Sandpiper, however, it entered another, much more controversial pipeline project – the Dakota Access – which has been in the public eye for months now, with large-scale protests and a White House veto delaying the construction works.

Pipelines are a vital part of Marathon Petroleum’s business: in the quarterly report announcement, CEO Gary H. Heminger said that midstream operations, along with its Speedway chain of convenience stores, had contributed more than US$450 million to the gross third-quarter income figure. The net stood at US$145 million.

Deprived of potential revenue streams from the Dakota Access, at least temporarily, Marathon has started work on another pipeline project – the Cornerstone pipeline, which would transport condensate and natural gas from the Utica and Marcellus shale plays to Marathon’s Ohio refinery. The construction began on schedule earlier this month, and with lower than the initially planned investments.

EQT 3rd. Qtr. Report.  EQT Corp.’s CEO Dave Porges is retiring early next year and will be replaced by Steven Schlotterbeck, the company announced today.
Dave Porges

Mr. Schlotterbeck is EQT’s head of exploration and production and was named president of the company in December 2015.

The leadership change marks a transition in Downtown-based EQT’s focus from financial restructuring, which represents Mr. Porges’ background, to building a technical leader, the company said in a statement.

Mr. Porges will retain his chairmanship of the company’s board of directors for one year following his retirement.

He is also currently the CEO of EQT Midstream Partners and EQT GP Holding, two spinouts that manage pipelines and compression assets. Mr. Schlotterbeck will assume the helm of both of these entities as well when the transition is complete.

The company also reported its quarterly earnings this morning, swinging to a loss of $8 million, or 5 cents per share, compared with a net income of $41 million, or 27 cents per share, during the same three months last year. EQT attributed the loss to a decrease in natural gas prices.

EQT Buys Almost 60,000 Acres in the Marcellus.  EQT announced Tuesday that it had reached deals totaling $683 million to acquire almost 60,000 acres of natural gas holdings in the Marcellus Shale.

It will pay Trans Energy Inc. $513 million for 42,600 acres and about 42 million cubic feet per day of natural gas production in West Virginia.

EQT will also pay $170 million for 17,000 acres and about 2 million cubic feet per day of natural gas from an undisclosed party. The land is located in Washington, Westmoreland and Greene counties.    

Carrizo Makes Eagle Ford Purchase.  Carrizo Oil & Gas announced that it has agreed to acquire Eagle Ford Shale properties from an affiliate of Sanchez Energy Corporation (NYSE: SN) for $181 million in cash, subject to customary closing adjustments. Additionally, Carrizo is providing estimated third quarter production.

Acquisition Highlights:

  • Approximately 15,000 net bolt-on acres located primarily in the core volatile oil window of the Eagle Ford Shale in LaSalle, Frio, and McMullen counties, TX
  • Estimated net production during September of approximately 3,100 Boe/d (61% oil) from 112 gross (93 net) wells
  • Net proved reserves, based on the Company’s internal estimates, of 14.5 MMBoe (71% oil, 56% developed)
  • Approximately 80 net de-risked drilling locations based on a single layer development in the Lower Eagle Ford Shale, with additional upside potential from stagger-stack development, infill drilling, and additional zones
  • Acreage is 100% operated with no additional drilling requirements

Hess 3rd Qtr. Report.  Hess reported its production in the Bakken Shale play dropped in the third quarter, to 107,000 barrels of oil-equivalent per day (BOE/d), from 113,000 BOE/d in the year-ago quarter, a 5.3% fall, the company said.

The decline was due to a reduced drilling program predicated on low commodity prices, the company said.

In the third quarter, Hess operated three rigs in the Bakken in North Dakota and Montana, and it placed 22 wells into production.

Drilling and completion costs averaged $4.7 million per well, down 11% from the year-ago quarter, the New York-based company said.

It said its standard well design has grown from 35 fracking stages to 50 fracking stages.

Hess reported a net loss of $339 million, which compares with a net loss of $279 million in the prior-year quarter.

The company reduced its third-quarter capital spending by 49%, to $435 million from $849 million one year ago.

Hess CEO John Hess hailed the new Liza-3 oil well offshore in Guyana that is partially owned by Hess, saying it looks very promising.

Liza’s estimated recoverable resources range will be at the upper end of 800 million to 1.4 billion barrels of oil-equivalent, he said.

Research Report on Marcellus/Utica Production.  Natural gas production in the Marcellus and Utica Shale plays will continue to grow, but growth may be less than some projections, Kallanish Energy learns.

That assessment came from Tom Choi, director of the California-based Berkeley Research Group, who was addressing an audience of more than 100 Tuesday in Pittsburgh at S&P Global/Platts ninth annual Appalachian Oil & Gas Conference.

Some industry watchers have predicted Marcellus-Utica production could hit 40 billion cubic feet per day (40 Bcf/d) in the next decade, but Choi said he’s unsure that will happen.

The Marcellus and Utica together now produce about 20 Bcf/d of natural gas.

Choi said he anticipates “moderate growth” in the Marcellus and Utica shales, but that the 40 billion estimate may be too rosy. He expects production from the Marcellus and Utica to grow at “a moderate pace.”

There will be increasing competition from more economical shale basins, he said. As production drops from Marcellus and Utica wells, drillers will shift to less-productive wells and that will hurt Marcellus-Utica growth, he said.

Many Marcellus-Utica wells have less-than-stellar production results, Choi added. Both plays are dominated by big, very successful wells that drive production, he said.

The Appalachian Basin is also still suffering from infrastructure constraints, he said.

Centennial reversal is a ‘go’

In other news from the Appalachian conference, Houston-based Enterprise Products Partners announced it’s proceeding with reversing the Centennial Pipeline to get shale liquids from the Appalachian Basin to the Gulf Coast.

Danika Yeager, vice president of regulated business for Enterprise Products, said the pipeline would handle 60,000 barrels per day (BPD) of propane and 170,000 BPD of ethane.

The project is a joint venture with Ohio-based Marathon Petroleum.

The two companies co-own the existing 795-mile, 26-inch Centennial line that runs from the Gulf of Mexico north to central Illinois. The plan is to reverse the line.

An additional 150 miles of pipeline in Illinois and Indiana will connect to Centennial, she said. The companies plan to begin construction in early 2018, and to have the pipeline in service later in the year.

Permitting begins in 2017

Permitting and right-of-way acquisition for new pipeline sections will begin after Jan. 1, she added.

Earlier Marathon Petroleum officials said the companies were working on the project, but Yeager said the pipeline reversal is a go.

In other news, several Platts’ speakers said it appears the proposed ethane cracker plant near Parkersburg, West Virginia, is not moving forward at the moment.

That project appears to be “on hold,” said Jeffrey Logan, president of the Pennsylvania Chemical Industry Council.

Royal Dutch Shell has announced plans to build an ethane cracker in Beaver County, Pennsylvania, northwest of Pittsburgh.  PTT Global Chemical, a Thai company, is planning a cracker in Ohio’s Belmont County. A final investment decision is expected in early 2017.

The West Virginia cracker had been proposed by Brazilian companies Braskem and Odebrecht.

FERC Delays Atlantic Sunrise Pipeline. The proposed $2.6 billion Atlantic Sunrise Pipeline has run into a new delay, Kallanish Energy has learned.

The Federal Energy Regulatory Commission last week issued a revised schedule that calls for issuing a final environmental impact statement (EIS) for the 197.7-mile Pennsylvania natural gas pipeline on Dec. 30.

That is roughly two months later than had been expected and will likely delay start of pipeline construction in 2017. Final FERC approval is now likely due in spring 2017, not earlier in the year.

The new delay could slow pipeline service from late 2017, as had been expected, into early 2018.

FERC had issued its draft EIS on the project last May. It said any impacts would be minimal.

The agency has caught some flak from the U.S. Department of the Interior and the U.S. Environmental Protection Agency for that draft report. Both agencies said FERC failed to fully consider all environmental impacts.

A coalition of 17 eco-groups has asked FERC to revise or reexamine its draft EIS.

The pipeline, being developed by Williams, would move Marcellus Shale natural gas from northern Pennsylvania to an existing pipeline in Lancaster County, Pennsylvania.

The pipeline, part of the Transcontinental Gas Pipe Line (Transco), would transport roughly 1.7 billion cubic feet per day (Bcf/d) of natural gas to markets in the Mid-Atlantic states and the southeast U.S.

Anadarko May Be Selling in the Permian.  Sanchez and Blackstone are considering buying acreage from Anadarko in the Permian Basin.  (RUMOR)

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

http://www.shaledirectories.com/blog/

Rig Count 

  • Baker Hughes Rig Count the week of October 28, 2016
     
  • PA     
    • Marcellus 27 up 2
  • Ohio 
    • Utica 14 unchanged
  • WV 
    • Marcellus 10 unchanged
  • TX
    • Eagle Ford 33 unchanged
  • TX & NM
    • Permian Basin – 212 unchanged
  • ND
    • Williston – 35 up 5
  • CO
    • Niobrara – 15 down 2
       
  • TOTAL U.S. Land Rig Count 533 up 5

PA Permits October 20, to October 27, 2016

       County              Township   E&P Companies

1.    Butler                 Butler        XTO
2.    Butler                 Butler        XTO
3.    Butler                 Butler        XTO
4.    Lycoming            Eldred       Inflection
5.    Sullivan               Fox          Chief
6.    Tioga                   Liberty      SWN
7.    Tioga                   Liberty      SWN
8.    Tioga                   Liberty      SWN
9.    Tioga                   Richmond  Shell
10.    Westmoreland    Salem        Apex
11.    Westmoreland    Salem        Apex

OH Permits for week ending October 22, 2016

        County       Township   E&P Companies

1.    Belmont        Wheeling    Ascent
2.    Belmont        Smith        Rice
3.    Belmont        Smith        Rice
4.    Belmont        Smith        Rice
5.    Belmont        Smith        Rice
6.    Belmont        Smith        Rice

Joe Barone jbarone@shaledirectories.com 610.764.1232
Vera Anderson vera@shaledirectories.com 570.337.7149

Northeast Supply Enhancement