Shale Directories Conferences
8th Annual Utica Midstream
North Canton, OH
8th Annual Upstream PA 2020
State College, PA
4th Annual Appalachian Storage Hub Conference
June 4, 2020
Hilton Garden Inn
Southpointe, Canonsburg, PA
8th Annual Utica Downstream
October 15, 2020
North Canton, OH
8th Annual Midstream PA 2020
November 12, 2020
State College, PA
2nd Annual Appalachian Basin Real Estate Conference
December 10, 2020
Latest facts and a rumor from the Marcellus, Utica, and Permian, Eagle Ford Plays
Shell Temporarily Shuts Down the Cracker Plant. Construction of Shell Chemical Co.’s ethane cracker project in Beaver County, Pennsylvania, temporarily has shut down due to coronavirus concerns, the project’s leader said late Wednesday.
“We have made the decision to temporarily suspend construction activities at Shell’s Beaver County site, effective March 18,” said Hilary Mercer, vice president, Shell Pennsylvania Chemicals, in a statement.
“In the days ahead, we will install additional mitigation measures aligned with CDC (U.S. Centers for Disease Control) guidance. Once complete, we will consider a phased ramp-up that allows for the continuation of safe, responsible construction activities.”
Mercer said the decision to pause the work of more than 8,000 workers was not made lightly. “But we feel strongly the temporary suspension of construction activities is in the best long-term interest of our workforce, nearby townships and the Commonwealth of Pennsylvania,” according to Mercer.
The official shutdown comes just hours after Beaver County politicians asked Shell to shut down the massive site along the Ohio River, roughly 30 miles northwest of Pittsburgh.
“It’s time to shut down,” Daniel Camp III, chairman of the Beaver County commissioners, said at a news conference Wednesday in front of the county courthouse.
Camp, joined by fellow commissioners Tony Amadio and Jack Manning, plus state representatives from Beaver County, said his office has received more than 500 calls from residents, Shell employees and contractors.
Callers have reported crowded conditions on buses that take the project’s thousands of workers to and from the work site, limited hand sanitizer onsite and other problems, according to Camp.
“With 8,000 workers, if something happens there, our health care facilities will not be able to undertake what they will have to do,” Camp said.
Pittsburgh’s Action News 4 has confirmed the company will undertake more cleaning efforts and add more worker transportation buses.
There are 8,500 workers at the Shell Cracker Plant site.
Officials said workers are also separating their lunches and doing sterile cleaning between lunches.
5 To Do’s During the Coronavirus Crisis. The world for small-to mid-size companies that service the oil and natural gas industry is ever-changing. Just like 9/11 changed how we fly the coronavirus crisis will definitely change how we all conduct business.
Having lived through 9/11, we all know how the business world changed in the short and long term. As we evolve to the post-coronavirus working world, you may want to consider enacting these five To Do’s for your company, employees and customers:
- Keep your employees informed of government enacted business restrictions and explain if these restrictions impact the day-to-day operations of your company.
- Focus everyday on developing programs that can lower your costs. The price of oil and natural gas will be under constant pressure. For your company to be successful, being the low-cost efficient provider could prove beneficial to your long-term growth.
- Maintain near constant communication with your customers. Do not assume they know how your company is operating during the coronavirus crisis. Tell your customers daily if necessary how your company is coping and adjusting to meet demands.
- Develop an expertise within your company to work remotely with efficiency. While you may need if for this crisis, being able to work remotely should become a core company skill. It will surely be needed.
- Become an aggressive marketer during tumultuous times. Numerous studies have been conducted to measure the effectiveness of marketing and advertising during a recession. These studies have shown that companies who maintain their marketing efforts during a recession realize an increase in business during the downturn and realize faster and greater growth when the economy improves.
Small- to mid-size companies are daily facing new, complex challenges to running their businesses. Ideally, one or two of these to do’s will prove helpful and reduce a little of the strain you’re feeling personally and professionally.
PA Governor: O&G Industry Is a Life Sustaining Industry. The world is changing daily as we respond to the threat of COVID-19. The need to “flatten the curve” has meant tough decisions about letting certain businesses stay open while requesting or even requiring that others close down. But as Pennsylvania Governor Tom Wolf (D) made clear in his recent mandate, there are several “life-sustaining” industries that are still hard at work to provide the energy, care and supplies Americans need to make it through these trying times – including the oil and natural gas industry.
Gov. Wolf had issued guidance for “non-essential” businesses to close. But this week he upgraded that to a mandate that all “non-life-sustaining” businesses will need to close their offices for the time being. The list of businesses that may continue operating includes health care providers, grocery stores and the trucking industry. A great debt of gratitude needs to be given to these individuals that are working overtime to keep the country fed and healthy – even as they face the risks and anxiety that the rest of us are staying home to avoid.
Also included on the governor’s list is oil and natural gas extraction, pipelines, utilities and manufacturing. Gov. Wolf’s mandate is a stark reminder of how important American oil and natural gas truly are to our well-being and livelihoods.
Mariner East 2 Construction Continues. Pennsylvania has shut down highway projects because of the coronavirus emergency, but state regulators on Thursday rebuffed calls to halt construction of the contentious Mariner East pipeline project.
The Pennsylvania Public Utility Commission declined to interrupt construction of the pipeline expansion project, which transports natural gas liquids such as propane from the Marcellus Shale region across Pennsylvania to a terminal in Marcus Hook. The PUC, in a statement, said that project was exempt from Gov. Tom Wolf’s order to shut down non-essential activity.
Two Major TX Producers Ask the State Curtail Pumping. Two of the biggest oil producers in Texas are asking the state regulator to consider curtailing the amount of oil companies can pump – an attempt to stem a dramatic collapse in prices and something that has not been done since the 1970s. US shale firms this month slashed as much as 50 per cent of planned spending as falling demand due to the coronavirus and a price war between Saudi Arabia and Russia threw the oil market into a free fall. With oil prices down 60 per cent this year, Parsley Energy and Pioneer Natural Resources want regulators to consider setting limits on how much oil large firms can send to market. Inaction would lead to oil prices falling to the single digits and “absolutely decimate the American oil and gas industry,” said Matt Gallagher, chief executive of Parsley, adding Pioneer shared his view. “We’re looking for stabilization to keep American workers employed as much as possible.” The Wall Street Journal first reported on Thursday that several unnamed companies were pushing the idea. Pioneer Natural Resources and state regulators did not immediately respond to requests for comment. The Texas oil and gas regulator, the Texas Railroad Commission, imposed production limits on producers in the 1930s to try to prop up prices and later was a model for the creation of OPEC.
No Oil & Gas Supply Chain Threat from COVID-19. The American Petroleum Institute oil and gas industry group said on Wednesday that it does not see a significant threat to the U.S. energy supply chain from the coronavirus pandemic. Oil and gas companies are implementing contingency plans focused on ensuring continuity of supplies to market, and preventing the spread of the virus to workers and the public, Suzanne Lemieux, API’s head of operations security, told reporters in a conference call with representatives of several energy industry trade groups. “The supply chain is operating as normal now and you’re going to see that continuing unless there is any additional … shelter-in-place restrictions or larger outbreaks,” Lemieux said. “This is not a new planning scenario for a lot of our member companies, but we are trying to be as cautious as possible,” she said, adding that many of its members have dealt with previous outbreaks such as Ebola, SARS and H1N1. Troutman Sanders, a law firm that advises pipeline companies, said in a blog this week that coronavirus may cause issues with “maintaining sufficient adequately trained and qualified staff for control rooms or field positions responsible for inspection and maintenance” and that the federal government has issued compliance waivers to companies in the past.
EQT Cuts $75 Million from CAPEX. Pennsylvania-based EQT Corp. on Monday announced that it is cutting an additional $75 million from its 2020 capital spending, in the wake of the recent oil price rout and the oil price war between Saudi Arabia and Russia, Kallanish Energy reports.
That will reduce the company’s capital spending to between $1.075 billion and $1.175 billion, it said.
The company said it intends to cut back on its development in Ohio’s Utica Shale.
EQT said the change should not impact production which is projected to be between 1,450 Bcfe and 1,500 Bcfe in 2020.
The company, the largest independent natural gas producer in the U.S., has now reduced its 2020 capital spending by $200 million since it was first released last October.
Adjusted free cash flow for 2020 is now expected to be between $225 million and $325 million, it said.
EQT also announced that it has signed an agreement with an unnamed third party to permanently release firm transportation obligations of about 400 million cubic feet per day of about 15% of EQT’s current portfolio.
In conjunction with that agreement, EQT entered into certain sales agreements to facilitate gas deliveries to the same premium markets.
The company said it expects its corporate-wide transmission expense to decrease by about 4 cents per Mcfe, largely offset by expected weakened average differentials.
With the agreement, EQT was also able to eliminate about $350 million in potential collateral posting requirements, it said.
The company also reported that it has repaid about $2 billion in debt in its revolving credit facility, senior notes due in 2020 and in 2021 and its 2021 term loan balance.
EQT is “capable of quickly modifying our business plans to adapt to the current environment,” said president and CEO Toby Rice in a statement.
The company’s production s 95% natural gas and the company has a strong hedge position for 2020, he said.
Lawmakers Weighing Options to O&G Industry. Russian and Saudi efforts to flood world markets with more crude oil has two North Dakota Republican senators calling on the Trump administration to do more to push back and support domestic producers. The efforts by Sens. Kevin Cramer and John Hoeven show the impact such a decision by the world’s second- and third-largest oil producers has on the senators’ home state and the country at large. Oil prices plunged to 18-year lows yesterday, with West Texas Intermediate hitting $21.30 per barrel. The drop comes amid the Russian-Saudi oil price war as well as a reduced demand due to coronavirus disruptions. Cramer yesterday floated the use of authorities granted by Section 232 of the Trade Expansion Act of 1962 to limit the impact of market manipulation by preventing the import of Saudi and Russian oil. In letters addressed to President Trump, Cramer accused the two countries of working to undermine U.S. competitiveness in the oil space by taking advantage of the coronavirus disruption to force U.S. producers out of business. “We must send the immediate signal; the United States will not be bullied or taken for granted,” the freshman senator wrote. Such a step would represent a drastic intervention into oil markets by the Trump administration, but one not unheard of for a president who has invoked those authorities with five such investigations — the most famous being tariffs on imports of steel and aluminum.
Exxon to Slash Spending. Exxon has become the latest U.S. oil company to announce plans for spending cuts amid the coronavirus outbreak that caused a price slide significantly aggravated by Saudi Arabia’s decision to start raising oil production. With its stock down to the lowest in 17 years, according to Reuters, Exxon is pressed to act fast in response to the latest events. “We are evaluating all appropriate steps to significantly reduce capital and operating expenses in the near term,” chief executive Darren Woods said in a statement. “We remain focused on being a safe, low-cost operator and creating long-term value for shareholders.” Woods did not give any details about the spending cuts but Exxon’s budget for this year and every year until 2025 was set at between $30 and $35 billion. The supermajor has been one of the few international oil companies that have ramped up spending levels over the past two years, aiming to grow production and shareholder value. It is also one of the many companies whose U.S. shale oil production costs are higher than the current price of West Texas Intermediate, according to calculations by Rystad Energy. Exxon has invested $6 billion on developing shale resources in the Permian, with plans to be producing 1 million bpd by 2024. Now, these plans will probably have to be changed to adjust to the new situation of prolonged demand depression and higher supply from Saudi Arabia and Russia.
Biggest Shale Drillers in TX Cut Budgets. The most prolific shale drillers in Texas have cut at least $7.6 billion from their combined 2020 capital expenditures budgets while several more are expected to follow suit as crude oil prices fall to lowest levels since the bottom of the last oil bust, which was considered worst in a generation. Exxon Mobil, the Texas-based oil major, Concho Resources of Midland and Pioneer Natural Resources of Irving this week became the latest oil and gas companies to promise cuts to their spending as the coronavirus outbreak brings the global economy to a halt and erodes energy demand. Oil fell to $26.95 a barrel in New York Tuesday, just above the low of $26.21 a barrel reached in February 2016. Prices are only to fall further as a price war between Russia and Saudi Arabia promises to flood global markets with even more crude oil even as demand for crude oil, jet fuel, gasoline and diesel shrinks around the world. U.S. shale drillers are not sitting idle. Seven companies that account for nearly one-fifth of the new oil wells drilled in Texas are pulling drilling rigs from the field, cutting back the number of hydraulic fracturing crews and slashing a combined $7.6 billion from their 2020 capital expenditure budgets — signaling that there will be a sharp decline of activity in the Permian Basin and elsewhere around the state.
Lamb Backing Biden’s “No New Fracking.” Pennsylvania Rep. Conor Lamb’s Republican opponent railed against the Democrat Tuesday after he tossed his support behind former Vice President Joe Biden’s promise to end new fracking projects if he wins in 2020. Lamb’s praise of the former vice president’s newfound fracking position comes as his state morphs into a leader in the booming natural gas industry. The moderate Democrat is also running for re-election in a state that tilted heavily toward President Donald Trump in 2016. “The Democrats I’ve talked to– blue-collar union Democrats who work in the oil and gas industry– are scared to death by this rhetoric,” Sean Parnell, a retired Army Ranger who is running for Lamb’s seat, told the DCNF. He added: “Over 100,000 oil and gas jobs in Western PA would vanish” under that plan. Lamb’s remark came one day after Biden promised during Sunday’s CNN Democratic debate to stop new fracking projects after his presidential rival, Sen. Bernie Sanders, drilled the former vice president for not being tough enough on the oil industry.
Everyone in SW PA vote for Sean Parnell and make sure he gets elected to Congress.
U.S. Government Buying Crude. The U.S. government has started the process to purchase “large quantities” of domestic crude oil to replenish its strategic reserves, helping the U.S. oil industry at times of record-low oil prices, Kallanish Energy reports.
President Donald Trump announced late last Friday he had instructed the secretary of energy to purchase “at a very good price large quantities of crude oil” for storage in the U.S. Strategic Petroleum Reserve (SPR).
“We’re going to fill it right up to the top, saving the American taxpayer billions and billions of dollars, helping our oil industry,” he added.
In response to Trump’s National Emergency declaration concerning Covid-19, energy secretary Dan Brouillette issued a memo instructing the purchasing of “American-made crude oil … as expeditiously as possible.”
The memo, seen by Kallanish Energy, didn’t specify further details such as the volume or type of crude to be purchased. However, the government could take up to 78.5 million barrels (Mmbbl) of crude off the oil market.
SPR has capacity to store 713.5 Mmbbl in its underground salt caverns along the Gulf Coast. According to the latest data by the EIA, the SPR has roughly 635 Mmbbl in storage. It’s estimated that the reserves can be filled at around a rate of 225,000 barrels per day.
As of Sept. 2018, crude oil stored in the SPR is about 38.6% sweet and 61.4% sour. The ratio was established to meet the needs of the U.S. refining industry most likely to take SPR crude in the event of a drawdown, particularly those in the Gulf Coast area. Sweet crude oil can be processed by nearly all refiners; the same is not true for sour crude.
Bob McNally, founder of Rapidan Energy, believes that “while filling the SPR will not materially offset the tidal wave of new supply hitting the global oil market, it makes total sense from a national security and budgetary perspective.”
“Better to buy low and before an emergency than the other way around,” he added.
EOG and Whiting Cutting CAPEX. EOG Resources and Whiting Petroleum said Monday they were slashing their capital spending budgets by at least 30% amid the ongoing collapse in crude prices and the anticipated global glut of supplies.
Now Since Saudi Arabia and Russia initiated a pricing war this month to flood the market with more oil starting in April, crude prices have plunged to about $30/b and triggered a wave of spending cuts from North American producers. Many are cutting close to 30%-40% of their 2020 capital dollars, laying down drilling rigs and reducing their daily production guidance.
Houston-based EOG said it would slice its spending by 31% and take its capital budget down to a range of $4.3 billion to $4.7 billion — well down from the previous budget of up to $6.7 billion. And, after previously projecting crude production volumes would rise by up to 14%, EOG now says it expects its crude volumes to be roughly flat from last year in the range of 446,000 b/d to 466,000 b/d.
EOG said it will keep its drilling focus in South Texas’ Eagle Ford shale and in the Permian Basin’s western Delaware Basin.
“Our first priority is to generate high returns with every dollar we spend even at low oil prices,” said CEO Bill Thomas in a statement. “With oil around $30, our 2020 premium drilling program is expected to generate more than 30% direct after-tax rate of return.”
Houston energy investment banking firm Simmons Energy said Monday that publicly traded producers are cutting by close to 30% on average but that anecdotal evidence suggests the private players are slashing their spending by even larger swaths.
Likewise, Bakken shale-focused Whiting Petroleum said it will reduce its capital spending by more than 30% down to a range of $400 million to $435 million. By comparison, Whiting spent $778 million in 2019 and had planned on about $600 million in 2020. Now, it’s down to nearly half its total from last year.
COVID-19 Impacting Oil & Gas. As the world starts practicing social isolation in the face of the COVID-19 virus, many headlines are devoted to the plunging Dow Jones Index right now. But that’s a deeply incomplete story of what’s going on. Yes, the market is plunging, but not equally by any stretch. People whose money is in future-oriented sectors are doing reasonably well, while those in backward sectors are suffering.
The above two charts are from the S&P Global site that maintains its market indices. The one on the left, that’s down about 9% over a year including the dip for COVID-19 fears, is for stocks of companies that don’t own any fossil fuel reserves. The one on the right that is about 72% over a year, is for companies that explore for and extract oil and gas.
When we talk about the stock market tanking, it’s mostly the oil and gas industry. The SP O&G index peaked in 2015 or so and has been in serious decline since. This is just more of the same for them. The markets have spoken clearly and are saying that the industry is dead, and COVID-19 is just another nail in the coffin.
This is, of course, in the context of ongoing subsidies for the industry that are increasingly looking like propping up a dying horse. For the US:
Congressional research puts the minimum number at $4.6 billion annually. An NRDC G7 annual analysis puts the number at $27.4 billion annually. An IMF full accounting including negative externalities related to health and global warming puts it at $649 billion annually.
The G20 and G7 committed over a decade ago to eliminating subsidies for this mature-to-the-point-of-senescence industry. And yet the US has taken no action. Canada was slightly better, but there’s no easy way to spin outright federal purchase of an oil pipeline for $4.5 billion in order to triple its capacity except as a subsidy. Similarly, even green British Columbia has subsidized natural gas fracking companies for more than a billion dollars over two years.
Rather than pivoting to support the industries of the future, the US White House is considering bailing out the shale oil sector of the United States.
Governments are addicted to oil and gas royalties and tax revenues, but they need to stop propping up this dying beast and accelerating the transition to the low-carbon future instead. COVID-19 is just highlighting this reality.
Russia Sees O&G Revenue Fall $40 Billion. Russia’s revenues from oil and gas will be US$39.5 billion (3 trillion rubles) lower than planned, due to the tumbling oil prices, Russian Finance Minister Anton Siluanov said on Wednesday, adding that Russia’s budget will be in deficit this year. The coronavirus pandemic and the lower economic activity, coupled with oil prices half the level before Russia and Saudi Arabia broke up the OPEC+ production cut deal two weeks ago, will weigh on Russia’s budget this year, which will tip into deficit. Russia’s economy is not going as well as one would have hoped, the finance minister admitted today, saying that the oil price factor alone is set to reduce the country’s budget income by nearly US$39.5 billion compared to earlier estimates. In case of budget deficit, Russia will use reserves from the National Wealth Fund (NWF), Siluanov said on Wednesday. According to analysts at Gazprombank, cited by Reuters, the fund has enough reserves to compensate for lower budget revenues due to low oil prices for more than five years. Last week, a day after oil prices collapsed in the worst drop in nearly three decades—courtesy of the renewed Saudi-Russia rivalry on the oil market – Russia’s Finance Ministry said that Moscow had enough resources to cover budget shortfalls amid oil prices at $25-30 a barrel for six to ten years.
COVID-19 Impacting Oil & Gas #2. The onslaught of North American producers cutting back spending and activity continued with the start of the week, with EQT Corp., EOG Resources Inc., Whiting Petroleum Corp. and Canadian operators pulling back as oil prices — and demand — are slaughtered.
U.S. production is forecast to “bear the largest impacts” through 2021 from Covid-19 and the price war now ongoing between the Organization of the Petroleum Exporting Countries and former ally Russia, IHS Markit researchers said Monday. U.S. oil output alone is forecast to crater by 2-4 million b/d over the next 18 months.
“The last time that there was a global surplus of this magnitude was never,” said IHS Markit’s Jim Burkhard, head of oil markets. “Prior to this the largest six-month global surplus this century was 360 million bbl. What is coming will be twice that or more.”
The “current situation points to the possible buildup of the most extreme global oil supply surplus ever recorded,” the IHS team said. The coronavirus has reduced global energy demand, but it also has collided with the oil price war launched earlier this month.
“Counting barrels is challenging enough under normal circumstances, but the looming imbalance on current trajectory between demand and supply is so large now that it is well beyond any typical margin of error or uncertainty about data,” IHS researchers said.
The global oil supply surplus could be 4-10 million b/d from February to May, with demand in March and April alone possibly declining by as much as 10 million b/d, according to the consulting firm.
The estimated global oil surplus, said IHS researchers, could translate into an inventory build of 800 million-1.3 billion bbl in the first six months, foreshadowing the impact of increased travel restrictions, reduced community and the increasing likelihood of a severe global economic slowdown in 2Q2020.
Raymond James & Associates Inc. analysts Pavel Molchanov and John Freeman on Monday said the fact that equity markets have entered bear territory doesn’t make the oil crash “feel” any better. The firm has cut its 2020 oil price forecast for the third time in three months.
The oil market is likely “to get much worse in the near term,” with West Texas Intermediate (WTI) likely testing $20/bbl in 2Q2020 “before rebounding strongly in the second half of 2020” and exiting the year at $45-plus.
“First, the cure for low oil prices is low oil prices, and next year we are forecasting a meaningful decline in U.S. production (and in other short-cycle producing countries as well),” Molchanov and Freeman wrote. “Second, the Saudi-Russia price war is largely political, and also self-destructive, so we expect it to be short-lived. Third, as hard as it may be to believe now, Covid’s demand impact will also subside over time.”
[We have been and will continue to cover the effects that COVID-19 is having on natural gas markets and have grouped that coverage here for your ease of use. All NGI article content regarding the coronavirus will be free until further notice.]
The WTI futures strip, said the Raymond James analysts, indicates quarterly prices below $40/bbl until 3Q2021. Lower 48 exploration and production (E&P) companies have responded by pulling back activity.
“Under this scenario, we expect the rig count to be cut in half, from 800 rigs at year-end 2019 to 400 rigs by the middle of 2020, and exiting 2020 at 390 rigs,” said the analysts. “With the strip recovering to a level above $40 in 2021, a slight recovery in the rig count follows, with 450 rigs at year-end 2021.”
Longer term, the Raymond James strip price scenario is conservative and assumes the domestic count remains flat at 450 rigs.
“When E&P companies were announcing budgets just a month ago with a planning price of $50-55 WTI, the single most consistent commentary from management was that budgets/activity would not increase due to modest increases in crude prices, reflecting a focus on free cash flow generation and returning capital to shareholders,” Molchanov and Freeman wrote. “We believe this assumption holds as much, if not more, at $40-45 WTI.”
The impact of “ultra-depressed” activity this year should hit full force in 2021, with output falling by 1.3 million b/d-plus, according to the Raymond James team. “The fall-off moderates in the out years despite flat activity, as base decline rates become more shallow.”
Societe Generale analysts said long WTI positioning versus short Brent positioning “has translated into expectations of a decreasing Brent-WTI spread, possibly due to the high operational costs and indebtedness of U.S. shale oil companies.
“Some of them may not survive prolonged low oil prices, and in this event U.S. production would decrease. Less crude availability in the US is likely to reduce the WTI discount to Brent.”
North American E&Ps have responded en masse since crude prices plummeted last week.
Houston-based EOG has reduced capital expenditures (capex) by 31% to $4.3-4.7 billion; it also is targeting flat year/year crude volume growth. The focus this year is drilling operations in the Permian Basin’s Delaware formation and the Eagle Ford Shale in Texas.
EQT, the nation’s largest natural gas E&P, has lowered capex by $75 million to $1.075-1.175 billion. Activity is being reduced, but the decline is not expected to impact 2020 production guidance of 1,450-1,500 Bcfe. Houston’s Goodrich Petroleum Corp., whose Haynesville Shale-heavy operations are weighted 99% to natural gas, has cut capex by $15 million to $40-50 million.
Meanwhile, Denver-based Whiting Petroleum Corp. has adopted a revised capital budget of $400-435 million, which at the midpoint represents a 30% decrease from the original spending plan.
Calgary-based Husky Energy has reduced capex by about 33% or C$900 million to C$2.3-2.5 billion. The cuts are expected to reduce production in 2020 to 275,000-300,000 boe/d from 295,000-310,000 boe/d. “Investment in resource plays and conventional heavy oil projects in Western Canada has been halted,” while drilling pads at all thermal operations have been suspended.
Fellow Calgary E&P Arc Resources Ltd. has cut its spending to C$300 million from $500 million and slashed the monthly dividend to C2 cents from 5 cents. Likewise Calgary E&P Enerplus Corp. has reduced 2020 capex by 40% at the midpoint to C$325 million.
Other Calgary-based E&Ps to cut capex for 2020 include Crescent Point Energy Corp., down by 35% to C$700-800 million. Vermilion Energy Inc. cut spending to C$80-100 million from $350-370 million; the monthly dividend beginning in April was sliced to C2 cents from 11.5 cents. NuVista Energy Ltd. is reducing capex by 25% to C$240 million.
Chesapeake Looks to Debt Restructuring Experts. Financially struggling Chesapeake Energy has hired legal and financial advisers to help with debt restructuring, according to media reports.
The Oklahoma-based company has hired attorneys at Kirkland & Ellis LLP and investment bankers at Rothschild a& Co., Reuters and Fox Business reported, citing multiple unnamed sources.
The company is looking at its options and no debt restructuring is imminent, the media outlets said.
The three companies have not offered any comment.
Chesapeake, one of the largest natural gas producers in the U.S. had about $9 billion in debt before the coronavirus and crude oil rout hit the O&G industry.
Its shares fell by more than 50% in the last few weeks.
The company has been shifting toward more lucrative crude oil in its U.S. shale operations.
Earlier, the company said in intended to cut its 2020 capital spending by about 30%, while maintaining relatively flat oil production and decreasing natural gas production from 2019 to 2020.
Overall, the company said it intends to decrease its 2020 overall production by about 10%.
For full-year 2019, Chesapeake reported a net loss of $308 million and a net loss available to common shareholders of $416 million or 25 cents per share.
Chesapeake reported average daily production in 2019 was about 484,000 barrels oil equivalent and consisted of 118,000 barrels of oil, 1.995 billion cubic feet of natural gas and 33,000 barrels of natural gas liquids.
For full-year 2019, the company spud 333 gross and 233 net wells, completed 370 gross and 273 net wells and connected 375 gross and 273 net wells.
That included wells on the Brazos Valley area of Texas, the Eagle Ford Shale in South Texas, the Powder River Basin in Wyoming, the Marcellus Shale in northeast Pennsylvania, the Haynesville Shale in Louisiana and the Mid-Continent in Oklahoma.
KB OREO Purchases EdgeMarc’s Assets. KB OREO (an affiliate of KeyBank, the secured lender under EdgeMarc’s DIP credit facility) entered into a global settlement with KeyBank, the Official Committee of Unsecured Creditors, and ETC Northeast Pipeline, LLC, a midstream services provider.
The global settlement resulted from months of negotiations, and against a backdrop of litigation with ETC after a rupture of ETC’s pipeline resulted in a shutdown of EdgeMarc’s operations in Pennsylvania.
Under the terms of the sale and global settlement, KB OREO LLC will purchase substantially all of EdgeMarc’s assets for approximately $90 million, comprised of a credit bid, cash, and other consideration. The Court approved the global settlement on February 7, 2020 and the sale closed on February 24, 2020.
On May 15, 2019, EdgeMarc filed voluntary chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware to pursue the sale of all or substantially all of its assets pursuant to section 363 of the Bankruptcy Code in order to maximize value for the benefit of its stakeholders.
Based in Carnegie, Pennsylvania, EdgeMarc is a privately-held limited liability company engaged in the acquisition, production, exploration and development of natural gas and natural gas liquids (NGLs) from underground deposits in the Appalachian Basin. EdgeMarc conducts its drilling and exploration activities in the “stacked” liquids-rich Marcellus shale in Pennsylvania and dry gas Utica shale in Ohio. Prior to the sale of its assets, EdgeMarc controlled contiguous positions of approximately 45,000 net acres across Ohio and Pennsylvania.
The Davis Polk restructuring team included partner Darren S. Klein (Picture) and associates Aryeh E. Falk, Jonah A. Peppiatt and Matthew B. Masaro. The litigation team included partner Lara Samet Buchwald and associate R. Brendan Mooney. The finance team included partner Meyer C. Dworkin and associate Sanders Witkow. The mergers and acquisitions team included partner Brian Wolfe and associate Matthew J. Cowcher.
PA Permits March 12, to March 19, 2020
County Township E&P Companies
- Washington East Finley CNX
- Washington East Finley CNX
- Washington Nottingham Range
- Washington Nottingham Range
OH Permits March 14, 2020
County Township E&P Companies
- Harrison North EAP OHIO
- Harrison North EAP OHIO
- Jefferson Island Creek EAP OHIO
- Jefferson Island Creed Chesapeake