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Tuesday, October 21, 2014

Links for 10/21/14: Kent State Shale Training, Chesapeake/Southwestern Deal Called Win-Win, and More

Gas & Oil:  Kent State University Offers Job Training in Gas, Oil Industry   -   "Kent State University at Tuscarawas, in partnership with Stark State College, ShaleNET and Ohio Means Jobs (The Employment Source), is offering a floor hand course beginning Nov. 3. This three-week class will run Monday through Friday from 8 a.m. to 4:30 p.m. at the..."

National Science Foundation:  New Tracers Can Identify Frack Fluids in the Environment   -   "Scientists have developed new geochemical tracers that can identify hydraulic fracturing flowback fluids that have been spilled or released into the environment. The tracers have been field-tested at a spill site in West Virginia and downstream from an..."

Columbus Business First:  Bank Deposits Booming in Utica Shale Counties   -   "Just five years ago, in the midst of the Great Recession, it probably would have been unthinkable to see some of Ohio’s fastest-growing banks located in small rural areas east of..."

Bloomberg:  Oil Drop Makes Drillers Own Worst Enemy; Gas Offers Haven   -   "U.S. oil producers that saw profits soar on the North American shale boom are feeling the downside of success: falling prices and shrinking cash are threatening to slow development. At the same time, as crude prices approach four-year lows, natural gas companies are experiencing..."

Energy in Depth:  New Report Says Natural Gas Bad for Climate – Because It’s Good for the Economy   -   "This week, a group of researchers published a report in the journal Nature that hazards yet another attempt at organizing a semi-coherent case against natural gas qua an effective means of addressing climate change. Of course, we’ve seen papers like this in the past, and we’ve addressed at length each of their respective bad-inputs, faulty assumptions and architectural inadequacies in..."

Business Wire:  Fitch: Chesapeake/Southwestern Deal a Strategic Win-Win   -   "The $5.4 billion southern Marcellus and Utica shale asset sale announced yesterday is considered to be a strategic win-win for both Chesapeake Energy Corp. (Chesapeake [BB/Positive]) and Southwestern Energy Company (Southwestern [BBB-/Stable]), according to Fitch Ratings. Chesapeake stands to monetize a non-core asset that will provide considerable proceeds to continue paying down debt and simplifying its capital structure as well as pursue other strategic initiatives. Southwestern will gain..."

Press release:  Antero Resources Third Quarter 2014 Operations Update   -   "Antero’s net daily production for the third quarter of 2014 averaged 1,080 MMcfe/d, including 25,000 Bbl/d of liquids (14% liquids). Third quarter 2014 production represents an organic production growth rate of 91% and 21% from the third quarter of 2013 and second quarter of 2014, respectively. Liquids production for the third quarter of 2014 represents an..."

Norwood News:  Opinion: Rebutting the Climate Change Argument   -   "A recent letter to the editor by Diana Pedi titled, Climate Change Happens in The Bronx Too took aim at fracking even though it’s thanks to fracking and the increased use of natural gas that the U.S. has significantly lowered greenhouse gas emissions. According to Pedi, fracking is to blame for climate change because, “fracking releases methane.” That claim has been directly contradicted by..."

Gas & Oil:  American Energy Partners Regional Headquarters to Be Built in Cambridge   -   "Aubrey McClendon, CEO of American Energy Partners, is locating his regional headquarters in Cambridge. The facility will be constructed at the D.O. Hall Business Center and will create 125 jobs. The Oklahoma City-based American Energy Partners LP has raised billions to..."

The Motley Fool:  Former Chesapeake Energy CEO Sets Sights on California   -   "Bloomberg recently reported that former Chesapeake Energy (NYSE: CHK ) CEO Aubrey McClendon is considering a bid for Freeport-McMoRan's (NYSE: FCX ) California oil assets. The assets, which are worth about $5 billion, would seem like a real departure from the shale-focused growth strategy that McLendon pursued at both..."


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Utica Shale Now Up to 1,560 Permits on Latest Report

The latest weekly permitting update from the Ohio Department of Natural Resources is now posted.  It was a busy week for Harrison County as the Utica shale numbers continue to rise.

12 new permits were issued last week.  6 of those permits were issued to American Energy Utica for Harrison County wells.  5 went to Antero Resources for Monroe County sites, and the remaining 1 permit is for a Belmont County well to be drilled by Rice Drilling.

These 12 new permits now move the Utica shale up to 1,560 total permits issued.  1,122 wells have been drilled, 607 are producing, and the Utica rig count is 46.

View the report by clicking here.

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Chesapeake Sells Off Almost 25% of Utica/Marcellus Operation

Southwestern Energy has acquired 413,000 acres of Marcellus and Utica shale assets from Chesapeake Energy in a $5.375 billion transaction.  Here are the announcements from the two companies.

First, Southwestern Energy:
Southwestern Energy Co., Houston, has agreed to acquire assets in the southern Marcellus shale and a portion of the eastern Utica shale in West Virginia from Chesapeake Energy Corp., Oklahoma City, for $5.375 billion.
The deal, expected to close in the fourth quarter, encompasses 413,000 net acres and 1,500 wells in northern West Virginia and southern Pennsylvania along with related property, plant, and equipment. Average working interest in the properties is 67.5%.
Of a total of 435 horizontal wells, 256 are operated and producing in the Marcellus and Utica and an additional 179 are nonoperated or nonproducing in the Marcellus and Utica.
Net production in September totaled 336 MMcfd of gas equivalent, of which 55% is gas, 36% are NGLs, and 9% is oil. As of Dec. 31, 2013, net proved reserves associated with these properties totaled 221 million boe.
Southwestern Energy will assume a portion of Chesapeake’s firm transportation and processing capacity commitments. Based on capacity and expected future commitments, the company’s preliminary plans are to begin with 4-6 rigs next year and increase to 11 rigs by 2017.
Southwestern Energy estimates that it can drill for a minimum of 20 years maintaining that 11-rig pace. By yearend 2017, the reserve mix for the company is estimated to be one-third each for the Fayetteville, northeast Marcellus, and the newly acquired West Virginia and Pennsylvania properties, compared with two-thirds for the Fayetteville and one-third northeast Marcellus as of the day the deal took place.
Southwestern previously purchased 162,000 net acres in the Marcellus from Chesapeake for $93 million, giving Southwestern Energy 337,000 net acres in the play upon closing of the deal (OGJ Online, Apr. 30, 2013). Earlier this year, Southwestern Energy agreed to purchase 312,000 net acres in the Niobrara shale from Quicksilver Resources Inc. and Swepi LP, a unit of Royal Dutch Shell PLC, for $180 million (OGJ Online, Mar. 7, 2014).
Doug Lawler, Chesapeake’s chief executive officer, commented on the sale from his company’s perspective, “It’s important to note that this transaction has no impact on our expected growth profile or on our views around maintaining a disciplined capital program. We expect our full-year production guidance for 2015 to remain in the range of 7-10% growth from 2014 levels adjusted for asset sales.”
As of May, the total value of sales and divestitures for the year made by Chesapeake totaled more than $4 billion (OGJ Online, May 16, 2014).
Next, from Chesapeake Energy:

Chesapeake Energy Corporation (NYSE:CHK) announced that it has executed a Purchase and Sale Agreement to sell assets in the Southern Marcellus Shale and a portion of the Eastern Utica Shale in West Virginia to Southwestern Energy Company (NYSE:SWN) (“Southwestern”) for aggregate proceeds of $5.375 billion. The transaction, which is subject to certain customary closing conditions, including the receipt of third-party consents, is expected to close in the fourth quarter of 2014.
Chesapeake has agreed to sell approximately 413,000 net acres and approximately 1,500 wells in Northern West Virginia and Southern Pennsylvania, of which 435 are in the Marcellus and Utica formations, along with related property, plant and equipment. Average net daily production from these properties was approximately 56,000 barrels of oil equivalent (boe) during the month of September, consisting of 184,000 Mcf of gas, 20,000 barrels of natural gas liquids and 5,000 barrels of condensate. As of December 31, 2013, net proved reserves associated with these properties were approximately 221 million barrels of oil equivalent (mmboe).
Doug Lawler, Chesapeake’s Chief Executive Officer, commented, “Today’s announcement marks a major step in Chesapeake’s transformation and a dramatic improvement in our financial strength as we seek to maximize value for our shareholders. Earlier this year, we committed to unlocking the significant value inherent in this asset, recognizing the disconnect of its perceived value within our portfolio. It’s important to note that this transaction has no impact on our expected growth profile or on our views around maintaining a disciplined capital program. We expect our full-year production guidance for 2015 to remain in the range of 7-10% growth from 2014 levels adjusted for asset sales. I am very proud of the efforts that our Southern Marcellus team and all of our employees have put into building and developing our assets and creating value for our company. We look forward to deploying the proceeds from this significant transaction in ways that will continue to drive even greater shareholder value.”

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Report Examines Complications of Natural Gas as a Bridge Fuel

From CSMonitor.com:
Natural gas may not be of much use as a “bridge” fuel en route to achieving significant cuts in greenhouse-gas emissions unless its use is accompanied by rigorous policies aimed at curbing emissions – policies that some analysts say should be designed to harness gas as an ally of renewable-energy sources, rather that as a competitor. 
That is the implication of a new study analyzing the effect of globally abundant natural gas on competing energy sources and on greenhouse-gas emissions. The global abundance would result from the use of techniques such as hydraulic fracturing to tap so-called “unconventional” sources of natural gas worldwide. 
Assuming that no new climate policies are adopted beyond those that are in place today and that market forces continue to determine the price of gas, an international team of researchers found that gas would replace coal – a help in curbing the emission of greenhouse gases, since natural gas releases about half the carbon dioxide coal does per unit of energy produced.
You can read more of that article by clicking here.

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Anti-Drilling Activist Evasive When Questioned by FrackNation Producer, Then Attacks Him in Blog Post

Phelim McAleer, who directed and produced FrackNation, recently attempted to question former mayor of Dish, Texas Calvin Tillman, who is a prominent anti-drilling activist, about a study that he had commissioned a few years ago.  It's all explained in this video.


Although Tillman chose not to engage the discussion further with McAleer in the video above, he did choose to issue an angry response via his blog.
It finally happened on July 25, 2014 - I was doing a presentation in Santa Maria, CA, when the creepiest side of the oil and gas industry showed up at a presentation I was giving at the local library. This was of course the ethically challenged documentary film makerPhelim McAleer. Mr. McAleer did the false and misleading propaganda documentary Fracknation which was funded by the oil and gas industry. This film was funded to counter the award winning Gasland documentary, which showed the downside of oil and gas operations.

He has been harassing other people who have people who have been critical and outspoken of the practices of the oil and gas industry. However, Mr. McAleer represents a sick and distorted section of the population. This is the section of the population that is willing to lie and mislead and insights violence against those who disagree with his feeble thoughts. Although, it is clear that he has only a very limited number of supporters, those who do follow him are either unable or unwilling to have an independent thought on their own, which makes them particularly dangerous because they blindly follow his lies, and attack those he attacks.

For years now, I have questioned Mr. McAleer's true motivations, and if you watch how he does his "interviews", you will see that he is not a legitimate journalist, but rather a drive by journalist who attempts to put words in your mouth and have you agree with them. He continues to ask the same question over and over hoping that you will say something that he can take out of context and use against you. If that does not work, he will just make up something and start saying that you said it. When you politely move away from him, he gets very pushy to the point of bordering on physically touching his foes. In this particular instance Mr. McAleer was pushing elderly women out of his way to get to me. Rather than attempt to perform a legitimate interview, he pushes it to the point that it becomes an attack. He then chases you down until it borders stalking and becomes creepy. He acts as though it is your fault that he makes industry funded movies that nobody wants to watch.

I knew this, but to this point it appeared to me that McAleer had went out of his way to avoid me, and I still believe his is afraid to have an honest debate with me. Therefore, I did not back away from him when he approached me and legitimately attempted to have an honest discussion with him. However, it quickly became clear that Mr. McAleer was not there to have an honest discussion, but rather more baseless attacks and shouting lies that are meant to spread more of his vile and misleading misinformation.

Since first daring to speak out about the business practices, I have been attacked by the oil and gas industry hacks. However, one particular sick and twisted thing Mr. McAleer does is try to get a reaction by attacking my children. He appears to have no moral compass that guides him through his interviews. It is no secret that my family moved from DISH out of concerns for our children's health. Mr. McAleer uses this point to attack my children and will go as far as accusing me of telling people that my children have leukemia, which is a complete and fabricated lie, not to mention a very sickening thing for someone to say. Unfortunately, I simply do not have patience for those who attack my family. Mr. McAleer does not have children, which is likely his greatest gift to society, and therefore can not understand the emotions of having a child and wanting to protect them from harm.
Just another day in the fight over fracking.

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Monday, October 20, 2014

Ohio Auto Dealers Feeling Effects of Shale Development

From Automotive News:
Until 2013, according to the U.S. census, median household income here trailed the nation’s average of $51,939 by more than one-third.

Yet for more than a year, gushers of cash have rained down on Marietta, swelling the local economy as farmers and landowners leased the mineral rights to their property for one-time payments of $4,000 an acre or more. More money — much more, in the form of residual payments — is expected in the coming decades.

An ongoing explosion of domestic energy production — primarily from a highly controversial extraction process commonly called fracking — is transforming rural communities across North America.

In Marietta, hotels are full. Restaurants are booming. The city’s median household income shot up more than 20 percent in one year to a 2013 estimate of $40,286, according to the U.S. Census Bureau.

At Marietta’s auto dealerships, the increase in business has been immediate and dramatic.

“Three months ago, we couldn’t get them financed on a $5,000 car,” Marietta dealer Jim Cobb says of one of his recent Chrysler-Jeep-Dodge-Ram customers.
Read the whole article by clicking here. 


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Canton Continues to Tout Itself as "The Utica Capital"

From Columbus Business First:
As Utica shale activity continues moving south, one northeastern Ohio city that bills itself as Utica’s capital is still going strong, a business official says. 
“We still have a lot of things going for us,” said David Kaminski, director of energy and public affairs for the Canton Regional Chamber of Commerce. 
Canton, in Stark County, is north of where much of the exploration and production is centered in southeastern Ohio counties such as Belmont and Monroe. But much of the early activity took place in northeastern Ohio, where Chesapeake Energy Corp. (NYSE:CHK) gobbled up hundreds of thousands of acres.
Read the rest of the article here.

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Thursday, October 16, 2014

T. Boone Pickens Not Opposed to Investing With Aubrey McClendon Again

From Bloomberg Businessweek:
T. Boone Pickens, the chief executive officer of BP Capital Management LP, said he would be interested in investing again with Aubrey McClendon, the co-founder of Chesapeake Energy Corp. who was ousted last year. 
“I potentially could be” an investor in publicly traded companies McClendon forms, Pickens said in an interview today at Bloomberg headquarters in New York. “Let’s see what he’s got.” 
McClendon told a conference in Dallas last month that he plans to sell shares in the natural gas exploration companies he’s formed since leaving Chesapeake. The companies will specialize in individual U.S. shale regions. McClendon and his Oklahoma City-based American Energy Partners LP have amassed about $13 billion in the past 16 months from investors including KKR & Co. 
Pickens, who sold all his shares in Chesapeake in 2012 as the stock fell on lower gas prices and the reaction to potential McClendon conflicts, said he isn’t yet among those investors.
Click here to read more.

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