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Thursday, July 31, 2014

Links for 7/31/14: Company Opens Office in Ohio, Utica Shale Draws Comparison to Eagle Ford, and More

Marcellus Drilling News:  Towns that Ban Fracking Could be Bankrupted by Takings Lawsuits (subscription required)   -   "One study mentioned in the NARO announcement says that bans and moratoria in Boulder County, CO could result in more than one billion dollars of “takings” lawsuits by landowners. In other words, the lawsuits will bankrupt the towns and villages stupid enough to enact a ban. Are you listening..."

PRWeb:  All Over the Map: Fenstermaker Extends Locational Reach to the Ohio Region   -   "Fresh on the heels of announcing the ribbon cutting ceremony for its office in Lakes Charles, Louisiana, Fenstermaker confirms that a new location has been established in Cambridge, Ohio. Providing energy services to a growing number of clients in the Utica Shale Play since October 2013, the company..."

Columbus Business First:  Utica shale production comparable to Eagle Ford’s startup, EIA says   -   "Initial natural gas production from the Utica shale mirrors that of the Eagle Ford shale in Texas and is slightly higher than the Haynesville formation in Louisiana, according to a recent Energy Information Administration report. But compared to..."

Seeking Alpha:  EQT's (EQT) CEO David Porges on Q2 2014 Results - Earnings Call Transcript   -   "As we discussed at the time of the first quarter call, we were revisiting our geologic and engineering analysis of the dry Utica/Point Pleasant potential on our acreage. As we look at the initial results of the wells drilled so far in the play by other operators, our technical teams are very encouraged that the results are basically in line with what our models would predict. Until now, we've been hesitant to drill our own well based solely on those models, given the lack of well control. But we think it is now time to drill a test well..."

The Plain Dealer:  Two drilling companies sue Broadview Heights over ban on oil and gas wells   -   "Two drilling companies with natural gas and oil wells in Broadview Heights have sued the city over its prohibition against future wells. Bass Energy Co. Inc., of Fairlawn, and Ohio Valley Energy, of Austintown, said the state of Ohio, not Broadview Heights, has sole authority to permit or deny drilling and..."

Columbus Business First:  Stark State’s oil and gas job-training center on track for January launch   -   "A training center for oil and gas jobs in northeast Ohio is on track to start classes in January. Stark State College, a community college in North Canton that has embraced training workers for the nearby Utica shale, is requesting $2.6 million in state funding ..."

Marcellus Drilling News:  Exclusive: Breakthrough Tech Cleans Frack Wastewater <30 Minutes   -   "What if you were convinced an invention IS the greatest thing since sliced bread–at least as it applies to the world of shale drilling? And what if that invention could clean thousands of gallons of frack wastewater right on site and turn it into DRINKABLE water–in less than 30 minutes? And what if..."

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Gulfport Production Sags With Slowdown in Utica Shale

From NGI:
Gulfport Energy Corp.'s second quarter production dropped by a little more than 1% from the first quarter after it pulled back the reins in the Utica Shale. 
The company produced a total of 2.4 million boe, or 26,725 boe/d in the second quarter, down from the 27,087 boe/d in the first quarter. The Utica accounted for 79% of second quarter production, or 1.9 million boe. 
Although it has a sizeable patchwork of assets in Southern Louisiana and the Bakken Shale and Niobrara formation, Gulfport has increasingly focused on 179,000 net acres in eastern Ohio. However, shortly after CEO Michael Moore was appointed in April, he said a close review of the company's operations revealed that earlier assumptions used to determine the pace of development in Ohio were too careless (see Shale Daily, April 24).
Read more by clicking here (subscription required).

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Study: States With Fracking Have Better Economies


New research shows states with hydraulic fracturing and horizontal drilling saw faster economic turnarounds after the recession in 2008 when compared to those who have no drilling activity.

New research has been released by Bernard L. Weinstein, an associate director of the Maguire Energy Institute at Southern Methodist University's Cox School of Business, that explained U.S. states with hydraulic fracturing and horizontal drilling saw faster economic turnarounds after the recession in 2008 when compared to those who have no drilling activity, Oil and Gas Journal reported.

Weinstein explained that job demands in shale developments have shifted dramatically. According to the source, he believes the need for petroleum engineers, environmental specialists, drilling managers, equipment manufacturers and other natural resource workers has increased as the sector grows larger in active drilling states.

"But these high-paying specialties are not the only ones to benefit from the boom," said Weinstein, according to the source. "Almost all sectors of the local economies are experiencing greater-than-expected growth in employment opportunities and wages."

It's no surprise to see the unemployment rate drop to 5.1 percent in Texas, which is the lowest among any larger state, and witness crude oil productions grow by 100 percent since 2010, the source reported.
Texas and North Dakota leading production and job growth

Bentek Energy, an energy analyst and forecasting sector of Platts, a leading energy, petrochemicals, metals provider, said that in June, oil production had increased by more than 33 percent in Texas and North Dakota.

The Bakken shale in North Dakota produced 1.1 million barrels of oil per day (bpd) in June, which was nearly 30 percent higher than the figures recorded in June 2013, the research stated. Texas's Eagle Ford shale saw a nearly 38 percent increase in oil production from June 2013 to 2014 with 1.4 million bpd recovered last month.

"Bentek estimates that internal rates of return on drilling and carrying costs exceed 65% in the Eagle Ford and 50% in the Bakken," said Jack Weixel, the director of energy analysis at Bentek Energy. "To the average producer that means for every $1 million they sink into drilling a well, they can expect to recover at least $1.5 million in crude oil, liquids and natural gas over the course of a year."
States avoiding fracking see higher unemployment

Some states have avoided fracking altogether with rich producing oil shale developments underneath their feet. According to Oil and Gas Journal, New York has a large and possibly one of the "sweet spots" of the Marcellus shale spreading through a major portion of the state.

However, New York currently bans fracking operations, but their unemployment rate is at 6.7 percent, and some other northeastern states have rates as high as 7.5 percent.

With the production continuing in fracking states, original equipment manufacturers can turn to Broadwind Energy for precision gearing needs.

News Source : States with active fracking and horizontal drilling see better economic success
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20 New Utica Shale Permits Issued Last Week

The Ohio Department of Natural Resources has issued its latest weekly update on permitting activity in the Utica shale.

20 new permits are listed for last week.  The breakdown by county:  Guernsey (6), Monroe (5), Harrison (3), Belmont (2), Noble (2), and Washington (2).  Gulfport Energy was the most active driller on the report, with 6 of the 20 permits issued.  Eclipse Resources was right behind, with 5.

This activity moves the cumulative numbers to 1,421 permits issued, 970 wells drilled, and 487 wells producing.  The Utica rig count is 49.

Click here to view the report.

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Wednesday, July 30, 2014

Investment Company Behind New Utica Shale Hotels Moving On to Other Plays

From Columbus Business First:
Drill Capital LLC, the investment company that has opened one hotel in the Utica shale and is working on a second, has plans for one more eastern Ohio hotel. 
Then it’s on to other emerging oil and gas areas. 
Drill Capital’s 80-room Microtel Inn and Suites, part of the Wyndham Hotel Group, opened in Carrollton last Wednesday, founder Farid Guindo told me. 
The New York-based firm had hoped to lure a restaurant chain to Carrollton, the county seat of Carroll County and home to oil and gas activity and related travel. But Guindo said restaurants want to wait to ensure there’s enough people staying at the hotels. A restaurant is off the table for now.
Click here to read the whole article.

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Gates Mills Residents Looking to Ban Oil and Gas Drilling

From Energy in Depth:
The highly questionable use of the community “bill of rights” is making headlines again this week in Ohio. While there is a petition being circulated in Gates Mills, two operators are taking action against these costly initiatives. 
In Gates Mills, activists are attempting to circulate a petition to get a community “bill of rights” on the November ballot, which of course is an attempt to ban shale development in the city limits. This comes after the Mayor came up with the idea to put together a land trust for landowners to maximize their bargaining position. You can learn more about what the community “bill of rights” entails here
There is currently no Utica Shale development taking place near Gates Mills, and more than likely will never take place anywhere near the village. However, that doesn’t change the fact that the community “bill of rights” has been soundly defeated three times in Youngstown. In Bowling Green, a similar measure was defeated not because of oil and gas development there, but because the “bill of rights” is widely considered aggressively anti-business. 
The business manager of the United Association of Plumbers and Pipefitters Local 396 called one such measure in Youngstown a “jobs killer.” Business leaders in Bowling Green said the “bill of rights” could discourage other business in Bowling Green not associated with oil and gas, which means putting men and women out of work who have nothing to do with “fracking” whatsoever.
Click here to read the whole article.

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Tuesday, July 29, 2014

Report Alleges That Chimera Waterless Fracking is a Fraudulent Company

The accuracy of the articles from Seeking Alpha that are quoted from in this post has been disputed.

UPDATE:

We have received communication from Charles Grob, named in the Seeking Alpha article referenced below as the head man at Chimera Energy Corp.  Grob is no longer with the company, having resigned in October 2012.

Grob included in his communications business cards for two employees of PEMEX, whom he said would verify that what was reported by Seeking Alpha is inaccurate.  I have reached out to them for comment and will update this article if and when I am able to obtain a response.

I reached out to representatives of PEMEX when this original post was created back in 2012 to attempt to confirm the relationship between PEMEX and Chimera Energy Corp.  No response was ever received.  I also attempted to call the phone number listed on Chimera Energy press releases, with no success in reaching anyone.

There have been other developments around Chimera Energy since the posting of this article back in September of 2012.

- On September 21, 2012, Chimera issued a press release (click here to view the release) stating that "Company management has selected Air Liquide as its supplier of helium for use in Non-Hydraulic Extraction on Pemex wells in the Chicontepic Basin of Mexico."

- On September 25, 2012, Aire Liquide issued this statement (click here to view it):
On Friday, September 21st, a press release was issued by Chimera Energy Corp. (CHMR) stating that Air Liquide has been selected as its supplier for an upcoming project in Mexico.

Air Liquide has no business relationship or affiliation with Chimera or its principal, Charles Grob. Chimera’s press release was issued without the knowledge or consent of Air Liquide.
- On September 24, 2012, Chimera issued a press release containing a "signed PEMEX onsite schedule letter dated September 14, 2012 regarding CHMR's Non-Hydraulic Extraction." That release can be viewed here. I reached out to multiple PEMEX representatives to try and follow up on this letter and get more information about it in October of 2012. No one replied.

- On October 9, 2012, Chimera announced the appointment of Baldemar Rios as the company's new Chairman and CEO.  View the release here.

There isn't a whole lot more information available on Baldemar Rios that I can find, other than what is in the press release.  Prior to taking on this role at Chimera Energy, Rios was the President and CEO of Projects & Industrial Products LLC in Houston, Texas.  Again, not much information is turned up when you research the company.

One of the only things a search for information did turn up was a written opinion from Judge Marvin Isgur of The United States Bankruptcy Court for the Southern District of Texas Houston Division (click here to view it).  According to that court document, Rios and his wife filed a joint voluntary Chapter 11 petition on January 4, 2011.  FLSmidth Krebs Inc. filed an adversary proceeding seeking to have Rios' discharge denied, detailing how Rios repeatedly amended the value of his company during his bankruptcy case - placing it as high as $26,000,000 at one point before adjusting it down to $6,000,000.  (The case was eventually converted to a Chapter 7, and no value was recovered from the company.)

When pressed at trial for the reasons why he made such drastic amendments to the value of his company, Rios could give no real explanation.  His testimony included this exchange:
The Court: When you look at Exhibit number 2, it was filed on February 15. And then Exhibit number 3 was filed on March 3rd, so 18 days later. What events occurred that caused the $20,000,000 drop over 18 days? 
Mr. Rios: Yeah because, uh one thing that happened also that, you know ah, you know some of the places where we have some operations, we have some . . . companies have some debts, so equipment and um equipment for example and um so . . . the companies, so the subcontractors, that we owed the money, they just stop you know or didn’t pay, you know, for example, you know, one of the creditor, I mean one of the subcontractors put a lien, and then you know, put a lien on the company, and then they went with the final customer that was paying us . . . 
Rios also produced hardly any financial records for his company, which had nearly $78,000,000 in sales over the 4 years prior to the bankruptcy proceedings.

Not surprisingly, the discharge was denied.

Other than that court document, a search turns up very little reference to Baldemar Rios or his company.

- On October 10, 2012, Chimera announced that it completed its first collaboration with PEMEX at Chicontepec Basin (which is oddly misspelled as the Chicontepic Basin in the press release).  Along with that release there was this picture posted:


The caption to the photo said: Chimera Energy Corp President Baldemar Rios (2nd from left) meeting with Pemex officials Jaime Granados (center), Jose Ceron (2nd from right) and Francisco Rios (right) in Poza Rica.

I have tried to obtain contact information for any of the individuals listed in that caption in order to reach out to them for comment on Chimera, but have had no success to this point.  A search of PEMEX's website doesn't return results for the names Jaime Granados, Jose Ceron, or Francisco Rios, nor does a search of an industry directory.  The business cards provided by Grob in his emails to us were not the cards for any of these men.

The validity of the photo was questioned by Hristina Beeva of Hotstocked, a microcap market information site.  Beeva wrote:
Just a little over a year since its incorporation, the company replaced 31-year-old founder and CEO Charles E. Grob (of unverified actual existence) with a Mr. Baldemar Rios, who claims to have worked closely with Mexican energy giant PEMEX, a completely legitimate state-owned company. The only proof that Chimera Energy has the Mexican Government's backing is a single blurry picture of Mr. Rios meeting a group of people, claimed to be PEMEX representatives of unknown rank.
- On October 11, 2012, Chimera declared that it was taking aggressive action against "naked short sellers."  The press release (view the whole thing here) stated, in part:
"The most serious challenge facing our Company is not the highly competitive industry in which we operate, nor the inherent uncertainties of cutting-edge technology, but the brazen greed of the individual(s) who are actively working every day to destroy Chimera before our technology has the opportunity to revolutionize the worldwide production of oil and gas," said Baldemar Rios, Chairman and CEO. "Today we go on the offensive. No longer will we sit idle while anonymous posters and bloggers spout egregious lies about the Company and our technology."
- On October 25, 2012, the Securities and Exchange Commission (SEC) announced a suspension of trading on Chimera Energy Corporation "because of questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things, the statements by Chimera in press releases to investors about the company’s business prospects and agreements."  Read the trading suspension by clicking here.  That suspension lasted through November 7, 2012.  Click here for an article looking at what that means for investors.

- On April 18, 2013, the SEC subpoenaed Andrew Farmer and Iridium Capital for failing to provide documents requested in the investigation of Chimera.  The litigation release (which can be read by clicking here) states, in part:
The SEC’s application explains that beginning in July 2012, Chimera commenced a promotional campaign that caused a dramatic increase in the trading volume and price of its stock. The SEC is investigating, among other things, whether the claims in Chimera’s press releases are materially false or misleading. On October 25, 2012, the SEC temporarily suspended trading in the securities of Chimera because of questions concerning the accuracy and adequacy of publicly disseminated information about, among other things, Chimera’s business prospects and agreements. 
As part of its investigation, the staff in the SEC’s Fort Worth Regional Office issued subpoenas to Farmer and Iridium in December 2012 seeking, among other things, materials related to their transactions in Chimera securities and to Chimera’s business. According to the SEC’s court papers, Farmer played an integral role in Chimera’s transition from a privately held to a publicly traded company. And, before Chimera’s securities became available for purchase to the public on the over-the-counter market, entities controlled by Farmer or for which Farmer acted as agent acquired millions of Chimera shares in private transactions, while Iridium, which Farmer also controlled, assisted in effectuating these transactions. According to the court papers, once Chimera’s promotional campaign was under way, entities controlled by Farmer sold to the public a substantial number of their privately obtained Chimera shares, generating hundreds of thousands, if not millions, of dollars in profits.
- On June 19, 2013, the SEC a subpoena enforcement action against Thomas Massey "for failure to produce documents in [a] market manipulation investigation."  A portion from that litigation release (which can be viewed here):
As part of its investigation, the staff in the SEC's Fort Worth Regional Office issued a subpoena to Massey in February 2013 seeking, among other things, materials related Massey's work on behalf of Chimera. According to the SEC's court papers, Massey played an important role in assisting Chimera with its business development and promotional efforts. Massey's work included assisting Chimera's executives in their attempts to establish a business relationship with a certain company based in a foreign nation, and providing draft press releases for review and approval by Chimera's executives.
Please note that the Seeking Alpha articles referenced below have been updated at their source to reflect that the accuracy of the articles is disputed.

I tried to visit Chimera Energy's website (www.ChimeraEnergyUSA.com) to see if the company had issued any updates lately, but the website is not active.  Another website referenced in Chimera's press releases, zerowaterfracking.com, returns a message from GoDaddy.com:
NOTICE: This domain name expired on 7/17/2014 and is pending renewal or deletion.
ORIGINAL ARTICLE FROM 9/13/12:

Monday, July 28, 2014

State Rep. Hagan Renews Call For Fracking Chemicals Disclosure


Today, State Rep. Robert F. Hagan urged Gov. Kasich to support his legislation that would better inform communities and local agencies about chemicals used in regional fracking projects. In 2013, Rep. Hagan introduced legislation, House Bill 42, to require oil and gas companies in Ohio to disclose a full list of chemicals used in the fracking process to better serve local medical professionals and responders during spills and other accidents.

Recent reports indicate that Halliburton delayed for five days the disclosure of a list of harmful chemicals that spilled into the Ohio River. The chemical information is typically used by emergency responders to make efficient decisions regarding the health and safety of community members and the surrounding environment.

“While this is not the time for ‘I told you so,’ it is disheartening to me that this disaster could have been better controlled if this piece of common-sense legislation was enacted,” said Rep. Hagan. “We have been told to trust the state agencies that oversee the fracking process. What we see now is the result of that blind trust­—earthquakes and chemical spills.”

Rep. Hagan’s legislation has only received sponsor testimony in House Agriculture & Natural Resources Committee.

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