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Tuesday, May 22, 2018

Hess Corp. Representative Talks About Company's Ohio Fracking Activity

From the Weirton Daily Times:
James W. Wilson, Utica operations area lead for Hess Corp., with a Steubenville presence at 4525 Sunset Blvd., was the May 8 guest speaker at the Steubenville Kiwanis Club’s noon luncheon meeting held at the YWCA of Steubenville.

Wilson, who was introduced by Kiwanian George Pugh, May program chair, is a native of North Dakota who has spent most of his career with a small independent oil company engaged in the drilling of small exploration projects and the acquisition of existing producing properties mostly in North Dakota, Montana, Wyoming and Utah. He has been with Hess Corp. since 2010 and recently transferred to Ohio to manage Ohio operations. 
Hess is a Fortune 500 company, Wilson explained, with safety as its No. 1 priority; the environment as No. 2; and production as No. 3. 
“In production we make about in the mid 300,000 barrels of oil equivalent a day throughout the world,” Williams said. “We are an international company. We’ve got significant operations in Ohio, North Dakota’s Bakkem, the Gulf of Mexico and Malaysia and more recently Guyana in South America, which represents a major world class discovery.” 
Worldwide, Hess has about 2,075 employees and “lots of contractors.” In Ohio, there are 15 employees, two full-time contractors and other contractors in the field handling maintenance and service work. Of the three engineers, two are regional, he said.
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Permitting Nearly Stalls in Utica Shale as Rig Count Drops Again


New permits issued last week: 1  (Previous week: 10-9
Total horizontal permits issued: 2830  (Previous week: 2830+-0
Total horizontal wells drilled: 2348 (Previous week: 2346+2
Total horizontal wells producing: 1898 (Previous week: 1890+8
Utica rig count: 20 (Previous week: 21)  -1

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Monday, May 21, 2018

Rex Energy Files for Bankruptcy, Begins Liquidating Assets

From the Pittsburgh Post-Gazette:
After months of trying to find another way, Rex Energy Corp. is filing for bankruptcy. 
The State College-based oil and gas company whose major holdings are leases and shale wells in Butler County, disclosed in its quarterly report with the Securities & Exchange Commission that it could not come to an agreement with its lenders after missing a debt payment in late April. 
Rex said it would be seeking protection under Chapter 11 of the bankruptcy code imminently. 
As of the end of last year, the company had 105 full-time employees. Only 17 of them work in the field as Rex uses independent contractors and consultants to do a lot of the drilling, fracking and associated work. 
Founded in 2007, Rex has been shedding assets and looking for capital for some time now. Last year, it sold a substantial portion of its Ohio acreage to Antero Resources Corp. Earlier this year, it sold its interest in wells in Westmoreland, Centre and Clearfield counties.
And from Rex Energy itself:
Rex Energy Corporation (REXX: OTC), an independent oil and gas exploration and production company, today announced that, following its previously announced strategic review, it has decided to begin an orderly sale process for its remaining assets in order to maximize their long-term value and prospects. To facilitate the sale and address its debt obligations, the Company initiated voluntary proceedings under Chapter 11 of the U.S. Bankruptcy Code with support outlined in a Restructuring Support Agreement signed by 100% of its first lien lenders and approximately 72% of its second lien noteholders.

Rex Energy's drilling and production programs are operating as usual, and the Company is maintaining the necessary staffing and resources to meet its commitments to gathering and processing partners. 
"Over the past seven months, Rex Energy has been in deep discussion with our lenders and advisors to evaluate every aspect of our business and take proactive steps to overcome the challenges our industry continues to face," said Tom Stabley, Chief Executive Officer. "We have undoubtedly made progress in addressing the realities of the global commodities market but require a more fulsome debt restructuring to overcome the immense pressures our business is facing. Ultimately, we decided that the best possible outcome was to put our remaining assets into the hands of owners with the financial strength necessary to position them for long-term growth and success. Chapter 11 provides an orderly process to achieve these goals in a way that maximizes value for our stakeholders." 
The Company has secured a financing commitment of $100 million from its existing first lien lenders, which, combined with its normal operating cash flow, will allow Rex Energy to maintain normal operations and meet ongoing financial commitments. In addition, and as is typical in these cases, the Company has filed a series of "First Day Motions" that, once approved by the Court, will allow it to uphold commitments to stakeholders, including employees, vendors and service providers, gathering and processing partners, and royalty owners.

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Report: Shale Industry Has Invested Almost $64 Billion in Ohio

From Kallanish Energy:
The shale industry has invested $63.9 billion in Ohio as of mid-2017, according to a JobsOhio official. 
That private sector investment in the Utica Shale in eastern Ohio started in 2011, Dana A. Saucier Jr., senior managing director, Energy and Chemicals, Food & Agribusiness,said in an interview in Smart Business. 
The $63.9 billion total includes upstream, midstream and downstream investments, Kallanish Energy reports. 
To date, Ohio has permitted 2,830 Utica wells, of which 2,346 have been drilled and 1,890 are producing. 
“Those looking to invest in Ohio’s shale opportunity have confidence in the state and the business environment it fosters,” he said. “The prevailing sentiment is that it’s an attractive place to deploy capital.” 
Pipelines to move natural gas to market have brought “an uptick in additional investment in the last 12 months of around $10 billion,” he said.
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Tuesday, May 15, 2018

Utica Rig Count Declines Again Last Week


New permits issued last week: 10  (Previous week: 7+3
Total horizontal permits issued: 2830  (Previous week: 2820+10
Total horizontal wells drilled: 2346 (Previous week: 2338+8
Total horizontal wells producing: 1890 (Previous week: 1890+-0
Utica rig count: 21 (Previous week: 22)  -1

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EIA Continues to Predict Big Shale Output

From Reuters:
U.S. shale production is expected to rise by about 145,000 barrels per day to a record 7.18 million bpd in June, the U.S. Energy Information Administration said on Monday. 
A majority of the increase is expected to come from the Permian basin, the biggest U.S. oil patch, where output is expected to climb 78,000 bpd to a fresh record of 3.28 million bpd, the EIA said in its monthly drilling productivity report here#tabs-summary-2. 
Soaring Permian crude production has already outpaced pipeline takeaway capacity, depressing prices in the region and leaving traders scrambling for alternatives to get crude to market.

Bakken output is expected to rise 20,000 bpd to 1.24 million bpd, the highest since June 2015, while Eagle Ford production is set to rise 33,000 bpd to 1.39 million bpd, the highest since February 2016. 
Production in the United States has surged thanks to the shale boom, helping send U.S. crude futures’ discount to international benchmark Brent crude futures WTCLc1-LCOc1 to the widest in six months.
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Preparation Continues for Belmont County Cracker Plant as PTT Tests the Soil

From The Intelligencer:
To ensure the ground can support a $10 billion ethane cracker, officials are testing the soil at the former R.E. Burger plant along the Ohio River in Belmont County.

Nearly two years ago, the 854-foot-tall smoke stack at the site fell to the ground after an organized sequence of explosions. Last summer, officials with Thailand-based PTT Global Chemical paid $13 million to acquire this property. 
“This is part of our ongoing feasibility and engineering work, including permit-related activities required through our contractors and consultants,” said PTT spokesman Dan Williamson. 
Early this month, PTT paid another $17.5 million to acquire the Ohio-West Virginia Excavating property, which is to the south and west of the Burger site. By combining the areas, the company controls about 500 acres for possibly building the ethane cracker. 
Williamson, however, said this acquisition should not be considered confirmation of a final investment decision, which he said remains under evaluation. 
Still, Belmont County Commissioner J. P. Dutton said he remains cautiously optimistic.
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Analyst Questions Whether Chesapeake Energy's Improvement is Enough to Save the Company From Huge Debt

From Seeking Alpha:
  • While Chesapeake is showing some decent financial results, allowing it to use the proceeds from asset sales to pay down debt, the hole it is in may be too deep. 
  • Its massive exposure to shale gas acreage remains a big impediment given that there are few signs of natural gas prices improving going forward. 
  • By the time natural gas prices will improve, it will be because Chesapeake as well as other shale drillers will run out of prime natural gas drilling sites.
After many years of deep losses incurred on its operations, specifically during the years when oil prices plunged, Chesapeake (CHK) is finally putting in some decent operating results, with the Q1 net operating profit at $268 million, on revenue of $2.5 billion, it is a decent profit margin of almost 11%. This is in part thanks to higher oil prices, but also to a large extent due to drilling consolidation in the more profitable acreage within its asset portfolio, which has been the case for the shale industry overall. The industry also got some significant help from plunging oil services costs, which are now starting to recover. The challenge for the entire shale industry will now be to keep the operating profits (where applicable) even as those service costs increase together with the price of oil. Those who will continue to report financial losses from this point on will most likely eventually disappear. For those who will from now on produce operating profits on the back of the higher oil price environment, the question will remain whether it is going to be enough to make up for the many years of losses incurred over the past decade or so. For Chesapeake the question is in my view more urgent, because the debt hole it is in is particularly deep. 
In order to get a better understanding of how Chesapeake got to be where it is right now, I think it is important to take a step back and look at its yearly operating results going back to the years before the shale boom started, until the present. 
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