Chesapeake Cut 740 Jobs

Chesapeake Cuts Jobs

Chesapeake Energy Corp is reducing its workforce by 15%, causing more speculation about the viability and future of the company.

Chesapeake Energy Loses $4.15 Billion | Eagle Ford Shale Play

Chesapeake, the second-largest producer of natural gas in the United States, announced last week that it will lay off 740 of its employees, most from its Oklahoma City office.

The layoffs added fuel to the rumors as analysts predict whether Chesapeake will sell or find partners for its oil and gas fields, with some suggesting that the company is ripe for a takeover.

“As you are fully aware, the current commodity price environment continues to be a challenge for our industry and Chesapeake. Over the past year, we have taken significant actions in response to the low commodity prices by reducing our costs and decreasing our capital spending.”

— Chesapeake CEO, Doug Lawler

In August,Chesapeake Energy Corp reported second quarter losses of $4.151 billion.  The company said it expects to post third-quarter charges of roughly $55.5 million related to the move.

Other issues facing the shale driller include new claims surface from mineral royalty owners who believe they were swindled by the Chesapeake.

Related: Chesapeake Continues Fight with Mineral Owners

A new lawsuit that involves over $1 billion in unpaid royalty payments was filed in Tarrant County against Chesapeake Energy, accusing the company of deliberately cheating property owners by improperly calculating the price of gas sold at the wellhead and by wrongly deducting expenses.

Chesapeake's operations in the Eagle Ford include 449,000 net acres that produces 105,000 BOE/day.

Federal Fracking Rules Halted

Fracking Ruling Blocked

The Obama Administration suffered a setback this week in its fight to add stricter regulations to the oil and gas industry for hydraulic fracturing (fracking).

Related: New Fracking Rules for Public Lands

On Wednesday, U.S. District Judge Scott Skavdahl issued a preliminary injunction effectively halting the efforts to add tighter regulations for fracking on public land.

The case before Judge Skavdahl combined two separate challenges from industry groups and several states who have filed lawsuits. All parties challenging the ruling stated that the Bureau of Land Management (BLM) did not follow federal rule-making law and exceeded their authority. The groups also claim these additional rules aren’t necessary because the EPA has already granted authority to the states to monitor and protect underground water sources.

“House Committee on Natural Resources Chairman Rob Bishop (R-UT) told cnbc that regulations would “cause major harm to states, industry, and the American people if implemented.”

At question are the new regulations proposed in March by the Bureau of Land Management in March. The rules came after a four-year investigation that included over 1.5 million public comments. If it moves forward, the fracking rule would require:

1. A validation of well integrity in order to protect groundwater supplies
2. Companies to publicly disclose chemicals used in hydraulic fracturing through the website FracFocus, within 30 days of completing fracturing operations
3. Higher standards for interim storage of recovered waste fluids from hydraulic fracturing to mitigate risks to air, water and wildlife
4. Companies to submit more detailed information before fracking to reduce the risk of cross-well contamination

Eagle Ford Sets Record for Lonestar

Lonestar Reports Record Quarter

Lonestar Resources announces record Eagle Ford Shale production for the third quarter of 2015.

Related: Shale Industry Shake-Up

In a press release this week, Lonestar Resources reported a net production for the third quarter of 2015 averaging 6,500 BOE per day, which represents a 39% increase over prior year results and a 12% increase over second quarter 2015 results.

Lonestar has focused much of its resources on 34,360 acres in the Eagle Ford Shale. These operations are breaking production records for the company, including approximately 48% year‐over‐year in the third quarter of 2015, and 15% sequentially over 2Q15 results.

While heralding this great news, Lonestar executives are careful to point out that expenditures reflect the company's commitment to a disciplined approach.

“Lonestar’s continued growth in this difficult environment is confirmation that our team is executing at a high level, bringing wells onstream within budget and at production rates that exceed our forecast. Moreover, this growth is being achieved with capital discipline and balance sheet management, which is critical in the current macro backdrop.”

— Lonestar’s Chief Executive Officer, Frank D. Bracken, III

In July, Lonestar agreed to a joint development agreement (JDA) with Dallas’ IOG Capital LP. which will add an $100 million for its Eagle Ford drilling efforts fund and develop additional farm-in opportunities such as Horned Frog, a 3,614-acre leasehold recently acquired in La Salle County, Texas.

Read more at lonestarresources.com

Fracking Ban: A Disaster for Texas Universities

Anti-Fracking Demonstrators

Controversy is brewing over whether the state should continue to drill for oil and gas on public University Lands.

Related: "Denton Fracking Bill" Sails Through House

A report released earlier this month by Austin-based Environment Texas Research and Policy Center and the California-based Frontier Group called for an end to oil and gas drilling, citing that 95% of the leases involve the controversial technique of hydraulic fracturing (fracking). They claim that fracking hurts the environment and threatens public health.

Pro industry supporters are expressing outrage, saying a halt to drilling would be "disastrous for the University system and the Texas economy."

If Environment Texas gets what it wants, it would mean a severe cut in the revenue stream for higher education in Texas. Alyssa Ray, marketing and corporate strategy analyst said that oil and gas leases from University Lands brought in more than $1.1 billion in 2014 compared to $589 million in tuition from more than 50,000 UT students in 2011.

“Please stand with us by defending continued oil and natural gas development on University Lands (...) These funds have allowed the universities to keep tuition affordable and make investments in new facilities. Now, a liberal environmental group is calling for a de facto end to drilling on lands that benefit both UT and A&M.”

— North Texans for Natural Gas, Petition Plea

Downsizing in the Eagle Ford

Sanchez Sells Eagle Ford Assets

Sanchez Energy Corp joins the ranks of other shale producers who are doing whatever is necessary to survive in this downturn.

Related: Sanchez Energy Reports Huge Losses

In a press release today, Sanchez confirmed that it is selling approximately 150 miles of midstream gathering lines and associated midstream infrastructure in the Eagle Ford in order to gain much-needed cash. Sanchez Production Partners will acquire and operate the assets concentrated in four gathering and processing facilities. Both firms are run by the private Sanchez Oil & Gas Corp.

The sale is expected to close next month and will bring Sanchez $618 million cash on hand, which they will use to buy assets, lease more property and accelerate drilling. The company anticipates that this agreement will result in an increase in lease operating expense of approximately $1.95 per barrel of oil equivalent.

Many Eagle Ford producers are selling assets and making deals in order to survive. Just last week, U.S. oil producer, Alta Mesa Holdings, announced it will exit from the Eagle Ford by selling Alta Mesa Eagle, LLC to EnerVest for $125 million.

Sanchez Energy CEO Tony Sanchez III said the company may sell other Eagle Ford assets as needed. 

“We anticipate that we will see additional opportunities to accelerate returns through midstream and other asset monetization strategies like the one announced today.”

Read the press release at sanchezenergycorp.com