Barnett Shale

Fort Worth land management firm expands to Denver

Purple Land Management, formed in Fort Worth in 2010, says it opened a Denver office to handle leasing, right-of-way and related consulting for energy companies and other clients in the Rocky Mountains region. That region includes the Bakken  and Niobrara shales, and the Powder River and Uninta basins in Colorado, Utah, North Dakota, Wyoming and Montana. The company also has offices in Ohio and Pennsylvania as well as in downtown Fort Worth. Bryan Cortney and Jesse Hejny, both TCU alums (surprise!) are the founders. The company also works with public entities.

-- Jim Fuquay

Study: Natural gas, renewables work together in Texas electricity market

While natural gas-fired generators complete with renewable power sources like wind and solar in the Texas electricity market, they are also complementary and the state will need both, according to a new study by The Brattle Group that was prepared for the Texas Clean Energy Coalition. According to former state Sen. Kip Averitt, now TCEC chairman, "increasing demand for additional electric generation capacity makes Texas an ideal test bed for the development of natural gas and renewable energy technologies. Having ramped up wind generation faster than any other state, Texas’ ability to integrate this renewable resource into its existing power system has the potential to be a model for others as they see the share of wind in their electricity supply increase," he says in a prepared release.

According to the study, "low natural gas prices have fueled concerns that natural gas will soon crowd out renewable resources, undermining Texas' progress towards the development of a thriving wind industry and towards reducing emissions." It goes on to say that despite that competition, "there is a strong complimentary (sic) relationship between natural gas and renewables." For one, gas-fired power plants "matches much better with intermittent renewable generation" from wind and solar. The current low prices of natural gas can also help cushion the higher up-front costs of renewables, the study says. A link to the study is here.

-- Jim Fuquay

Julie Wilson leaving Chesapeake Energy

Julie Wilson, Chesapeake Energy's top officer in the Barnett Shale, will leave the company effective Friday and return to consulting, according to an email she sent this week. "After seven exciting years at Chesapeake Energy, I’m moving on to the next adventure in life, resuming my previous consulting business.  My last official day in the office will be June 14, although I’ve agreed to serve as consultant for the next few months to help assure a smooth transition," the email reads. She will be succeeded by Ben Russ, the natural gas producer's Southern Division counsel. Russ works out of Chesapeake's headquarters in Oklahoma City but "plans to be in Fort Worth a couple of days each week," Wilson says in her email.

Wilson was a longtime Fort Worth advertising executive prior to joining Chesapeake ion 2006, after it moved into the Barnett Shale in 2004. She was a principal in Regian & Wilson, formed in 1980, which in 1998 was sold to New York-based Grey Worldwide. Wilson left the agency in 2001 to do strategic business development and communications consulting at the Reasons Group.

-- Jim Fuquay

 

Barnett, U.S. rig counts decline

Drilling rigs in the Barnett Shale fell by two this week to 27, near their 10-year low in the North Texas natural gas field, according to RigData. Denton County was the busiest with six rigs, followed by Tarrant and Wise counties with five each, and Montague and Jack counties with four each.

Nationwide, the rig count fell by six to 1,765, said Baker Hughes of Houston. Rigs seeking crude oil were down four to 1,406, natural gas rigs were unchanged at 354 and five rigs were classed as miscellaneous.

A year ago there were 1,984 active rigs.

-- Jim Fuquay

Range Resources agrees to settle Oklahoma royalty suit for $87.5 million

Fort Worth-based Range Resources said today that on May 31 it took steps to settle an Oklahoma class-action lawsuit for $87.5 million. Plaintiffs in the suit, filed in 2010, had sought $160 million in alleged underpayments on royalties. Range in April said it set aside $35 million in potential expenses related to the case. In today's filing, Range said it reached a memorandum of understanding that sets forth a final settlement in the amount of $87.5 million, which includes interest. As a result, Range will take an additional charge of $52.5 million in this year's second quarter.

-- Jim Fuquay

Barnett rig count rises by 3 to 29

The number of active drilling rigs in the Barnett Shale rose this week to 29, up three from a week ago, as the northern reaches of the North Texas gas field continued to draw attention. Denton County was the most active with six rigs, followed by Wise and Jack counties with five each, and Montague with four, according to RigData. Nationally, active rigs rose by nine, to 1,771, said Baker Hughes. Rigs seeking crude oil were up eight, to 1,410, gas rigs were unchanged at 354, and miscellaneous rigs were up one.

— Jim Fuquay

Exxon shareholder propositions voted down

Exxon Mobil Corp. shareholders voted down all shareholder proposals presented at the company's annual meeting today in Dallas, including a measure calling for the company to expressly prohibit discrimination based on sexual orientation. That proposal, which had drawn increased scrutiny from activists in recent weeks, drew the support of 20 percent of shares voted. Shareholder proposals calling for increased disclosures of environmental impacts, including greenhouse gas emissions, were supported by 30 percent or fewer shares cast.

The meeting included an extended response by CEO Rex Tillerson to supporters of the greenhouse gas measure, which asked the nation's biggest energy company to set specific goals for reducing emissions and addressing risks from climate change. "We view climate change as a serious issue. It does present serious risks," Tillerson said. But he maintained that climate models are limited in their "ability to understand all the feedback loops" affecting global temperatures, calling the effort "one of the grand challenges" facing scientists today. At the same time, he said, "there is no ready replacement" for fossil fuels to meet growing energy demand around the world.

The Rev. Michael Crosby, a Franciscan friar from Milwaukee, challenged Tillerson to accept that as carbon dioxide levels in the atmosphere have exceeded 350 parts per billion, it represents a threat "that needs to be addressed right now." Climate researchers recently noted that the average CO2 concentration in the atmosphere topped 400 ppb. But Tillerson said there is "nothing magical" about the 350 ppb threshold, even though it represents a "base case" that should be pursued by policymakers. "But to suggest that 350 vs. 450 is a known outcome," he said, overstates the ability of climate models to predict the impact on temperatures. "We do not see a viable pathway" to reducing CO2 concentration to 350 "without a devastating impact" on living standards around the world, Tillerson said.

Exxon's 2010 acquisition of Fort Worth-based XTO Energy came up in Tillerson's response to a shareholder's question about why Exxon has not outperformed its peers in the past five years. The company's presentation included a graphic showing that returns to shareholders shares outpaced both the broader U.S. market as well as competitors over 20-year and 10-year periods.

Tillerson said Exxon has made unprecedented investments since 2008, some of which will take years to pay off. According to the company, it has spent $162 billion in the past five years, including $40 billion in 2012 alone, on capital projects. And, he said, "the XTO merger had an effect" when U.S. natural gas prices fell to decade-low levels last year. While Exxon expected gas prices to fall from their peak in 2008, "they stayed low much longer than we expected" because the recession hurt demand and smaller producers continued to develop new supplies.

"Maybe we were off a year or two" in the timing of the $41 billion deal, he said. But that's not significant in the perspective of a longer view over 30 to 40 years, he said.

Among other corporate business, a shareholder resolution calling for all directors standing for election to garner a majority of votes cast drew the most support, with 45 percent, followed by 35 support who supported a measure to separate the posts of chairman and chief executive officer. 

Other measures and their votes in favor included requiring the company to prepare a formal report on the risks of natural gas development (30 percent), set greenhouse gas emissions goals (27 percent), disclose all lobbying memberships and payments (25 percent), limit the number of boards Exxon directors can serve on (6 percent) and prohibit contributions to influence an election (6 percent).

A non-binding "say on pay" measure that expresses shareholder approval of executive compensation gathered just under 71 percent. Exxon CEO Rex Tillerson, addressing the vote in a session after the vote with reporters, said that was less than the 76 percent a year earlier but just slightly more than two years earlier. Tillerson said the change from 2012's vote likely represented one large institutional shareholder and indicates that more than 70 percent of shareholders are satisfied with the company's pay levels.

-- Jim Fuquay

Quicksilver Resources buys Canadian site for possible LNG facility

Fort Worth-based Quicksilver Resources has acquired a former industrial site in British Columbia, saying it could build a liquefied natural gas facility. Quicksilver has large holdings in British Columbia's Horn River Basin. A report is available here.

-- Jim  Fuquay

All quiet at Exxon Mobil annual meeting

As Exxon Mobil prepares to commence its annual shareholders meeting starting at 9 a.m. this morning, there was a conspicuous absence of protesters around the Morton H. Meyerson Symphony Center in downtown Dallas. That's a marked departure from the usual crowd voicing disapproval of the XL Keystone pipeline, environmental and other corporate governance issues that typically go with being the world's largest publicly traded oil company. CEO Rex Tillerson isn't expected to make any news at the meeting, but meets with reporters for a question-and-answer session following the event.

-- Jim Fuquay

Railroad Commission adopts stricter well construction rules

The Texas Railroad Commission today adopted new well construction rules that specify casing, cementing and other standards aimed at ensuring that hydraulic fracturing operations do not impact groundwater or injection wells. When cases of water contamination near oil and gas operations have been investigated,  the cause is typically found to be poor casing or cementing that allowed drilling fluids, oil or natural gas to escape and migrate nearby. The new rules drew support from observers as varied as the Texas Oil & Gas Association and the Sierra Club. They go into effect Jan. 1, 2014.

One measure mandates a minimum thickness of the cement sheath around casing, the steel pipe lining a well bore. Cement used to set surface casing in place must be at least 0.75-inch thick, and cement on subsequent casing must be at least a half-inch thick. Cyrus Reed of the Texas Chapter of the Sierra Club said his group would have preferred more cement on lower strings, but said it's still good to set a specific standard. "We're generally pleased with the new rules," Reed said. "It was a pretty good effort."

Deb Hastings, executive vice president of the Texas Oil & Gas Association, in a prepared statement said "the new rule enhances transparency, reflects advances in technology and is technologically feasible for operators to implement."

Besides the cementing standards, other measures require:

• pressure testing and monitoring on wells that are hydraulically fractured;
• verification of casing integrity;
• additional testing when a well taps a formation less than 1,000 feet below useable groundwater;
• use of air or water-based drilling fluid until surface casing is set and cemented;
• updated requirements for well control measures and blowout preventers;
• additional cementing when an injection or disposal well is within a quarter-mile

Officially, the rules are amendments to the Commission's Statewide Rule 13 (Casing, Cementing, Drilling, Well Control and Completion Requirements). They also implement legislation from the 2011 Legislature that transferred to the Railroad Commission responsibility for setting the required depth of surface casing. That job, aimed at protecting drinking water aquifers, was previously handled by the Texas Commission on Environmental Quality.

-- Jim Fuquay

Barnet rig count unchanged, U.S. rigs down seven

The number of drilling rigs working in the Barnett Shale was unchanged this week at 26, according to RigData. For the first time in years, however, Wise County was not the busiest, yielding the top spot to Denton County with six rigs. Wise and Montague counties each had five rigs working, and Tarrant County had three.

Nationally, active rigs dropped by seven this week to 1,762, said Baker Hughes. Rigs seeking crude oil fell six to 1,402, those seeking natural gas were unchanged at 354, and miscellaneous rigs were down one to six.

-- Jim Fuquay

API chief: Natural gas export opponents few but 'shrill'

Jack Gerard, president of the American Petroleum Institute, says Dow Chemical and other corporate opponents to exporting U.S. natural gas are limited to just "a handful, but they're very shrill." Gerard made his comments this morning at a breakfast with reporters in Dallas.  API is the Washington-based trade association for U.S. major oil and gas producers. Gerard also said he believes Dow "has backed off a bit" in seeking to restrict natural gas exports because it is losing support for that stance within the chemical industry. Dow has been the most vocal among big users of natural gas components, which serve as feedstock for petrochemical production, who fear exports of liquefied natural gas will drive up U.S. prices, which have only recently risen from 10-year lows.

The issue is gaining steam as developers have filed close to 20 applications for permits to liquefy and export U.S. natural gas. Ernst Moniz, recently sworn in as Energy Secretary for the Obama Administration, this week said he would delay decisions on the permits pending further study. Gerard said API believes that barring a clear reason to say no, the federal government should grant the permits and let the industry determine how many of the hugely expensive export facilities will actually be built. "Let the market work out who invests $10 billion and who doesn't," he said.

-- Jim Fuquay

Quicksilver Resources independent director named chairman

W. Yandell Rogers, an independent director on the Quicksilver Resources board since March 1999, was elected chairman at the Fort Worth-based producers board meeting Wednesday. Rogers is CEO of Priest River Ltd., described by the company as a private holding company. He replaces Thomas "Toby" Darden, 59, who remains on the board as chairman emeritus but will retire Dec. 31, the company said today. Quicksilver said Darden "will continue as an employee of the company through the end of the year, focusing on strategic transactions including the pursuit of a joint venture in the Horn River Basin in British Columbia," and "will continue to advise the company on the Horn River Basin development and other projects." 

"We deeply appreciate Toby's leadership and his many valuable contributions to the growth of Quicksilver," Rogers said in a prepared release. "We are fortunate that we will benefit from his continued counsel as a director and a consultant." In the same release, Darden said: "It has been my pleasure to serve with so many outstanding and talented employees from Quicksilver and affiliated companies over the past 38 years. Together we have produced billions of dollars of revenues and developed trillions of cubic feet of natural gas reserves. I look forward to continuing as an active director on the Board and in my advisory role as the company moves forward in our joint venture efforts in the Horn River Basin." Quicksilver's CEO is Glenn Darden, 57. He has held the post since December 1999.

-- Jim Fuquay

 

 

Texas House honors Barnett Shale pioneer George Mitchell

George P. Mitchell, whose efforts combining hydraulic fracturing and horizontal drilling led to the development of North Texas' Barnett Shale and launched a nationwide boom in shale production, was honored Monday with a joint resolution on the floor of the Texas House of Representatives. Mitchell, who turns 94 next month, was not present but was represented at the event by his daughter, Sheridan Lorenz, and Marilu Hastings, environment program director at the Cynthia and George Mitchell Foundation. According to a prepared statement from the foundation, Lorenz encouraged state leadership to "redouble its efforts to position Texas to lead the transition to a clean energy economy by modernizing existing oil and gas regulations to better manage advanced drilling technologies, to continue expanding renewable energy markets and to create incentives to use energy more efficiently." Gov. Rick Perry made a rare appearance on the House floor for the ceremony.

Mitchell in February was honored with a "History Making Texan Award" by the Texas State History Museum Foundation "in tribute to his exemplary contributions to the oil and gas industry." The House resolution also recognizes Mitchell's historic preservation work and his development of The Woodlands north of Houston.

The production techniques that Mitchell's company, Mitchell Energy, pioneered in the Barnett Shale have spawned a rush of  shale oil and gas production that has reversed a decades-long decline in U.S. output. While shale production is seemingly an overnight success, Mitchell worked for years to find the right combination that make the dense rock give up its oil and gas in economic quantities.

In 2008 at a Fort Worth event honoring his achievements, Mitchell told the Star-Telegram that success was not guaranteed. "Even my engineers told me, 'You’re wasting your money, Mitchell.' Finally we figured out you had to fracture it considerably to make it produce," Mitchell said at the time. "It took about seven wells that cost a couple of million each and a lot of experiments to figure out how to make it work," he said. He drilled his first Barnett Shale well in 1981. He drilled his first horizontal Barnett well in 1997. By 2001 Mitchell's efforts in the field were established enough to draw a $3.5 billion buyout offer from Devon Energy of Oklahoma City. Devon acquired Mitchell Energy, whose Barnett holdings are still headquartered in Bridgeport in Wise County, and remains the field's largest oil and gas producer.

-- Jim Fuquay

 

 

Quicksilver shares decline on first-quarter loss, lower revenues

Quicksilver Resources, which is working to sell assets and reduce a big debt load, announced a narrower loss for the first quarter.

The Fort Worth natural oil and gas producer said its net loss totaled $60 million, down from a restated $212 million loss in the first quarter of 2012. Revenues declined to $133 million from $166.5 million a year ago as both production and prices of natural gas, natural gas liquids and oil declined.

In March, the company announced a deal to sell 25 percent of its Barnett Shale assets to Tokyo Gas for $485 million. Proceeds from that deal were not included in the results, as the transaction did not close until April 30.

The company said its Barnett Shale production declined by 5 percent from the fourth quarter 2012, but its production in Canada's Horn River Basin was up 30 percent.

The company's Quicksilver Production Partners entity also announced that it is withdrawing its filing for an initial public offering of stock due to the sale of the Barnett Shale assets and "the persistence of challenging" pricing for natural gas liquids.

Shares of Quicksilver were off nearly 9 percent, to $2.43 cents a share, in afternoon trading after the results came up short of Wall Street expectations.

-- Steve Kaskovich

 

Pioneer Natural Resources shares jump on strong outlook

Shares in Irving-based Pioneer Natural Resources rose 6 percent in active trading Thursday following the producer's announcement Wednesday of better-than-expected earnings. In a call with financial analysts Thursday morning, company executives said Pioneer will accelerate its drilling schedule in the Midland Basin. Pioneer said it expects to produce 174,000 to 179,000 barrels of oil equivalent in the second quarter.

-- Jim Fuquay

Devon loses $1.3 billion on big impairment charge

Devon Energy, the largest producer in the Barnett Shale, said it lost $1.3 billion in the first quater after taking a $1.9 billion non-cash impairment charge related to market prices of natural gas and crude oil. After adjustments for those and other items, Devon earned $270 million, or 66 cents a share, compared to financial analysts' consensus estimate of 56 cents. The company's shares (ticker: DVN) were up in early trading. Impairments occur when a company's estimate of assets under current economic conditions falls short of the expenses it booked to acquire the assets.

Devon said total production declined slightly from a year ago to the equivalent of 687,000 barrels of oil a day. Crude oil production was up 14 percent to 162,000 barrels a day, helped by a 23 percent increase in the Permian Basin in West Texas. In the Barnett Shale Devon said it averaged 1.4 billion cubic feet of natural gas a day in the quarter, including 55,000 barrels a day of liquids, up 5 percent from a year ago.

-- Jim Fuquay

Chesapeake squeezes out first-quarter profit of $15 million

Chesapeake Energy, in its first earnings report since the departure of former CEO Aubrey McClendon on April 1, said it earned $15 million despite nearly $180 million in one-time charges. The Oklahoma City-based producer, which is the second-largest operator in the Barnett Shale, said revenues jumped $1 billion in the quarter to $3.4 billion on higher product prices and a 9 percent gain in production from a year ago. Oil production was up 56 percent from a year ago, said acting CEO Steve Dixon. After adjusting for unusual items, Chesapeake earned $183 million, or 30 cents a share, compared to Wall Street's consensus estimate of 25 cents. But the company's shares (ticker: CHK) were down in early trading.

The company said it averaged 83 drilling rigs in the quarter and spent $1.5 billion on drilling and competitions, versus just $45 million for unproved acreage. CFO Domenic Dell'Osso said Chesapeake will "devote more than 80 percent of our total capital expenditures to drilling and completion activities in 2013, as compared to an average of approximately 50 percent over the past three years." The company said it closed or signed about $2 billion worth of asset sales so far this year and expects between $4 billion and $7 billion in asset sales during 2013.

--- Jim Fuquay

Barnett rig county up one 26, U.S. rigs down

Active rigs in the Barnett Shale inched up this week to 26, just one more than the 11-year low seen the previous week, according to RigData. Wise County continued to be the busiest in the North Texas field, with six rigs working, followed by Denton and Tarrant counties with four each.

Nationally, the rig count was down four to 1,754, according to Baker Hughes. The number of rigs seeking crude oil rose by 10 to 1,381, while rigs seeking natural gas fell by 13 to 366. Seven were listed as miscellaneous. A year ago, there were 1,945 active rigs.
-- Jim Fuquay

Range Resources sets aside $35 million for Oklahoma royalty lawsuit

A class-action lawsuit in Oklahoma that seeks $160 million in alleged royalty underpayments from Range Resources led the Fort Worth-based oil and gas producer to book $35 million in potential expenses during the first quarter, according to a Securities and Exchange Commission disclosure today. "While we believe we have strong defenses to the claims made in this lawsuit," Range said in its filing, it concluded that amount was appropriate  "given our evaluation of the law in Oklahoma, the outcomes in similar litigation and our assessment of the current status of the litigation." Range also said it has appealed a Feb. 19 court ruling certifying a class.

Deductions for post-production expenses "by third parties who transport and process natural gas production" form the basis of the suit, the company said in the filing. Range said that while it believes that "current case law in Oklahoma ... allows operators to deduct value-enhancing costs for treating, compression and other post-production expenses incurred to increase the value of a marketable product," the extent of the deductions could be something a judge or jury must determine. Range generally sells its Oklahoma natural gas production to third parties "which, in many cases, do transport and process the gas," it said. Range Resources-Midcontinent, the subsidiary involved, Range said, "has substantially complied with its royalty payment obligations under its leases and we therefore intend to vigorously defend this litigation."

-- Jim Fuquay

 

 

Range Resources loses $75.6 million as production rises

Fort Worth-based Range Resources said it lost $75.6 million in the first quarter despite a 27 percent jump in revenues. A non-cash charge of $97 million on unrealized derivatives was partly to blame, but the oil and gas producer also reported $38.4 million in lawsuit settlements, which the company did not detail. After adjustments for unusual items, the company said it earned $52.9 million, or 33 cents a share, better than financial analysts' consensus estimate of 28 cents. Range said its production in the quarter rose 32 percent, with oil and condensate showing the biggest gain. Product prices after accounting for hedges  slipped 3 percent to the equivalent of $5.06 per 1,000 cubic feet (mcf) of gas before transportation costs paid to third parties. Those transportation, gathering and compression expenses came to 79 cents per mcf. The company will hold a conference call with analysts Friday morning.

-- Jim Fuquay

FracFocus falls short, Harvard study says

FracFocus, a website that posts information on hydraulic fracturing materials used in new oil and gas wells around the nation, needs more federal oversight, a new study out of the Harvard Law School says. It faults the site, a project of state regulators and agencies, for inadequate disclosure and being difficult to search. Bloomberg News has a report here.

-- Jim Fuquay

Appeals court lets Range's defamation suit against Lipsky continue

A state appeals court said Fort Worth-based Range Resources can pursue a defamation claim against Parker County landowner Steven Lipsky, but it also dismissed several of Range's other counterclaims against Lipsky, his wife and their environmental consultant. The Texas Second Court of Appeals in Fort Worth had been asked by the Lipskys and Wolf to dismiss Range's suit, which followed the Lipskys' lawsuit in 2011 that claimed Range contaminated a water well on the family's property. 

A link to the story in the Star-Telegram is here.

-- Jim Fuquay

Ex-Chesapeake CEO McClendon forms new energy company

Aubrey McClendon, who effective April 1 left Chesapeake Energy, the company he co-founded, has formed a new energy company named American Energy Partners LP, The Oklahoman reports. Citing an e-mail that the newspaper says was sent Tuesday to a number of people in the energy industry, "McClendon wrote that he has founded and serves as the chairman and CEO of American Energy Partners. McClendon said in the email that American Energy Partners is looking to acquire onshore assets in the United States," according to the report on the newspaper website. “My goal is to build a substantial E&P (exploration and production) company both through the drillbit and through acquisitions of producing properties,” McClendon says in the email. “In particular, I will be looking for deals with a lot of drilling left on them and will also consider undeveloped acreage deals — plus, I am not scared of natural gas.”

A link to The Oklahoma's report is here.

-- Jim Fuquay

Mexico oil and gas development an opportunity, Exxon CEO says

Mexico will eventually open its domestic oil production to foreign companies, Exxon Mobil CEO Rex Tillerson told a Dallas audience today. While the nationalization of Mexico's oil industry in 1938 is still celebrated there, Tillerson said that there is "growing recognition that change is needed" and outside producers should be allowed to help develop resources. "That will happen out if necessity" Tillerson said. Exxon's interest would depend on Mexico's "terms and conditions" of that participation, he said.
-- Jim Fuquay

Fort Worth independent acquires East Texas acreage from Chesapeake

Energy & Exploration Partners, a Fort Worth-based producer, said Monday it acquired 57,275 net acres and 11 producing wells in East Texas from Chesapeake Energy. The company is backed by Apollo Investment Corp. and Highbridge Principal Strategies, which were issued notes in connection with the transaction. The acreage is in Madison and Grimes counties, which are between Huntsville and College Station. Energy & Exploration Partners said it has an additional 14,600 acres in the area, and it plans to acquire 330 square miles of 3D seismic. CEO Hunt Pettit said the company plans "to commence a two-rig drilling program on the acreage acquired from Chesapeake."

According to its news release on the acquisitions, Energy & Exploration Partners said it has interests in West Texas and the Rocky Mountains.

-- Jim Fuquay

Exxon CEO Tillerson sees pay rise to $40.3 million

Rex Tillerson, chairman and CEO of Irving-based Exxon Mobil Corp., received a 15 percent pay raise in 2012 as his total compensation rose to $40.3 million, the company said in a regulatory filing Friday. Tillerson’s pay package was only partly cash: a salary of $2.57 million, a $4.59 million bonus, and $447,425 in other compensation. The biggest element was $19.6 million in restricted stock, half of which vests in five years and half in 10 years or until retirement, whichever is later, according to the disclosure, called a proxy filing.

Another large element was a $13 million increase in the present value of Tillerson’s pension. An increase in the interest rate used to calculate a lump sum payout of his pension accounted for about half the increase, and the past year’s gains in his salary, bonus and tenure at the company account for the rest. As of the end of 2012, Tillerson held rights to nearly 1.6 million Exxon shares that had not yet vested, worth $136 million at the time.

There are eight shareholder proposals that will be voted upon at the company’s annual meeting, set for May 29 in Dallas. Among the proposals are calls to split the company’s chairmanship and CEO positions, to disclose lobbying activities and political contributions, and to expressly prohibit hiring discrimination based on sexual orientation. Proposals also call for additional measures to measure the risks of natural gas development and to reduce the company’s greenhouse gas emissions. The company said it opposed all those measures.

-- Jim Fuquay

Range reports higher first-quarter production

Fort Worth-based Range Resources said today its first-quarter production was the equivalent of 876 million cubic feet of natural gas a day, a record to for the independent producer and driven by rising Marcellus Shale output. Production of crude oil and condensate  was up 52 percent, natural gas was up 34 percent and natural gas liquids were up 22 percent. That put the company's overall production at 79 percent natural gas, 14 percent NGLs and 7 percent crude oil and condensate.

The average price for all products slipped 3 percent to $5.06 per 1,000 cubic feet (mcf) equivalent. Range realized $4.09 an mcf for gas, $35.29 a barrel for NGLs and $85.46 for oil and condensate. Costs for gathering, compression and transportation were estimated at 80 cents per mcf. CEO Jeff Ventura said the company is on track for production growth of 20 to 25 percent in 2013 and "for many years" as it develops about 1 million net acres in the Marcellus in Pennsylvania.

-- Jim Fuquay

Gas exports not favored by many consumers, UT poll finds

More American think the United States should keep natural gas production for domestic use rather than export it, according to the latest University of Texas Energy Poll. The online survey, conducted March 11-20, found that 39 percent favored keeping U.S. gas production, versus 28 percent that supported exports. The rest were neutral.

Interestingly, it's not much of a partisan issue: 36 percent of self-described Democrats and 38 percent of self-described Republicans oppose exports, and an even closer 30 percent of Democrafts and 29 percent of Republicans favor exports. Independents were most likely to oppose exports, by 44 percent. The  big split was by gender. A third of men favored exports, while only 22 percent of women did.

Partisan differences on hydraulic fracturing were more defined, even as support for the production technique declined overall, from 48 percent a year ago to 45 percent in the new poll. Forty-one percent opposing fracking. But while 71 percent of Republicans favor fracking and 20 percent oppose it, that flips with Democrats as 60 percent oppose fracking and just 22 percent support it.

The poll's results are here.

-- Jim Fuquay

 

FTS lost $29.8 million in 2012

FTS International, formerly Frac Tech, swung from a hefty profit in 2011 to a loss of $29.8 million as revenues slid 18 percent. The company said it kept its 34 fleets of hydraulic fracturing equipment busy all year, doing more fracturing stages even though the number of wells fractured declined slightly. But the revenue from each of those stages fell from $136,335 to $101,905, the lowest since 2009. The Fort Worth-based company replaced its CEO in November.

On Monday, The Wall Street Journal reported that Chesapeake Energy, FTS' biggest customer and owner of about 30 percent of the company, was no longer considering selling that stake. Citing unnamed sources, the newspaper said Chesapeake's stake, which it had estimated at about $2 billion earlier, was worth less than $1 billion under common evaluation methods using its most recent earnings before taxes, interest, depreciation and amortization.

-- Jim Fuquay

Appeals court could return water contamination case to Weatherford court

The Texas Second Court of Appeals today said it may return to Parker County courts the lawsuit of Parker County landowners Steven and Shyla Lipsky against Range Resources in a water contamination case. Former State District Judge Trey Loftin had denied the motion by the Lipskys and their environmental consultant, Alisa Rich, to have Range's counter-suit against them dismissed. In its ruling today, the appeals court said that because Loftin lost his re-election bid last May, it would "abate" its jurisdiction in the case and return the case to Loftin's successor, Judge Craig Towson, if all parties agree. The appeals court gave until April 11 for the parties to tell the court what they want to do.

-- Jim Fuquay

Bigger operators safer in Pennsylvania, Wall Street Journal finds

The Wall Street Journal crunched the numbers for safety and environmental violations in Pennsylvania portions of the Marcellus Shale and concluded that larger producers generally have better records than smaller producers. It leads its report with the example of Royal Dutch Shell's violation rate of 13 percent per inspection in 2010, compared to a 63 percent rate at East Resources right before the independent sold its Marcellus assets to Shell in 2010. In another example, the newspaper said that following its acquisition by Exxon Mobil, XTO Energy's rate of safety violations "has fallen by half, even though drilling takes place in the same counties, often with the same personnel." (Anyone who has read Steve Coll's recent history of Exxon, Private Empire, will not be surprised, considering Coll's account of the zero-accidents mentality Exxon developed after the Exxon Valdez spill in Alaska.)

Bigger isn't always better. Fort Worth-based Range Resources, an early developer of the field, had a better-than-average record among mid-sized producers, the Journal reported. All operators improved their records in the past two years, according to the newspaper's analysis of state records. For example, Shell has since lowered its violation rate to 5 percent in 2012.

You'll probably run into the Journal's pay wall, but a link to the story is here.

-- Jim Fuquay

Southlake energy services firm files for IPO

Emerge Energy Services L.P. of Southlake hopes to raise $100 million with an initial public offering and a listing on the New York Stock Exchange, the company says in a Securities and Exchange Commission filing. The partnership is backed by Insight Equity, a Southlake private equity firm. Emerge Energy's operations include: Superior Silica Holdings, a provider of sand and proppants for hydraulic fracturing; Direct Fuels Partners, which operates a refinery and distribution center in Euless, and Allied Energy Co., which distributes ethanol and other fuels. The combined companies in 2012 would have had revenues of $956.9 million and net income of $27.1 million, and its earnings before interest, taxes, depreciation and amortization (EBITBA) would have been $52.3 million, according to Emerge Energy's IPO disclosure, filed March 25. According to that filing, Insight Equity, which was founded in 2002, "makes control investments in strategically viable, middle-market, asset-intensive companies across a wide range of industries. Insight Equity has committed approximately $425 million to 12 investments in North America."

-- Jim Fuquay

Investors cheer Quicksilver's Tokyo Gas deal

Investors apparently are happy with Quicksilver Resources' $485 million deal announced Friday to sell 25 percent of its Barnett Shale assets to Tokyo Gas. The Fort Worth-based producer's shares (ticker: KWK) are up about 20 percent this morning on extremely heavy trading. (U.S. stock markets were closed for Good Friday, so Monday was the first trading day following the deal's disclosure.)

Quicksilver gets about two-thirds of its production from the Barnett. The $485 million gives TG a quarter of all Quicksilver's reserves in the field, and going forward Tokyo Gas and Quicksilver will split development costs on a 25/75 basis. Quicksilver estimated proved reserves in the field at 1.2 trillion cubic feet under Securities and Exchange Commission guidelines on its fourth-quarter report, but that used 2012 average futures price of $2.76 per 1,000 cubic feet.

-- Jim Fuquay

Barnett rig count inches up one, to 33

Active drilling rigs in the Barnett Shale rose by one this week, to 33, according to RigData. Wise County continued to lead with nine rigs, followed by Montague with five, Tarrant, Jack and Denton counties with four each, and Palo Pinto with three.

Devon Energy is by far the busiest operator in the field, running eight rigs last week in Wise, Denton and Parker counties. EnerVest Operating and EOG Resources each kept three rigs busy, mostly in Montague County, an oil-rich portion of the field.

-- Jim Fuquay

Quicksilver sells 25 percent of Barnett operations to Tokyo Gas

Quicksilver Resources and Tokyo Gas on Friday announced that the Japanese utility will buy 25 percent of Quicksilver's Barnett Shale operations for $485 million. The deal comes more than a year after the Fort Worth-based producer hosted a tour of the Barnett Shale for a group of Japanese energy executives. Japan is looking for new sources of natural gas in the wake of its decision to shut down most of its nuclear reactions in the wake of the tsunami-related accident at three Fukushima reactors. For more, see today's Star-Telegram report here.

-- Jim Fuquay

 

Quicksilver names private equity advisor to board

Fort Worth-based Quicksilver Resources, which has been working to find a partner on its Barnett Shale and Horn River Basin properties, said Thursday it named Michael McGovern of Cadent Energy Partners to its board effective Wednesday. McGovern, 61, is described in Quicksilver's release as "Executive
Advisor to Cadent Energy Partners, LLC, a private equity firm investing in the energy industry." No other relationship between the two organizations is disclosed in the announcement.

In the prepared release, Quicksilver Chairman Toby Darden said McGovern's "experience across multiple disciplines in the energy sector will add depth to our team." The release says McGovern has been involved in the energy industry since 1975 and served as CEO of several public companies, including Pioneer Cos., Coho Energy, Edisto Resources, Convest Energy, Ironstone Group and American National Petroleum Co.

-- Jim Fuquay

Basic Energy Services CEO Huseman to retire at year's end

Ken Huseman, CEO of Fort Worth-based Basic Energy Services, intends to retire at the end of 2013, the company announced today. The board intends to appoint Roe Patterson, currently senior vice president and chief operating officer, to succeed Huseman, who is expected to remain a director. Patterson is expected to be named a director when he assumes the CEO post, on or about Jan. 1.

Huseman has led the company, which relocated its headquarters from Midland last fall, for more than 14 years. Patterson joined Basic in 2006 and has held his current post since March 2011.

-- Jim Fuquay

2010 Pennsylvania contamination case settled for $750,000

Court documents unsealed in a Pennsylvania lawsuit against Fort Worth-based Range Resources and others show the companies paid $750,000 for the homeowner's property, attorney fees and related claims. The records had been sealed since the July 2011 settlement but two Pennsylvania newspapers had sought to have them made public, which a judge approved on Wednesday.

The case concerns Chris and Stephanie Hallowich, who in June 2005 purchased 10 acres in Hickory, Penn., a rural area. They started building their home there in November 2006. "Unknown to the plaintiffs, the prior owner, Nancy Stewart, had subdivided the property and then sold a portion to defendant Range Resources Corp. for the purpose of drilling natural gas wells," according to court documents. Stewart also signed a mineral rights lease on the property, the documents say. By 2008 the Hallowich home was in the proximity of four natural gas wells drilled by Range, as well as a compressor station and a gas treatment facility operated by other companies, who were also defendants in the suit. The Hallowich family and another neighboring landowner soon complained of water contamination. The family sued Range, MarkWest Energy Partners, Williams Gas/Laurel Mountain Midstream and the Pennsylvania Department of Environmental Protection in 2010. The state regulator had found high concentrations of some compounds, including manganese, in the landowners' water but could not say Range or the other companies were responsible.

According to a copy of the settlement released Thursday, the companies agreed to pay a total of $750,000. Of that, $594,820.37 went to the family, including trust accounts of $10,000 for each of the couple's two small children. The settlement says the children's "alleged claims involve nuisance and personal injury. There is presently no medical evidence that support that these claims are related to any exposure to the activities of defendants as set forth in plaintiff's complaint." The family's legal counsel received 20 percent of the settlement, or $150,000, plus $5,179.63 in expenses.

Range spokesman Matt Pitzarella, in an e-mailed statement, said: "The family began building their home after several early Marcellus wells and associated infrastructure was starting to be developed near them. The family was in a unique situation and one that was not ideal for them or for Range. Range believed that the right thing to do was to allow both sides to move forward." He said the company "does not have concerns with the judge's decision, which we greatly respect, to make the court file public. This information combined with the vast public data accessible through the DEP's extensive investigations should provide the public with even greater clarity that shale gas is being developed safely and responsibly."

A link to the documents, posted online by State Impact Pennsylvania, can be found here.

-- Jim Fuquay

 

Pennsylvania contamination case to be unsealed

A Pennsylvania ruled the settlement of a water contamination case between drillers, including Fort Worth-based Range Resources, and two homeowners should be unsealed. According to a Bloomberg News report, "Chris and Stephanie Hallowich, told National Geographic magazine in 2010 that their water was polluted by the wells, pipelines, processing operations and truck traffic that came into the rural area where they had built their home. They also said they suffered burning eyes, sore throats and other symptoms when gas was released into the air."

Range spokesman Matt Pitzarella said the company, which had opposed the unsealing, is fine with it now. In an e-mail, he told Bloomberg that unsealed documents "should provide the public with even greater clarity that shale gas is being developed safely and responsibly." The National Geographic story, posted online on Oct. 17, 2010, recounts the Hallowich family's  experience buying 10 acres in southwestern Pennsylvania in 2007, then finding themselves in the middle of natural gas development.  "From a nuisance perspective, I will tell you they have a legitimate concern," the online report quotes Pitzarella as saying of the Hallowich family of four. Range drilled a well "that produces gas beneath the Hallowich site," the report says, and the "company and others say the bulk of their operations—the well sites themselves—are short-term disruptions and that the land is restored, as the state of Pennsylvania requires, within nine months after drilling is complete." It says there are unresolved disputes over water quality from a well on the family's property, which was drilled after Range commenced its own drilling operations.

Bloomberg News has a report on the judge's ruling here.

-- Jim Fuquay