Statoil bails out of West Virginia, EQT rushes in

EQT appears to be paying $6,500 for lease hold rights.  They need to learn to negotiate from Rice who are going to pay $7,500/acre for minerals, in fee, in a much better area.

EQT Corp. announced a $407 million deal on Monday to buy the rights to develop shale gas on some 62,500 acres in West Virginia.

The Downtown-based company, which alluded to a potential deal last week during a company earnings call, is buying the assets from Statoil USA Onshore Properties Inc. The deal includes land in Wetzel, Tyler, and Harrison counties and 31 Marcellus wells, of which 24 are currently pumping out 50 million cubic feet of natural gas daily.

Company leaders said there were a number of asset packages floating around in the market that might be attractive to EQT as it looks to strengthen its core operating area, which spans large parts of Allegheny, Washington, Westmoreland and Greene counties in southwestern Pennsylvania, and half a dozen counties in northern West Virginia.

“For the most part, we happen to be focused on transactions that are relatively small in nature,” EQT’s CEO Dave Porges told analysts last week.

The deals being looked at by the company allow it to capitalize on its current assets, he said.

The Statoil deal, for example, will allow EQT to more than double the size of the horizontal wells it had planned to drill from land it already controlled. The longer laterals will continue under its new holdings, the company said.

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Permalink Reply by searcherone on May 2, 2016 at 3:06pm

Anyone know if this is all of the acreage Statoil has in WV?  Some of this acreage is Wetzel where EQT has a huge presence in WV.    Statoil has a presence in Monroe Co. Ohio which borders Wetzel only separated by the Ohio River.   Not a lot of acreage in Monroe, wonder what implications this has for that acreage?

Permalink Reply by bo boboski on May 2, 2016 at 9:27pm

Looooonger laterals; that might be the code cracker. But only if the driller has all that land leased. Eclipse just completed a 4 mile lateral in Ohio. we'll see,in the next few months,how well this is going to produce and how much more economical it will be.

Permalink Reply by KAR on May 3, 2016 at 12:50am
Bo, do you happen to have the name of the well or county it was drilled in? Thanks.
Permalink Reply by David Cain on May 3, 2016 at 1:56pm

KAR,

I think Bo is referring to the Purple Hayes well in Guernsey county Ohio.  I believe the lateral is a little shy of 19,000 ft. or 3.5 miles.

Permalink Reply by Paul Butler on May 2, 2016 at 10:00pm

The EQT people are very slow learners. 

Probably coal people that should have been excused from the oil & gas business before they ever entered. 

They should have gone straight from the coal business, to teaching high school phys-ed or selling used cars.

Every one of the idiots that put all of the shale companies into bankruptcy, have extensive records of acquiring leaseholds and mineral rights that they never got around to drilling--before they got the long hook and put themselves and 80% of their employees in the unemployment line.

Everyone of the executives at Rice, Range, Consol, EQT-- and the other employees in their executive suites, should get an immediate trip to the unemployment line.  For some it's not going to be immediate, but with their lack of skill in running oil & gas companies---it is inevitable.

These morons are butchering their companies with the purchases of leaseholds/minerals when they have tens of thousands of acres in house they aren't drilling.

Statoil is selling acreage their little bird brains wrongfully acquired.  Can you imagine what kind of a haircut they took on the investment?

These leases and the drilling thereof have done one thing and one thing only---lose money.  They have lost trillions in enterprise value just in 2015 because the analysts see what is coming---economic blight.

First they bankrupted their coal operations, now they appear bent on destroying their entire companies.

Buy some more rubes.

1xc6tw2xj1fwlPermalink Reply by 1xc6tw2xj1fwl on May 3, 2016 at 10:25am

Very good point, Brad.

Permalink Reply by paleface on May 4, 2016 at 12:04am

 Paul,if the price of natural gas starts to rise things will look a lot better for these company's.

Permalink Reply by Paul Butler on May 4, 2016 at 1:51am

I understand that. 

Notwithstanding the foregoing, the land grab mentality, the architect of which drove himself into a concrete wall, has to stop.

I have friends who are preparing Securities Fraud/Shareholder Derivative Suits which will be filed against many of the Shalers, their executives and employees. some already in bankruptcy and several about to file for bankruptcy.

Let me assure you---those people are about to catch Holy Hell and the brokers who facilitated the shams are going to get their share too. 

Many of these companies were acquiring leaseholds when they knew they wouldn't have money to operate in just a couple of months. 

If you add up the money Statoil spent on leaseholds, when they already had ten of thousand of acres they hadn't made a dime on, it's quite shocking.

Why don't the rubes at EQT show they can make money with the acres they do have before they acquire more? 

Because making money by operating takes actual talent and skill. 

Apparently, they want to make money the easy way---acquire acreage they can borrow against from dim witted bankers and then sell interests to even more dim witted investors.

The reckoning is going to be quite bad and hasn't even begun.

When companies fall into bankruptcy and their books get into the hands of third parties and the public actually sees what they did, there is going to be much shock and many of these clowns will end up in jail.

Permalink Reply by DONNA M SELLERS on May 4, 2016 at 1:56am

Ihave a lease with Statoil in Wetzel, County, nothing has been drilled on it yet. My Lease will be up in a little over a year and half. In that lease they have the option to lease 2 more years with a sign on bonus half of what I received in the original lease. My ???? s are if EQT bought my lease do they have to abide by Statoils terms if they want to keep or have bought my lease.

Permalink Reply by searcherone on May 4, 2016 at 2:19am

Yes, Donna, that is what EQT is obligated to do.   That said many times the new company comes along and says they want to amend the lease.   It is a wait and see game for you.

Permalink Reply by DONNA M SELLERS on May 4, 2016 at 3:26am

Thanks

Permalink Reply by Jim Litwinowicz on May 4, 2016 at 4:11am

Actually, they are not obligated to do anything when the lease expires, except perhaps putting a release on your deed. They have the option to renew with the terms of the old lease, negotiate a new one, or walk away depending on many factors.

What they will do is look at the property, quality of the shale, prices, availability of pipelines, regulatory issues, and more. If they determine they want the continue leasing, they will most likely come back with an offer much lower than your current lease, mostly because of much cheaper gas prices. It will have a lower cash payment, lower royalty %, and less friendly terms. It is up to you to decide if you want to sign a new extension if they change anything from the original lease..

There is a small possibility they will offer the old lease and renew under those terms but doubtful. They usually do that only for areas that have very high production and they plan on drilling soon.

If they come in with a lower offer, this will be the same as negotiating a new lease. You could ask for different things that you didn't get in the first one but keep in mind with lower prices and less competition for land, you are in a less favorable position so don't expect too much.

In the end, you will have to decide on signing a new lease with different terms or walking away and hoping for a better deal at a later time.  But predicting if and when you will get a better offer is impossible.  May be five years, might be 20....or even 50. Maybe never.

Good luck!

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