Things have been relatively quiet since our last report. Natural gas spot prices dropped across the board while the rig count remained relatively flat. The Brent Crude and West Texas Intermediate benchmarks were somewhat steady last week and they both closed around $48/bbl as of last Friday. In other news, the Secretary of PA’s Department of Environmental Protection resigned after a controversial email, and the judge in the ongoing Sabine Bankruptcy that everyone is watching authorized the financially embattled E&P company to get a new deal in the wake of prior orders confirming the debtor’s ability to reject gas gathering agreements. Here’s your week in review:
The Rig Count
- The national rig count is down 2 units to 404. (Source: BakerHughes).
- The rig count in the Marcellus is flat at 26. (Source: BakerHughes).
- The rig count in the Utica is flat at 10. (Source: BakerHughes).
- Natural gas spot prices at the Henry Hub are down at $1.91/MMBtu as of 5/20/2016. (Source: EIA).
- In the Marcellus and Utica region, spot prices are down and still trail the Henry Hub benchmark as of 5/20/2016. At Dominion South in northwest Pennsylvania, spot prices are down at $1.36/MMBtu as of 5/20/2016. On Transco’s Leidy Line in northern Pennsylvania, spot prices are down at $1.32/MMBtu as of 5/20/2016. (Source: EIA).
- Oil prices are up at $48.73/bbl as of 5/20/2016. (Source: WSJ).
Developments in Appalachia
- Quigley Out as PADEP Secretary. The Secretary of Pennsylvania’s Department of Environmental Protection – the environmental agency primarily responsible for oil and gas regulation in the Commonwealth – resigned on Friday after reports that he had urged environmental groups to increase their support for state regulatory initiatives. Philly.com and the Inquirer report that the Governor had been evaluating Quigley’s impartiality in light of those emails given Quigley’s prior work for the outspoken environmental group PennFuture, which launched ad campaigns following Quigley’s email against several legislators thought to be delaying the clean power initiatives. Quigley reportedly had a history of ruffling the feathers of folks within the Wolf administration and with some in the state legislature regarding the allegedly slow pace with which the state’s clean power initiatives have been moving. Governor Wolf issued a statement thanking Quigley for his service and stating that he looks forward to working with the interim secretary (Pat McDonnell).
Developments Beyond Appalachia
- Sabine Bankruptcy Update: Sabine’s New Gathering Agreement. Following her order confirming that Sabine Oil & Gas can reject its gathering agreements as part of the E&P company’s restructuring, Bankruptcy Judge Shelley Chapman issued an order last week allowing (but not requiring) Sabine to enter into a new “Facilities Agreement” with DCP South Central Texas LLC, reportedly saving the debtor $200,000 per month in costs associated with the previous gathering arrangements. The gathering companies are expected to appeal the judge’s prior rulings that their agreements are subject to rejection in the first place. In re Sabine Oil & Gas Corp., No. 15-11835 (SCC) (S.D.N.Y., May 19, 2016).