Any of our clients who had leases with Stone Energy will now be dealing with EQT.
Previously, Tug Hill had entered into an offer to purchase Stone Energy’s leases, but EQT came along and offered more money so Stone sold to EQT.
While Tug Hill is still rather new and we don’t have a real feel for what kind of company they are, we do know that EQT has a bad reputation with pretty much everybody in the industry. We would have preferred to have Tug Hill as the operator.
Stone Energy has been hurting badly for a long time. They have been flirting with bankruptcy for at least a year. This summer they re-opened some wells and I thought they might be able to avoid bankruptcy, but the news says otherwise.
As part of the deal, Stone Energy is going to sell it’s Marcellus leases to Tug Hill. Tug Hill is growing slowly but surely in the northern panhandle of West Virginia.
Any of our clients who have leases with Stone Energy will soon be dealing with Tug Hill. Nothing should change, as the lease governs the relationship between you and the company, regardless of which company it is.
Last September Stone Energy shut-in their Mary field here in West Virginia, citing low gas prices. Today we hear that Stone has cut a deal to begin flowing gas to Williams pipelines from the Mary field.
This is an indication of two things: prices have risen far enough that production in the Marcellus region in profitable, and at least one company thinks that gas prices are going to remain high for a while.
Production was never completely shut-in in the Mary filed. They’re producing about 45MMcfe per day right now. Production is expected to increase to somewhere over 60 MMcfe per day in July and to over 100 MMcfe per day in August, so more than double in the next 60 days.
Some of our clients are going to be very happy about this news. Better royalty checks! Look for them in a mailbox near you.