marcellus shale strategic analysis

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Marcellus Shale Strategic Analysis May 17, 2010

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Marcellus Shale Strategic Analysis. May 17, 2010. Tasking . Companies involved in MS/ possible end-users Possible strategic partners Analysis of PA regulations regarding compression Standards: Operating Pressures Pipeline flows Fracturing practices. Methodology (cont’d). - PowerPoint PPT Presentation

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Page 1: Marcellus Shale Strategic Analysis

Marcellus Shale Strategic Analysis

May 17, 2010

Page 2: Marcellus Shale Strategic Analysis

Tasking Companies involved in MS/ possible end-users

Possible strategic partners

Analysis of PA regulations regarding compression

Standards:Operating PressuresPipeline flowsFracturing practices

Page 3: Marcellus Shale Strategic Analysis

Methodology (cont’d)Identify companies involved

Open SourceSpecialized databases

Compare companies involved w/ other shale playsIndicates strength in industry

Identify compressor MFR’sProfile

Identify Compressor MFR’s association in MS

Page 4: Marcellus Shale Strategic Analysis

Methodology (cont’d)

Marcellus Other Shale

CompressorMFRs

Page 5: Marcellus Shale Strategic Analysis

Key Finding: Top Players1. Chesapeake Energy 2. Range Resources3. Seneca Resource /EOG4. Statoil5. Atlas Energy6. EQT Corp7. Chief Oil & Gas8. XTO Energy9. EXCO Energy10. Talisman/Fortuna11. Cabot12. East Resources

Page 6: Marcellus Shale Strategic Analysis

Low Hanging Fruit

(See Matrix Cover Sheet/Matrix Overview)

Page 7: Marcellus Shale Strategic Analysis

Strategic ProfileMFR compressor packages

Associations w/ MS

Other shale plays

Revenues $5 M – $25M

Not teamed w/ Ariel

Page 8: Marcellus Shale Strategic Analysis

Company Rankings1. Dearing Compressor & Pump2. Kinglsy Compression3. Sullivan Palatek4. Rix Industries5. McClung Energy Services6. Titan Compressor Systems7. Big Gas Compression8. ACI9. Brahma10. Compass Compression11. Natural Gas Compression Systems12. UE Compression13. Natural Gas Services Group

Page 9: Marcellus Shale Strategic Analysis

Dearing CompressorRevenue: $20 – 50 million

Employees: 93 w/ plans to add

Shale Affiliation: Marcellus

Products: GE, Gardner Denver, Ariel, Reliance

Location: Ohio

Page 10: Marcellus Shale Strategic Analysis

Kingsly CompressionRevenue: $10 million

Employees: 40 (2 branches)

Shale Affiliation: Unknown, actively marketing

Products: Ariel, Cummins, Ingersoll Rand, Quincy

Location: Ohio/Pennsylvania

End Users: EQT, Chesapeake, Range Resources

Page 11: Marcellus Shale Strategic Analysis

Sullivan PalatekRevenue: $23 million

Employees: 90 (last reported)

Shale Affiliation: Barnett Shale and Marcellus Shale

Products: OEM

Location: Indiana

Partner: Union Drilling

Page 12: Marcellus Shale Strategic Analysis

The Hanover CompanyPurchased by Exterran

Other Exterran Compression DistributorsGlobal Compression Universal CompressionWeatherford International

Ariel

Page 13: Marcellus Shale Strategic Analysis

Compressions Systems IncHeadquarters: Midland, TX

Locations: Midwest

Shale Affiliations: Likely

Products: Ariel, GE Gemini

Page 14: Marcellus Shale Strategic Analysis

State ManagementDecentralized, unorganized

No comprehensive overview

No method for sharing w/ connected states

Priorities:Water managementEnvironmental degradationConstruction codesReclamation

Page 15: Marcellus Shale Strategic Analysis

Future State IssuesSeverance tax

Increasing bond limitsSingle - $2,500Multiple - $25,000

“Disaster Watch”Fracturing

Home water well exploded by gas fracking in Dimock, PA. Source:

http://beavercountyblue.files.wordpress.com/2010/02/dimock-well-explosion-photo1.jpg

Page 16: Marcellus Shale Strategic Analysis

FracturingHorizontal wells (60% will increase)

Hydraulic dominant over airGreater access/Higher ROI$3.5 million per rig750 – 2500 psigMore accident prone

Vertical wells (40% will decrease)Limited access/Lower ROI$255 K50 – 350 psigEasier accident containment

Page 17: Marcellus Shale Strategic Analysis

Compressor RegulationsPennsylvania

None

OhioNone

West VirginiaNone

New York>125 psig requires

permit

= Good Faith Agreement

*intervene only if problems

Page 18: Marcellus Shale Strategic Analysis

Brownie Points - NGV Louisiana Act 469

Tax credit increases 20 to 50% on conversions $3000 for direct buy Payroll tax credit for workers

NAT GAS Act 2009 Sponsored by Rep. Dan Boren (D-OK), John Larson (D-CT)

AT&T Investing USD $565 M in natural gas hybrids 15K vehicles in the next 10 years

Congressional Natural Gas Caucus First hearing 10/2009

Tennessee Gas PipelineDominion Keystone Pipeline

Page 19: Marcellus Shale Strategic Analysis

Brownie Points (cont’d)

Page 20: Marcellus Shale Strategic Analysis

Wiki Tour

http://marcellusshale.wikispaces.com

Page 21: Marcellus Shale Strategic Analysis

Thank You

Questions?

Page 22: Marcellus Shale Strategic Analysis

Contact Information

Kathleen [email protected]

Zach [email protected]

Sladjana [email protected]

Casey [email protected]