Contract

One day after a federal bankruptcy court judge ruled that Sabine Oil and Gas Corp. could terminate some of its gathering contracts as part of its recovery in Chapter 11, industry experts said they don’t believe the ruling sets a precedent in the midstream sector, but are advising midstream companies to fortify their contracts with producers.

Chesapeake Energy Corp., once the most active producer in the U.S. onshore, has reduced its rig count to less than 10 and cut capital spending by more than half as it shores up its balance sheet for the long haul. With a fourth quarter loss of more than $2.2 billion, the No. 2 U.S. natural gas producer also is continuing to negotiate with midstream partners to revise contracts that better fit its downgraded development plans.

Attorneys active in the oil and gas industry warn that a pair of bankruptcy court cases involving distressed exploration and production (E&P) companies could spell trouble for the midstream sector, with the potential for more E&Ps using bankruptcy protection as a means to get out of long-term contracts.

In a move that releases SandRidge Energy Inc. from “significant” deficiency payments, the operator said it has settled a months-long dispute with a subsidiary of Occidental Petroleum Corp. (Oxy) over a project to remove carbon dioxide (CO2) from natural gas produced in the Pinon Field in the West Texas Overthrust (WTO).

National Grid’s Massachusetts Electric Co. and Nantucket Electric Co. recently asked Massachusetts regulators to approve contracts for natural gas pipeline capacity on separate projects by Algonquin Gas Transmission LLC and Tennessee Gas Pipeline LLC (TGP).

January natural gas is expected to open unchanged Monday morning at $2.21 as near-term weather forecasts continue their mild pattern and the technical pattern shows little change. Overnight oil markets rose.

December natural gas is expected to open a penny higher Tuesday morning at $2.31 as traders factor in only nominal expected occurrences of colder temperatures and traders look for a spot to initiate short positions. Overnight oil markets were mixed.

It was all trick for natural gas sellers and treat for gas buyers for the week ending Oct. 30. Trading was downright spooky with only a handful of market points posting gains and double digit losses being the norm.

Gulfport Energy Corp. has dropped a lawsuit against a small village in Southeast Ohio, electing to resolve a conflict about its ability to buy water for its drilling operations from a reservoir in the community outside of court.