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Ascent Resources' Ohio drilling flurry has roots stretching to Oklahoma City

5-Year Virtual Multichannel Revenue Forecast Underscores Segment's Opportunities

Wake Up Savers, Watch Out Banks - CDs Back In Vogue - Episode 25

Financial Consumer Watchdog's Powerful Investigative Tool Faces Overhaul - Episode 26

SNL Banker


Ascent Resources' Ohio drilling flurry has roots stretching to Oklahoma City

Ascent Resources has come roaring from the middle of the pack to challenge Gulfport Energy Corp. as the most productive gas driller in Ohio's Utica Shale and announced a $1.5 billion investment in the play, moves big enough that one might think Ascent had some special knowledge.

It did.

The same people who "discovered" the Utica Shale for Chesapeake Energy Corp. populate the executive suite at Ascent; 12 of Ascent's top 14 managers have Chesapeake on their resumes.

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Ascent will maintain Chesapeake's history of skilled drilling and leave behind its financial drama, CEO Jeff Fisher said in a June 29 interview. "Here at Ascent, we brought over the operational excellence, the technology, the innovation and the entrepreneurship from Chesapeake, but what we've added to that is a focus and a discipline from a financial standpoint in what we're doing."

Ascent had just announced that it would use a nearly $1 billion infusion from its private equity backers to buy out the Utica joint venture of Hess Corp. and CNX Resources Corp. and cash out some early investors.

The joint venture's acreage in the top dry gas counties along the Ohio River, Belmont and Monroe, along with acreage in the more liquids-rich window in Harrison and Guernsey counties to the west, fits nicely with Ascent's core holdings, Fisher said.

"As you go south in the play [from its Carroll County starting point], the play gets more overpressured and has good frack seals, both a top seal and a bottom seal such that the rock stimulates better," Fisher said. "We consider Belmont County, Guernsey, Harrison and southern Jefferson as the best parts of the play. That is exactly where our acreage is concentrated."

After more than doubling its Utica gas and liquids production to 1.004 billion cubic feet equivalent per day year over year in the first quarter, Ascent is essentially tied with Gulfport as the Utica's top producer. While Gulfport has slowed its activity in the Utica's southern Ohio dry gas counties to focus on a shale play closer to its Oklahoma City home, Ascent plans to drill about 135 wells in Ohio this year.

"The existing acreage that we had before these transactions was strategically targeted because we understood the rock, we understood the quality and the attributes of the reservoir, and bought in the right parts of the Utica Shale," Fisher said. "I think being part of the team that discovered the play gave many [Ascent executives] ... insights into the quality of the Utica. It was really the first idea we had when we were starting up this company as a play to focus on."

After corporate raider Carl Icahn engineered Chesapeake Energy founder Aubrey McClendon's 2013 ouster from power as the freewheeling, free-spending days of the shale gas gold rush ran out, McClendon rented offices just down the road from Chesapeake's Oklahoma City headquarters, hoisted a help-wanted billboard and started hiring.

Led by Fisher, who had been Chesapeake's executive vice president for production, several executives with more than a decade of experience in shale gas drilling from the early Barnett Shale around Fort Worth, Texas, through Louisiana's Haynesville Shale to Ohio's Utica packed up their desks and moved. Backed by an initial $1.35 billion investment by private equity firms Energy & Minerals Group and First Reserve Corp, the Chesapeake veterans got back to work on what would eventually become Ascent Resources.

EMG and First Reserve will be cashing out some of their original investment as Ascent is also buying their Utica Minerals Development LLC, which owned acreage that Ascent operated for the two firms, Fisher said.

"What we really like to do is find high quality, strategic private equity investors that understand what we're doing and understand our business," Fisher said, noting that the latest round is anchored by three new investors whose identities will be disclosed when the deal closes later in 2018. "They were investors that knew our company and know the Utica very well. We had a couple of new investors come in very strong."

The latest round of investment gives Ascent the cash it needs to fulfill its development plan and achieve cash flow neutrality in 2019 without going to the public markets, Fisher said. "We have sufficient capital and liquidity to fund our business plan, so from that standpoint, there's not a need to go public," he added. "IPO is an opportunity; it's not a necessity." Ascent reported that it lost $42.4 million in the first quarter as activity accelerated, compared to a $7.9 million loss in the first quarter of 2017.

Fisher was quick to point out that Chesapeake and the Utica are not the first rodeo for Ascent's executive team. He said he worked on ARCO teams in the 1980s that produced a slew of current exploration and production chiefs. "We all have broader histories than just Chesapeake. I grew up in the business with some peers of mine: [Chairman and CEO] Ryan Lance at [ConocoPhillips], [Chairman and CEO] Dave Stover at [Noble Energy Inc.], [CEO] John Christmann at [Apache Corp.]"



5-Year Virtual Multichannel Revenue Forecast Underscores Segment's Opportunities

Highlights

The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Jul. 18 2018 — Driven by subscriber gains from AT&T Inc.'s DIRECTV NOW and DISH Network Corp.'s Sling TV and assisted by a batch of new arrivals in 2017 that includes Hulu LLC's Hulu with Live TV and Alphabet Inc.'s YouTube TV, Kagan estimates virtual multichannel services will reach nearly $2.82 billion in overall revenue in 2018, rising to more than $7.77 billion by 2022.

The large gains we project reflect the relative fledgling status of a market that is positioned to take advantage of widespread internet access by presenting new, alternative choices to traditional multichannel operators.

While the growth of virtual services is expected to dampen the projected decline in customers with some form of live linear channel package, we project the shift to have significant revenue implications for the market due to markedly lower average revenue per user rates associated with the new services.

Future developments could impair the segment over the five-year outlook. For instance, legacy distributors could revisit skinny bundles at competitive price points and leverage their existing customer relationships to undercut virtual providers.

Of note, traditional multichannel operators also providing wireline broadband have additional leverage with broadband bundles. For this category of ISPs, broadband could also be leveraged through the creation of prioritization lanes given the FCC's net neutrality reversal.

Recent M&A activity also clouds the future, led by the pursuit of key 21st Century Fox Inc. assets by Walt Disney Co. and Comcast Corp.

Disney has been quite transparent about the rationale behind the move. The media juggernaut plans to launch direct-to-consumer services leveraging its vast content libraries, including some of the world's most valuable franchises such as Marvel and Star Wars.

Although Comcast is playing its strategy cards closer to the vest, its pursuit of Sky PLC and 21st Century Fox, combined with the company's foray into wireless telecommunications, intimate wide-scale video-streaming plans.

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Listen: Wake Up Savers, Watch Out Banks - CDs Back In Vogue - Episode 25

Jul. 17 2018 — CD specials are back. More banks are offering the promotional rates on CDs, or certificates of deposits, to attract new customers. While that is good news for savers, it means funding costs likely will rise even more for banks. The episode shines a light on recent CD rates offered by banks and features commentary on smart deposit strategies from Bruce Hinkle of StoneCastle Cash Management and KeyCorp CFO Donald Kimble.

No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).


Listen: Financial Consumer Watchdog's Powerful Investigative Tool Faces Overhaul - Episode 26

Jul. 17 2018 — Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, has changed the way the agency operates and reduced enforcement actions against banks. Now, Mulvaney is turning his attention to a powerful tool used by the agency called the civil investigative demand. S&P Global Market Intelligence colleague Brian Cheung discusses how the CFPB uses the tool and what changes could mean for banks and consumers.

No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).


Watch: SNL Banker

Jul. 10 2018 — Transform internal data into vital insight with SNL Banker from S&P Global Market Intelligence. Our solution integrates seamlessly with internal systems to give U.S. community banks and credit unions greater visibility into finances and operations