When Will Drilling Pick Up in the Marcellus/Utica? It Depends…

questionWhat will it take for drillers to begin drilling again? That’s a question getting asked frequently by analysts on quarterly earnings calls with Marcellus/Utica drillers. The short answer is for the price of natural gas to go up and stay up. How high? Here’s some interesting economics from Southwestern Energy CEO Bill Way: every time the price of natural gas increases another quarter ($0.25), it translates into $185 million in cash flow for his company. If the price went up 50 cents, Southwestern would reactivate two drilling rigs. Another key factor in when drillers will start drilling again are DUCs–drilled but uncompleted wells. The DUC inventory is going down–but many drillers still have a year’s worth of DUCs they can leverage before they have to sink new holes…

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