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Stock Performance for Gas-Focused E&Ps (M-U Drillers) in 2023

How was 2023 with respect to the return on investment (ROI) in the stocks of gas-focused (largely Marcellus/Utica) drillers? Of the three classes of O&G companies — oil-focused, diversified, and gas-focused — it was the gas-focused drillers who had the best stock returns in 2023, according to an analysis by RBN Energy. Gas-weighted E&Ps posted a 7% median gain last year, according to RBN. Most of the companies in RBN’s list of gas-focused drillers have major operations in the M-U. Let’s have a look at how each one did.
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35 New Shale Well Permits Issued for PA-OH-WV Dec 11-17

New shale permits issued for Dec 11 – 17 in the Marcellus/Utica continued the trend up over the previous week. There were 35 new permits issued last week versus 27 issued two weeks ago. Last week’s permit tally included 17 new permits in Pennsylvania, 13 new permits in Ohio, and 5 new permits in West Virginia. The company receiving the most permits last week was Ascent Resources with 8 new permits in two different counties: Guernsey and Belmont counties in OH. Antero was second highest with 5 new permits in Ritchie and Doddridge counties in WV.
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27 New Shale Well Permits Issued for PA-OH-WV Dec 4 – 10

New shale permits issued for Dec 4 – 10 in the Marcellus/Utica were up by 2 over the previous week. There were 27 new permits issued last week versus 25 issued two weeks ago. However, there was a major surprise! Last week’s permit tally included 8 new permits in Pennsylvania, 9 new permits in Ohio, and 10 new permits in West Virginia. The pattern is typically the opposite, with PA receiving the most permits and WV the least. The company receiving the most permits last week was EQT Corporation, with all 10 of WV’s permits all on the same well pad in Marion County.
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25 New Shale Well Permits Issued for PA-OH-WV Nov 27 – Dec 3

New shale permits issued for Nov 27 – Dec 3 in the Marcellus/Utica were much improved over the previous few weeks. There were 25 new permits issued last week versus 14 issued two weeks ago and just one new permit three weeks ago. So the trend is our friend! Last week’s permit tally included 15 new permits in Pennsylvania, 8 new permits in Ohio, and 2 new permits in West Virginia. Three companies tied for top place with 4 permits each: Seneca Resources in PA, Ascent Resources and Encino Energy in OH.
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Ohio Utica Shale Production 3Q23 – Top Wells, Drillers & Counties

The Ohio Dept. of Natural Resources (ODNR) released production numbers for the third quarter of 2023 late last week, and nobody noticed…except MDN (thanks to a tip from a good friend). ODNR no longer issues a press release to summarize the results as they once did. We’ve got the full spreadsheet with oil and gas production details for all 3,281 active shale wells in the Buckeye State. We’ve sliced and diced the numbers and have our usual Top 25 lists for natural gas and oil wells. We’ve included a couple of charts summarizing the data, showing the total production by driller (gas and oil) and the total production for the quarter by county. You’re gonna love it!
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M-U Driller Profits Bounce Back into the Black for 3Q23

It’s been a financial roller coaster for oil and gas drillers over the past 15 years. Investors in shale oil and gas companies suffered for years with little or no returns for their invested money. Five of eight large Marcellus/Utica drillers saw their share prices decrease by an astonishing 85% or more from 2008 to 2019 (see Former EQT CEO: Shale Revolution a “Disaster” for Investors). Just before the COVID pandemic hit, shale companies began to change and focus on less drilling and more profitability. That change paid off in a big way. Shale companies saw record profits in 2022 (see How Did M-U Gas Drillers Spend Their 2022 Record Haul of Cash?). But beginning in late 2022, the roller coaster took another turn down and profits crashed (see M-U Drilling Profits Hit Two-Year Low, Better Days Ahead?). But what’s this? Profits for drillers in the M-U (and other shale plays) recovered and began to climb again in the third quarter of 2023 following a five-quarter slide.
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Corporate Raider Kimmeridge Likes a Chesapeake/Southwestern Merger

A month ago, MDN shared the rumor that Chesapeake Energy Corporation is sniffing around Southwestern Energy, looking to buy out and merge in its closest O&G peer (see Chesapeake Energy Exploring a Merger with Southwestern Energy). One of Chesapeake’s largest investors, Kimmeridge Energy Management Co. — what the financial industry calls an “activist investor” (which we call by the old term “corporate raider”) — says a merger between the two would create one of the industry’s most sought-after stocks. Kimmeridge is pushing to make it happen.
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22 New Shale Well Permits Issued for PA-OH-WV Nov 6 – 12

New shale permits issued for Nov 6 – 12 in the Marcellus/Utica slipped but still turned in a respectable number. There were 22 new permits issued last week, versus 37 issued the week before. Last week’s permit tally included 6 new permits in Pennsylvania, 16 new permits in Ohio, and no new permits in West Virginia. Hilcorp Energy was the winner of most permits issued, with 12 new permits issued for a single well pad in Columbiana County, OH.
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37 New Shale Well Permits Issued for PA-OH-WV Oct 30 – Nov 5

New shale permits issued for Oct 30 – Nov 5 in the Marcellus/Utica saw a significant increase. It almost felt like old times again! There were 37 new permits issued last week, versus 26 the week before. Last week’s permit tally included 24 new permits in Pennsylvania, 11 new permits in Ohio, and 2 new permits in West Virginia. Coterra Energy was the top permittee for the week, drawing 9 permits in Susquehanna County, PA. This will really rub the antis raw: Coterra received several permits to restart drilling in Dimock Township. 🙂
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Southwestern New Drilling Drops by One-Third, Profits Down Too

Southwestern Energy, with major assets in the Marcellus/Utica and Louisiana Haynesville, issued its third quarter 2023 update last week. The company generated $45 million in net income for the quarter versus profiting $450 million in 3Q22. Southwestern reported total net production of 425 Bcfe (billion cubic feet equivalent), or 4.6 Bcfe per day, including 4.0 Bcf per day of gas (86% natgas, 12% NGLs, 2% oil). Southwestern invested $454 million of capital, using it to drill 24 wells, complete 25 wells, and place 23 wells online to sales, including 15 in the Marcellus/Utica and 8 in the Haynesville. New drilling fell (by our back-of-the-envelope estimate) about one-third from 2Q23.
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26 New Shale Well Permits Issued for PA-OH-WV Oct 23 – 29

New shale permits issued for Oct 23 – 29 in the Marcellus/Utica increased again. There were 26 new permits issued last week, versus 22 the week before. Last week’s permit tally included 18 new permits in Pennsylvania, 7 new permits in Ohio, and 1 new permit in West Virginia. Coterra Energy was the top permittee for the week, drawing 7 permits in Susquehanna County, PA. Chesapeake Energy was #2 with 5 permits issued in Sullivan County, PA.
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22 New Shale Well Permits Issued for PA-OH-WV Oct 16 – 22

New shale permits issued for Oct 16 – 22 in the Marcellus/Utica rebounded. There were 22 new permits issued last week, versus 14 the week before. Last week’s permit tally included 17 new permits in Pennsylvania, 5 new permits in Ohio, and no new permits in West Virginia. Chesapeake Energy was the top permittee for the week, drawing 7 permits between two counties in PA: Susquehanna and Wyoming (northeastern part of the state). EQT had 5 permits across two PA counties: Greene and Washington (southwestern part of the state). And Ascent Resources had 5 permits in Ohio in two counties: Guernsey and Harrison.
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Chesapeake Energy Exploring a Merger with Southwestern Energy

Oh boy, here we go again. The rumor mill is in overdrive. Reuters (which is pretty reliable with these kinds of reports) is reporting that Chesapeake Energy Corporation is sniffing around Southwestern Energy, looking to buy out and merge in its closest O&G peer. Both Chesapeake and Southwestern have significant, long-time Marcellus assets (in Pennsylvania), and both have added new assets in the Louisiana Haynesville in recent years. They are on parallel tracks with their strategy of using Marcellus assets as a cash cow to fund more drilling in Haynesville, with an eye on grabbing higher prices in foreign markets by exporting Haynesville gas as LNG. It certainly makes sense that one company would be interested in combining with the other. If the two do combine, it would become the #1 shale gas driller in the U.S., surpassing EQT (in market value).
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23 New Shale Well Permits Issued for PA-OH-WV Sep 25 – Oct 1

New shale permits issued for Sep 25 – Oct 1 in the Marcellus/Utica were up a few ticks from the previous week. There were 23 new permits issued last week, up from 21 permits issued two weeks ago. Last week’s permit tally included 10 new permits in Pennsylvania, no new permits in Ohio, and a surprising 13 new permits in West Virginia. Two companies tied for top permittee, one you know, one you may not know. Olympus Energy received 5 permits to drill in Westmoreland County, PA. Consol Mining Company received 5 permits to drill in Monongalia County, WV. Consol used to own CNX Resources before spinning off CNX into its own company. Consol concentrates on coal mining. We were surprised to see Consol wandering back into shale drilling.
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21 New Shale Well Permits Issued for PA-OH-WV Sep 18 – 24

New shale permits issued for Sep 18 – 24 in the Marcellus/Utica were roughly the same as the prior week. There were 21 new permits issued last week, down 1 from permits issued two weeks ago. Last week’s permit tally included 11 new permits in Pennsylvania, 4 new permits in Ohio, and 6 new permits in West Virginia. Three companies tied for top permittee last week: PennEnergy Resources with 5 permits in Butler County, PA; CNX Resources with 5 permits in Washington County, PA; and Southwestern Energy with 5 permits spread between Wetzel and Ohio counties in WV.
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Major U.S. Shale Drillers Hedged 2H23 Gas Production Avg. $3.35

According to an analysis by S&P Global Commodity Insights, large U.S. shale gas drillers (namely Marcellus/Utica drillers) have hedged (pre-sold at a specific price) an average of 50% of anticipated shale gas production for the second half of 2023. The average price of the hedges is $3.35/Mcf, far above the average NYMEX Henry Hub price that has been bumping along between $2.25 and $2.75. CNX Resources is the top hedger, hedging 80% of its production in 2H23 at $3.04/Mcf.
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