Cabot 2Q – Still Drilling & Making Money in a Down Economy
Cabot Oil & Gas issued its 2Q20 update on Friday. CEO Dan Dinges said natural gas prices hit a historic low in 2Q (lowest since 1995), but he thinks the price will improve “this winter.” Although the price Cabot got for its gas last quarter ($1.52/Mcf) was 33% lower than a year ago, the company still made a profit. Cabot netted $30 million in 2Q, vs. netting $181 million a year ago. The company drilled 14 new shale wells, completed/fracked 31 wells, and placed 25 new wells online last quarter. They produced an average of 2.2 Bcf/d of natural gas.
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Southwestern Energy released its 2Q20 update on Friday. The company, with nearly a half-million acres under lease, drills solely in the Marcellus/Utica in two distinct regions: northeastern Pennsylvania and West Virginia. The NEPA operation targets dry gas. WV targets wet gas/NGLs. During 2Q, Southwestern drilled 80% of its new wells in the NEPA dry gas area. Southwestern drilled 30 new wells, completed/fracked 31 wells, and placed 31 wells online to sales last quarter. One of the eye-popping bits of news from the company update is that for one particular well they hit a super-low $505/lateral foot cost to drill the well–the lowest drilling cost we’ve seen by any M-U driller anywhere!
Last year, in an effort to flow more natural gas to a starving New York City, Kinder Morgan cut a deal with utility company Consolidated Edison to provide more gas by beefing up capacity along its Tennessee Gas Pipeline (TGP) that feeds NYC, allowing Con Ed to avoid cutting customers off from natgas hookups (see 
Pennsylvania State Sen. Gene Yaw, Majority Chair of the Senate Environmental Resources and Energy Committee, is hammering ICF International, a consultant hired by the PA Dept. of Environmental Protection (DEP). The DEP has paid $874,000 (so far) to ICF for research relating to “climate change.” ICF is providing research used by the DEP to justify Gov. Wolf’s harebrained idea to join the Regional Greenhouse Gas Initiative (RGGI), a carbon tax scheme meant to drive natgas electric plants out of existence in the state. All in the name of saving Mom Earth. Ludicrous. ICF, supposedly impartial, appears to be anything but according to Yaw.
The dirty deed is finally done. It now officially costs more for a new shale permit to drill in Pennsylvania than in any other state in the country. In Ohio, it costs drillers $5,500 to file for and receive a permit to drill a new shale well. In West Virginia, the cost is $10,150. In Pennsylvania, it used to cost drillers $5,000 for a new shale well permit. As of Saturday, the price went up 250% to $12,500.
MARCELLUS/UTICA REGION: New York State Teachers Retirement System buys 146,700 shares of Antero Midstream; Pa. lawmakers keep up battle against Regional Greenhouse Gas Initiative; PennFuture urges oil, natural gas industry to explore green initiatives, but PIOGA calls proposal ‘laughable’; First Amendment rights of Amish take center stage in battle over huge New York wind project; OTHER U.S. REGIONS: ExxonMobil slashing Permian rig count, forecasting global oil glut extending ‘well into 2021’; Maine’s most expensive ballot fight ever unites natural gas companies and environmentalists; NATIONAL: Chapter 11 bankruptcy statistics on U.S. shale patch are not the best barometer to gauge industry’s future; U.S. homes and businesses receive natural gas mostly from local distribution companies; Chevron warns pandemic threatening through September, but common ground in election; Drillers go remote as pandemic reshapes oil business; INTERNATIONAL: China boosts shale gas development.