Top 10 Natural Gas & Top 10 Oil Producers in West Virginia for 2020
The Gas and Oil Association of West Virginia (GO-WV) released a new report yesterday called “Gas Facts” (full copy below). The report chronicles the impact oil and gas has had on the Mountain State over the past five years. According to Charlie Burd, GO-WV executive director, “Natural gas is the state’s top-paying sector, supporting more than 82,000 jobs and contributing roughly $5.2 billion in wages each year. Clean, abundant natural gas will continue to drive economic growth and opportunities for generations of West Virginians.” It’s an interesting report. One thing in the report caught our eye immediately: Two “top 10” lists for gas and oil production. We’re suckers for a good top 10 list…
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Small investors have a golden opportunity. Oil and gas companies (drillers in particular) are more profitable than ever, yet many large investors are avoiding and will not invest in them. Why? Because they’re idiots? Well, yes, that’s one reason. But the root cause is they have been cowed by loud-mouthed environmental extremists. Threatened by them. Oil and gas companies are still here, still providing a critical service to the world, and still need investors. That’s a great opportunity for small investors–like you.
Last week Pennsylvania was back on its game, issuing 22 permits to drill new shale wells. Most of the permits in PA were for three well pads by three different operators: Seneca Resources, Repsol, and EQT. Ohio issued just two new permits to Gulfport Energy for the same well pad in Belmont County. West Virginia issued four new permits, three of them to Southwest Energy and one to Antero Resources.
Yesterday Antero Resources announced the publication of its 2020 ESG Report (environmental, social, governance) highlighting a focus on People, Performance, and Purpose. The report details Antero Resources’ ongoing commitment to the communities in which it operates, safe operations, environmental excellence, and strong governance. Frankly, we could care less about ESG programs–an attempt to impress people who will never be impressed with the extraordinary efforts made by fossil fuel companies to respect the environment. What caught our eye in Antero’s report is the amount of money the company invested in West Virginia and Ohio, where it drills for liquids and gas.
A healthy number of permits were issued to drill new shale wells across the Marcellus/Utica region last week. Pennsylvania issued 19 new permits in both southwest and northeast PA. Ohio issued 8 new permits, all of them to a single driller (Ascent Resources) for two well pads in two different counties. West Virginia issued 9 new permits–all but 2 of them were issued to Antero Resources in Tyler County.
Each quarter NGI (Natural Gas Intelligence) runs the numbers and publishes a list of the 25 top natural gas marketers in the U.S. These are not necessarily the top 25 producers of natural gas (although in some cases they are), but the top 25 sellers (vendors, jobbers) of natural gas. NGI’s latest quarterly report shows overall the biggest sellers of natgas lost ground once again in 2Q21, which continues a 2+ year trend of year over year declines in the amount of gas sold.
Although the price of natural gas has rocketed this year and cash flows for Marcellus/Utica drillers have ballooned, showering drillers with plenty of free cash flow, M-U drillers are spending less (19% less) on capital expenditures than they did in 2020. Production in the M-U is up slightly by 4% so far in 2021 vs. 2020. The experts at RBN Energy have dived into this latest twist in the shale story to help explain what’s going on and why.
Because of the soaring price of natural gas (see our companion post today), and because gas drillers have shown remarkable restraint and a real effort to scale back capital spending in an effort to generate free cash flow, investors have taken note and like what they’ve seen. The share price in most pure-play shale gas producers (mainly those in the M-U) posted double-digit gains in value over the past month.
During the second quarter (May through June), ten of the largest oil and gas producers covered by S&P Global Market Intelligence saw their NGL (natural gas liquids) revenues grow substantially from the same period a year ago. Those ten companies, half of them drillers in the Marcellus/Utica region, saw NGL prices increase from 104% to as high as 261%. The extra money from NGLs made what turned out to be a down quarter financial-wise (because of bad bets on hedges) better than it would have otherwise been.
Expectations coming from Wall Street are that pure-play drillers, like many in the Marcellus/Utica, will show a turnaround in their financials for the second quarter of 2021. According to S&P, investors took drillers at their word last year that they won’t “drill baby drill” the way they have in years gone by. The stock prices of nearly all major M-U drillers have soared over the past 12 months as a result. The biggest turnaround has been Antero Resources. Its stock price is up nearly 400% over the past 12 months! Range Resources’ stock price is up 140%.