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M-U Investors Continue to Press for Limits on New Drilling
Most Marcellus/Utica shale drillers are making money hand over fist. At least they’re making money if you don’t count certain losses from hedges. The financial numbers are heading in the right direction, for the most part. And investors are happy, rewarding M-U drillers by buying shares of stock at ever-higher prices. However, those same investors *don’t* want to see M-U drillers expand their drilling programs beyond what it takes to maintain current levels of production. Investors want the free cash flow being generated by M-U drillers to be given to investors in the form of either dividends or stock buybacks–not by expanding and drilling more.
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With the ever-changing landscape of mergers and acquisitions in the shale industry, including here in the Marcellus/Utica, it’s helpful to check in every now and again with a “top 10” list. This time our top 10 list is for the largest shale drillers/operators in Pennsylvania. The Pittsburgh Business Times recently updated its “Book of Lists” for active PA shale drillers, all 47 of them. We have a quick list of the top 10 below.
Yesterday CNX Resources issued its fourth quarter and full-year update for 2021. As it has done over the past few years, CNX did not issue a full update (no narrative), opting to let its official SEC filing do the talking for it. What does the quarterly update show? The company pumped 1.7 billion cubic feet per day (Bcf/d) of natural gas and equivalents during 4Q. CNX averaged 1.6 Bcf/d for the full year. The company swung from losing $873 million in 3Q to making a profit of $630 million in 4Q–a $1.5 billion swing! How many wells did CNX drill in 4Q?
Houston-based Schlumberger (pronounced Shlum-Bur-Zhay) is the world’s largest oilfield services company. They’re the company a majority of exploration and production companies (drillers) call when they want a new well drilled. The #2 company on speed dial for drilling new wells is Halliburton, and they’re not even close in size to #1 Schlumberger. On Friday Schlumberger issued its fourth quarter and full-year 2021 earnings report, holding a conference call to discuss results. Of particular interest to us was information detailing Schlumberger’s work for M-U driller CNX Resources.
In May 2021 S&P Global Market Intelligence ran an article on which Marcellus/Utica drillers are likely targets to be acquired, and which drillers are doing the targeting (see 
Everyone loves a “top x” list, right? We sure do. Hart Energy, publisher of must-have industry magazines including E&P (Exploration & Production), and Oil and Gas Investor, recently published a special publication called 
This edition of the Marcellus/Utica permits report covers the past two weeks as MDN was taking a break during the last week of 2021. For the period of December 20 through January 2, there were 29 permits issued to drill new shale wells in Pennsylvania, Ohio, and West Virginia. PA had 16 new permits (most of them located on two well pads), OH had 12 new permits (spread across five well pads), and WV had just one new permit. Must be WV DEP took the last two weeks of the year off.
The DUG East (Developing Unconventional Gas) was held this week in Pittsburgh, PA. A number of big names–CEOs of major Marcellus/Utica companies–gave talks to those who attended. Two of the biggest names on the platform were Toby Rice, CEO of EQT Corporation (the largest natural gas producer in the United States), and Nick DeIuliis, CEO of CNX Resources, the separated arm of what used to be CONSOL Energy, a coal company. Both men are evangelists for natural gas, but both have a distinctly different style and way of going about their advocacy. It’s like apples and oranges.
Hart Energy’s DUG (Developing Unconventional Gas) East event was held this week in Pittsburgh, wrapping up this morning. Unfortunately, MDN could not attend the event this year. Some major news is coming from the event. One of the headline speakers from yesterday was CNX Resources CEO Nick DeIuliis who said he thinks it’s high time to seriously look at revising the now-ten-year-old impact fee that drillers pay (PA’s equivalent of a severance tax), a fee created as part of the Act 13 law. What would Nick change about the impact fee/tax?
Last Thursday CNX Resources reached a plea deal with the Pennsylvania Attorney General’s office over alleged violations of the Air Pollution Control Act and bad recordkeeping. Yeah, you read that right. State Attorney General Josh Shapiro (a real putz) leveled criminal charges against CNX over miscounting how many times the company used a pig (pipeline inspection gauge) to clean out a pipeline in Washington County, PA. An anti-fossil fuel zealot who lives near the pigging station complained about noise and emissions and ran squealing to the AG (pun intended).
Contrary to the false narrative spun by leftist media that “everyone,” especially large institutional investors, are divesting from and refusing to buy new investments in stocks of companies that drill for oil and natural gas, some of the largest institutional investors came off the sidelines and some (for the first time ever!) got into the game by investing in individual shale gas stocks in the Marcellus/Utica during the third quarter of 2021. Which big investors did the investing and how much did they invest/purchase in the way of stock? We have all the deets below…