COVID Aftermath: CNX, Equitrans Cutting Southpointe Office Space
In our opinion, we have yet to fully understand the long-term, permanent changes in society that have happened because of the COVID-19 pandemic. There are signs that things have permanently changed. For example, a significant number of people now work from home rather than commute to an office in downtown. Many workers like working from home better! In a signal that COVID long-term changes are impacting the Marcellus/Utica industry, two major M-U companies with office space in the Southpointe business park (Pittsburgh suburb in Washington County) are shopping a collective 213,000 square feet of office space they no longer need because their workers have permanently relocated to home offices.
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All three M-U states received permits to drill new shale wells last week. Pennsylvania received a big 21 new permits. Ohio received 7 new permits last week, all of them for Encino Energy (two different well pads). West Virginia received just 2 new permits, both for HG Energy on the same pad in the same county.
The data crunchers at the Pittsburgh Business Times have been sifting through the data for 2020 and have composed a list of the “
Yesterday, CNX Resources, Bettis Brothers, and The Bus Stops Here Foundation announced a partnership intended to bring greater awareness and access to opportunities in the natural gas industry to disadvantaged urban and rural communities in the Pittsburgh region. Does the Bettis name ring any bells? It should. Pittsburgh-based IntegrServ, a trucking company partly owned by former Pittsburgh Steeler Jerome Bettis, filed a federal lawsuit last summer against EQT claiming discrimination against his company (a minority-owned company) after EQT canceled a contract worth some $66 million (see 
Two weeks ago CNX Resources issued its 4Q and full-year 2020 update, except at the time they didn’t issue the usual press release with a summary overview (see 
CNX released fourth-quarter and full-year numbers yesterday, but without the usual press release summarizing the results. CNX’s top brass did hold a conference call with analysts to discuss the update. Right out of the chute CEO Nick DeIuliis opened up the session by making four points. Nick’s very first point was that “2020 marked the most successful year we’ve seen as an E&P” as measured by free cash flow.
As we entered 2020, the stock price for most Marcellus/Utica drillers was near or even at the lowest it had ever been (see 
Capital expense (capex) investments made by drillers in the Marcellus/Utica during the third quarter of 2020 were the lowest in at least six years according to a new report (full copy below) from the Institute for Energy Economics and Financial Analysis (IEEFA). The report looks at nine of the top drillers in the M-U and finds collectively they cut capex investment by more than one-third in 3Q20 over 3Q19. And yet those same nine collectively spent a half-billion dollars more during 3Q on drilling and building projects than they earned in revenue from selling oil and gas. That’s troubling.
Yesterday CNX CEO Nick Deluliis was one of the keynote speakers at the annual DUG (Developing Unconventional Gas) East event, held virtually this year. Normally DUG is held at the Convention Center in Pittsburgh. Deluliis’ talk was wide-ranging, but much of it concentrated on mergers and acquisitions, particularly M&A in the Marcellus/Utica. Deluliis is not much interested in horizontal M&A for CNX, but he is intrigued by vertical M&A.
Yesterday Hart Energy held its annual (always excellent) DUG (Developing Unconventional Gas) East event. Normally the event is held at the Convention Center in Pittsburgh. This year it was an all-virtual event. Among the speakers were CNX CEO Nick Deluliis, PennEnergy Resources CEO Rich Weber, and Ascent Resources CEO Jeff Fisher. While it’s not all blue skies and sunshine ahead, all three CEOs painted a picture of 2021 that’s better than 2020.
EQT CEO Toby Rice has been positively chatty lately. He gave a great interview to the Pittsburgh Business Times revealing his thinking with respect to the recently announced Chevron deal (see today’s lead story). He also spoke to Bloomberg reporters. Rice shared his views on further consolidation in the M-U sector. He indicated EQT is still in the hunt for a deal with CNX and possibly other M-U drillers.
CNX Resources issued its third-quarter 2020 update yesterday. The company didn’t bother to issue the usual narrative describing what happened during 3Q. Instead, they simply pushed out the financials, a slide deck, and spoke to analysts on a conference call. What did we learn picking through the numbers and the conference call transcript? One thing we learned is that CNX has no interest in being merged with EQT, that’s for sure.