“Short Selling” – An Important Signal for Marcellus-Related Companies
Welcome to Friday. It’s time for a brief tutorial on “short selling” or “going short” in the stock market. Even if you don’t participate in the stock market, you need to pay attention if you work for a Marcellus driller or other publicly traded company that sells to or is part of the industry. You also need to pay attention if you are leased with a Marcellus driller. A company’s stock price is key to the value of the company–something called its market capitalization. The more a company is worth (the more “market cap” it has) the more it can borrow when it needs to for things like drilling new wells. A bigger market cap also means a company can borrow money at a lower interest rate (more collateral/value, less risk). Let’s take a look at the recent market gyrations and how those gyrations have encouraged something called short selling of Marcellus-related stocks…
Read More ““Short Selling” – An Important Signal for Marcellus-Related Companies”
The writers at NGI–Natural Gas Intelligence–continue to pump out hit article after hit article. (Full disclosure: MDN editor Jim Willis works part time for NGI on the marketing side. But hopefully by now you know that Jim doesn’t offer false praise for friend or foe. He always calls ’em like he sees ’em.) The latest article we’re excited about is one about a potential shift among Marcellus drillers in southwestern PA and WV–a shift away from Marcellus drilling, potentially replacing it with Utica drilling. Yes, you read that right. No, not all Marcellus drilling will suddenly stop–but in a continuing low-cost gas environment where every dollar counts, drillers are rethinking their strategies and where they will spend precious capital dollars. The recent blockbuster Utica well drilled by EQT in southwestern PA is catching everyone’s attention (see 
There is no doubt the current stock market crash (what else can you call it?) has affected everyone and everything–including the Marcellus/Utica industry. Yesterday the price of West Texas Intermediate (WTI) crude oil closed the trading day at $38.24 per barrel–the lowest price since 2009 during the dark days of “the Great Recession”. Natural gas trading at the benchmark Henry Hub in southern Louisiana, often used as a proxy for all natural gas, closed at $2.64 per thousand cubic feet (Mcf). The Dow Jones Industrial average sunk another 588 points to close down more than 1,000 points in two trading sessions–last Friday and yesterday. At the beginning of trading yesterday, the DJIA experienced its biggest intraday (within a single day) loss ever–plunging more than 1,000 points as trading began. Thankfully it regained nearly half of that–but still, it was scary on many levels. All of that fear has affected all stocks, including the stock price for some of the biggest Marcellus/Utica drillers, who saw losses averaging 7-10% in a single day–yesterday…
Noble Energy, a driller with a massive joint venture with CONSOL Energy on 663,350 acres of Marcellus and Utica Shale leases in the northeast, has confirmed they are “cutting back” the number of rigs they operate in the Marcellus Shale due to “the current environment.” What “cutting back” means is that they will go from operating a single rig to operating no rigs beginning in the middle of the third quarter (which means next month). Two other Marcellus rigs operated by CONSOL Energy will go off line by the fourth quarter…
Yesterday CONSOL Energy’s management team hosted their second quarter 2015 analyst and investor conference call. There was major information contained in that call. The big news is that CONSOL just hooked up and tested a new Utica Shale well in Westmoreland County, PA that is the second best initial producing Utica well ever. Just last week MDN told you about the #1 Utica well drilled so far, by EQT (see 
The plot thickens. Last week MDN was the first, and until now the only, source reporting on rumors that CONSOL Energy may sell it’s CNX Gas division (see 
Following up on our CONSOL Energy/Noble Energy rumor from last Friday, MDN now has a second source that delivers a bit more information about the rumor–refining it for us. We told you on Friday that a persistent rumor among those working for or with CONSOL Energy is that Noble Energy is lining up to buy the gas division, CNX (see 
MDN doesn’t do this (too) often, but we’re going to engage in a little Friday idle speculation. A tad bit of rumor mongering. So take this for what’s it worth. MDN has a contact in the Pittsburgh region that tells us that *all* of CONSOL Energy’s field engineers received an email at 3:30 am–this morning–requesting that they report to the center in Canonsburg, PA to discuss dismissal packages. Our contact says CONSOL’s plan is to lay down the rest of their active drilling rigs as soon as existing wells are completed and that they will not drill any new wells for the next 18 months. The really big bombshell is this: rumors are swirling that CONSOL’s CNX gas division is getting ready to sell itself to Noble Energy…