EQT Update – Making Moves to Drill More in WV in 2021

Yesterday the country’s largest natural gas producer, EQT Corporation, released its 4Q and full-year 2020 update, holding a conference call with analysts to discuss the results. The update shows the company produced an average of 4.45 million cubic feet per day (MMcf/d) of natural gas in 4Q. Although there was plenty of “free cash flow” for the year, on paper the company lost $967 million in 2020, which is an improvement over the year before when it lost $1.2 billion. Perhaps the biggest news (for us) coming from yesterday’s update is that in 4Q EQT turned its drilling attention to the West Virginia Marcellus. EQT plans to do much more drilling in WV this year too.
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Weekly Shale Drilling Permits for PA, OH, WV: Feb 1-5

Two of three M-U states received permits to drill new shale wells last week. Pennsylvania received 22 new permits (second week in a row with 22 new permits). Ohio received zero new permits. And West Virginia received 6 new permits (down from 8 new permits the previous week).
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Weekly Shale Drilling Permits for PA, OH, WV: Jan 25-29

All three M-U states received permits to drill new shale wells last week. Pennsylvania received 22 new permits. Ohio received 2 new permits. And West Virginia received 8 new permits.
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Is Scheme to “Certify” NatGas Emissions a Carbon Tax Trojan Horse?

On Friday MDN told you that EQT has partnered with a company called Project Canary (used to be Independent Energy Standards Corporation) to use the TrustWell™ Responsible Gas Program to monitor two EQT gas wells to prove to the world (in particular the global warming lunatics) that EQT’s gas is good and green (see EQT Partners with Project Canary on “Responsibly Sourced” NatGas). However, we’re not convinced TrustWell is a trustworthy program.
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EQT Partners with Project Canary on “Responsibly Sourced” NatGas

Yesterday EQT, the largest natural gas producer in the U.S., announced it is partnering with a Denver, CO company calling itself “Project Canary” on two test shale gas wells, to prove the gas produced is “certified responsibly sourced” natural gas. The test will purportedly prove that EQT is doing a good job of producing its natgas with “high environmental and social standards.” Personally, we don’t think they have anything to prove, nor should they. But hey, it’s not our company to run.
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Weekly Shale Drilling Permits for PA, OH, WV: Jan 11-15

Two of three M-U drilling states received permits last week. Pennsylvania scored 14 permits to drill new shale wells. Ohio received no new permits for Utica wells. West Virginia received 5 new permits to drill new shale wells.
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EQT Asks 2 WV Judges be Removed from Royalty Cases re Conflicts

EQT Corporation, the largest natural gas producer in the United States, is asking West Virginia officials to remove two judges from hearing cases brought by landowners against the EQT relating to royalty disputes for alleged improper deductions. EQT wants Judges Timothy Sweeney and David W. Hummel Jr. to be disqualified from at least three cases (that we know of).
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US Well Locks in Long-Term E-Fracking Contracts with Range, EQT

In a pair of announcements earlier this week, U.S. Well Services announced it has signed new long-term deals with both Range Resources and EQT to supply “electric fracking” services. We told you in February 2020 that Range had signed on with U.S. Well Services to continue using its electric fracking service (see Range Resources Converts to Electric Fracking with US Well Serv.). A couple of months later EQT signed up with U.S. Well too (see EQT Converting One-Third of Completions to US Well E-Fracking). What’s the difference between traditional fracking and electric or e-fracking?
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Extreme Makeover: EQT Edition

Oil & Gas Investor magazine recently sat down with Toby Rice, CEO of EQT Corporation, to discuss his (and his brother Derek’s) successful takeover of the company in July 2019. The lengthy article begins this way: “A year and a half after leading a mutiny of shareholders to take control of the nation’s largest natural gas producer, CEO Toby Rice is proud to reveal the completed remodel. And it’s even better than promised.”
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Haynesville Shale Growing – Chief Competitor to Marcellus/Utica

The Marcellus/Utica is the #1 natural gas producing play in the country. Last month the M-U region produced 33.6 billion cubic feet per day (Bcf/d), according to the U.S. Energy Information Administration’s December Drilling Productivity Report (see DPR: Most Shale Plays, Incl. M-U, Continue Big Drop in Production). The second highest-producing region was the Permian, producing 16.9 Bcf/d. Third highest was the Haynesville at 11.3 Bcf/d. So why do we say the Haynesville is the chief competitor to M-U?
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M-U Drilling Co. Stocks Boomed in 2020, Positive Outlook 2021

As we entered 2020, the stock price for most Marcellus/Utica drillers was near or even at the lowest it had ever been (see Marcellus/Utica Drillers’ Stock Prices Near/At Historic Lows). Then the twin catastrophes of an oil price war (launched by Russia and Saudi Arabia) and a worldwide pandemic hit in March. As it turns out, the catastrophes ended up benefitting our shale drillers. Stock prices improved dramatically for a number of major gas drillers in the M-U after March.
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Weekly Shale Drilling Permits for PA, OH, WV: Dec 14-18

Last week Pennsylvania issued 25 new shale well drilling permits in both northeast and southwest PA, although most of the permits for SWPA. Ohio issued 4 new shale well permits, all of them to the same company (Encino Energy) and the same well pad (in Harrison County). West Virginia issued 6 new shale well permits, one in Lewis County and the rest in Tyler County.
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Weekly Shale Drilling Permits for PA, OH, WV: Dec 7-11

Last week Pennsylvania issued 21 new shale well drilling permits scattered across both northeast and southwest PA. Ohio issued 5 new shale well permits, all of them to the same company and the same well pad. West Virginia issued 3 new shale well permits, all in different counties.
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3Q Financial Health of Top Marcellus/Utica Drillers Troubling

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.
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Judge Allows Class Action Against EQT/Rice 2017 Merger to Proceed

In June 2019 the Cambridge (Massachusetts) Retirement System sued EQT claiming EQT’s executives had made false and misleading statements about their 2017 purchase of Rice Energy–claims about cost efficiencies that never materialized, and claims about the location of Rice leases that were not as close to EQT’s acreage as claimed (see Mass. Retirement Fund Sues EQT for Plummeting Stock Price). In a word, Cambridge alleged fraud on the part of EQT’s executives and seeks to turn their lawsuit into a class action on behalf of all investors who owned EQT stock at that time.
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