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DT Midstream Makes FID on New Greenfield Pipeline in Ohio Utica
DT Midstream (DTM), headquartered in Detroit, owns major assets in the Marcellus/Utica region and other regions. DTM issued its second quarter 2023 update yesterday. The company announced it had reached a final investment decision (FID) to build a new greenfield gathering system in the Ohio Utica Shale. The gathering system will transport associated gas from new wells being drilled in the rich window of the Utica.
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Yesterday MDN brought you jammed-packed news about EQT Corporation, the country’s largest natural gas driller and producer, from the company’s second quarter update (see 
EQT Corporation, the largest natural gas producer in the United States, issued its second quarter 2023 update yesterday. There was loads of news. The company reported a new world record of drilling 18,200 feet in 48 hours for a single well in Green County, PA. Also of note, CEO Toby Rice and newly appointed CFO Jeremy Knop said a long-delayed purchase of Tug Hill Operating (major new acreage for EQT in West Virginia) would be concluded within the next 30 days. Very exciting news! But it wasn’t all peaches and cream. Reading through the reports, you will discover that EQT produced 471 Bcfe in 2Q23 (an average of 5.18 Bcfe/d) versus producing 502 Bcfe in 2Q22 (an average of 5.52 Bcfe/d)–down 6% year over year. The company lost $67 million in 2Q23 versus making a profit of $891 million in 2Q22, a swing of $958 million (nearly one billion dollars). Why?
Last summer, MDN brought you the news about a lawsuit against Diversified Energy and EQT over the issue of old and “abandoned” wells in West Virginia (see 
New shale permits issued for Jun 26 – Jul 2 in the Marcellus/Utica saw a dramatic increase, thanks to a bump in Pennsylvania’s numbers. There were 39 new permits issued last week, way up from 11 issued the previous week. Last week’s permit tally included 30 new permits in Pennsylvania, 8 new permits in Ohio, and just 1 new permit in West Virginia. Coterra Energy scored the most new permits with a whopping 12 issued in Susquehanna County, PA (for two well pads). Range Resources had the second most new permits, with 7 permits issued in Washington County, PA (for one pad).
For individuals, discretionary income is what’s left after you pay your taxes and fixed costs like housing, food, and clothing. For shale drillers, the equivalent to discretionary income is cash flow from operating activities (CFOA), which is the net income a company generates adjusted for non-cash expenses like depreciation and stock-based compensation, and for changes in working capital. Drillers can use their extra cash to grow production by spending more for drilling new wells (capital expenditures or capex). Or drillers can send some of the extra cash back to investors via share buybacks and dividends. How did Marcellus/Utica drillers spend their CFOA during the first quarter of 2023?
It’s possible to track which institutional investors (big investors like BlackRock) are buying or selling shares in various companies by reviewing Securities and Exchange Commission (SEC) Form 13F filings. S&P Global Market Intelligence performed a 13F review of which companies bought, and which sold (and how much) shares of stocks for shale gas drillers during the first quarter of 2023. The topmost active shale gas driller having its stock purchased by institutional investors was Comstock Resources, which drills exclusively in the Haynesville Shale. The reason Comstock came out on top, postulates S&P, is because the Haynesville is located close to the Gulf Coast and LNG export plants. However, it was the rest of the list that interested us.
The weather has been fantastic for those of us living in the northeastern U.S. over the past few weeks. Clear blue skies (when they aren’t clouded with wildfire smoke from Canada), really warm temperatures, and absolutely no rain to spoil outdoor activities. Here in the Binghamton, NY area, we went from a surplus of rain and swollen rivers and lakes just a month ago to a rain deficit today. Lawns and fields and beginning to turn brown. Hey, we’re not complaining! But we do need some rain. The lack of rain in the Susquehanna River Basin has triggered water withdrawal restrictions for 42 oil and gas drillers and four other large water users (46 in all) by the Susquehanna River Basin Commission (SRBC). In many cases, the SRBC order is to “cease withdrawal.”
It’s been a wild ride for shale energy companies from the beginning of the shale revolution around 20 years ago. Here in the Marcellus/Utica, the very first Marcellus well was sunk by Range Resources in 2004. Until a few years ago, most shale drillers were not profitable, eating through investors’ money like candy. Just before the beginning of the pandemic, shale drillers got the “free cash flow” religion and began to pull back on new drilling in favor of profitability for shareholders. The pandemic, followed by Russia’s war against Ukraine, added new market gyrations. Bottom line: Last year, shale oil and gas drillers saw historic revenues and profitability. This year, the bottom is dropping out once again…