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NatGas Drillers Post Record Profits in 2021, Heading for Better 2022
According to RBN Energy, 2021 was the most profitable year in at least the last two decades for oil and gas producers (i.e. drillers). Oil and gas producers reported income two-thirds higher than the previous peak in 2014, when commodity prices were significantly higher. There’s every indication that 2022 will be even better for the bottom line of O&G companies. What about Marcellus/Utica drillers? Yep, they’re on the list of phenomenal results too.
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According to Reuters, at least a dozen U.S. shale gas executives met yesterday in Houston, TX, with European energy officials to discuss expanding U.S. fuel supplies to Europe. Among those in the meeting were “top executives” from Chesapeake Energy, Coterra Energy (formerly Cabot Oil & Gas), and EQT Corp., the largest natural gas producer in the U.S. Individual meetings are planned between the execs and representatives from Latvia, Estonia, and Slovakia. It seems that Europe has finally opened its eyes (and its mind) to the benefits of American natural gas.
Last week Pennsylvania issued 14 new shale well permits, with EQT Corp. grabbing eight (seven of them on a single pad in Fayette County), and Coterra Energy (formerly Cabot Oil & Gas) receiving three (all on the same pad in Susquehanna County). Ohio issued ten new permits last week, with three going to a relative newcomer, Utica Resource Operating (same pad in Guernsey Count) and three for Encino Energy (same pad in Harrison County). West Virginia got skunked and shows no new shale permits issued last week. Pity.
Since February 2020 EQT Corporation’s credit rating (for company-issued bonds) has been at the “junk” (i.e. non-investment grade) level. Two of the three top credit ratings agencies–Standard & Poor’s Global Ratings and Fitch Ratings–recently upgraded EQT’s credit rating, returning it to investment grade. So far Moody’s has not followed, but we’re guessing it won’t be long before Moody’s upgrades EQT’s rating too.
Each quarter NGI (
You might think that Toby Rice, son of Daniel Rice III who was, at one time (for over a decade), the single most successful and profitable mutual fund manager in the world, was born with a silver spoon in his mouth. You might think that everything was given to Toby Rice on a silver platter. You would be wrong. Prior to running the largest natural gas producer in the U.S., Toby Rice was, among other professions, a chimney sweep (cue the song from Mary Poppins, Chim Chim Cher-ee). He then swept floors for $9 an hour while he attended grad school to learn about fracking. Toby knows what it’s like to work (hard) for a living.
We’ve heard of “supermajors”–those six to seven integrated oil and gas companies that have a market capitalization of $100 billion or more (including ExxonMobil, Shell, BP, Chevron, ConocoPhillips, and Total). We’ve heard of “majors”–integrated oil and gas companies defined as having a market capitalization of $10 billion to $100 billion. And we’ve heard of “independents”–smaller companies that focus just on drilling (not integrated, meaning no downstream and possibly no midstream operations). A Reuters article introduces to a new concept–mini-majors. Among that group is EQT Corporation.
Yesterday MDN brought you news of a bold new plan by EQT CEO Toby Rice to “unleash” American LNG exports to not only help our friends in Europe, but also to reduce the amount of coal use across the world, thereby lowering coal-related emissions including carbon dioxide (see 
You have to hand it to the Rice boys, they sure know how to make an entrance and grab the spotlight. While attending the annual CERAWeek event in Houston yesterday, EQT CEO Toby Rice unveiled a plan to “unleash” American LNG, supplying Europe and the world with our LNG, which would displace coal, lower carbon dioxide emissions planetwide, and wean the world off the energy produced by despots like Russia and Iran. It is a bold plan with specifics.
Hackers, believed to be “state-sponsored,” aggressively targeted computers belonging to current and former employees at two dozen major natural gas suppliers and exporters. The aim seemed to be an attempt to cripple U.S. LNG exporting ability. One of the targets of the attacks was EQT Corporation, the largest natural gas producer in the U.S. The activity occurred on the eve of Russia’s invasion of Ukraine. You do the math to figure out who the “state sponsor” of the attacks was.
Only four (known) times since 2017 have U.S. shale producers met face-to-face with representatives from the OPEC cartel to discuss “energy concerns.” Yesterday was one of those four times, happening in Houston, Texas where everyone who’s anyone is meeting at the CERAWeek conference. (Yes, we’re nobodies…we aren’t there.) Among the shale execs meeting with OPEC was none other than the largest natural gas producer in the U.S. (and in the Marcellus/Utica), EQT CEO Toby Rice. What was discussed?
According to S&P Global, shale gas producers behaved themselves during the fourth quarter of 2021 and didn’t, even as the price of gas went sky high, do anything more than maintain current production. Gas drillers kept spending in check, didn’t do any more drilling than was necessary to maintain production, and plowed free cash flow back into dividends and stock buybacks. The result? Investors loved it and share prices soared.
Using investment capital from Preferred Capital Securities, WhiteHawk Energy is buying mineral and royalty rights in southwestern Pennsylvania, primarily in Washington and Green counties, for $52.5 million. The assets include production and cash flow from over 950 horizontal Marcellus Shale wells. The wells are operated by EQT, CNX Resources, and Range Resources.