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M-U Driller Profits Bounce Back into the Black for 3Q23

It’s been a financial roller coaster for oil and gas drillers over the past 15 years. Investors in shale oil and gas companies suffered for years with little or no returns for their invested money. Five of eight large Marcellus/Utica drillers saw their share prices decrease by an astonishing 85% or more from 2008 to 2019 (see Former EQT CEO: Shale Revolution a “Disaster” for Investors). Just before the COVID pandemic hit, shale companies began to change and focus on less drilling and more profitability. That change paid off in a big way. Shale companies saw record profits in 2022 (see How Did M-U Gas Drillers Spend Their 2022 Record Haul of Cash?). But beginning in late 2022, the roller coaster took another turn down and profits crashed (see M-U Drilling Profits Hit Two-Year Low, Better Days Ahead?). But what’s this? Profits for drillers in the M-U (and other shale plays) recovered and began to climb again in the third quarter of 2023 following a five-quarter slide.
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4th Circuit Allows EQT to Appeal WV Landowners Royalty Lawsuit

A lawsuit of interest for all landowners is playing out in West Virginia between a class of landowners and EQT Corporation, the largest natural gas producer in the country. We searched our extensive archives high and low and found no mention of this lawsuit! Somehow, it has escaped our attention — until now. As these cases often are, this one is long and complicated. However, the nub of the case, the essence of the dispute, is whether or not EQT can pay royalties to landowners based on the “raw” gas that comes out of the borehole (methane plus NGLs) or whether, as the plaintiffs argue, EQT should pay royalties based on the post-processed gas and NGLs (presumably at a much higher rate).
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37 New Shale Well Permits Issued for PA-OH-WV Oct 30 – Nov 5

New shale permits issued for Oct 30 – Nov 5 in the Marcellus/Utica saw a significant increase. It almost felt like old times again! There were 37 new permits issued last week, versus 26 the week before. Last week’s permit tally included 24 new permits in Pennsylvania, 11 new permits in Ohio, and 2 new permits in West Virginia. Coterra Energy was the top permittee for the week, drawing 9 permits in Susquehanna County, PA. This will really rub the antis raw: Coterra received several permits to restart drilling in Dimock Township. 🙂
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EQT’s Toby Rice Says Industrial World Threatened by Pipe Lawsuits

Toby Rice

EQT Corporation CEO Toby Rice says there is a “war on infrastructure” here in the U.S. (meaning a war against pipelines) that is sparking a “Europe-style energy crisis.” Rice says, “The industrial world that we enjoy now is severely compromised because of the lawsuits, the pushback and the movement to cancel energy infrastructures and modern society.” He also says we’re just five years behind Europe in regard to an energy crisis.
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26 New Shale Well Permits Issued for PA-OH-WV Oct 23 – 29

New shale permits issued for Oct 23 – 29 in the Marcellus/Utica increased again. There were 26 new permits issued last week, versus 22 the week before. Last week’s permit tally included 18 new permits in Pennsylvania, 7 new permits in Ohio, and 1 new permit in West Virginia. Coterra Energy was the top permittee for the week, drawing 7 permits in Susquehanna County, PA. Chesapeake Energy was #2 with 5 permits issued in Sullivan County, PA.
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EQT Sets New World Drilling Record; Deals to Sell 1.2 Bcf/d via MVP

EQT Corporation, currently the largest producer of natural gas in the U.S., provided its third quarter update yesterday. And wow! There is plenty to talk about. The company set another drilling world record of 18,264 feet in 48 hours, beating the existing world record set by EQT in the second quarter (see EQT Sets World Drilling Record; Tug Hill Deal to Close Next 30 Days). CEO Toby Rice announced the company recently signed two long-term deals with natural gas customers who will buy EQT’s molecules from the Mountain Valley Pipeline (MVP) when it gets completed. The two deals collectively add up to 1.2 Bcf/d heading to the southeastern U.S.
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22 New Shale Well Permits Issued for PA-OH-WV Oct 16 – 22

New shale permits issued for Oct 16 – 22 in the Marcellus/Utica rebounded. There were 22 new permits issued last week, versus 14 the week before. Last week’s permit tally included 17 new permits in Pennsylvania, 5 new permits in Ohio, and no new permits in West Virginia. Chesapeake Energy was the top permittee for the week, drawing 7 permits between two counties in PA: Susquehanna and Wyoming (northeastern part of the state). EQT had 5 permits across two PA counties: Greene and Washington (southwestern part of the state). And Ascent Resources had 5 permits in Ohio in two counties: Guernsey and Harrison.
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14 New Shale Well Permits Issued for PA-OH-WV Oct 9 – 15

New shale permits issued for Oct 9 – 15 in the Marcellus/Utica gyrated once again, dropping to about half from the previous week. There were 14 new permits issued last week, versus 23 the week before. Last week’s permit tally included 12 new permits in Pennsylvania, no new permits in Ohio, and 2 new permits in West Virginia. EQT was the top permittee for the week, drawing 6 permits in Greene County, PA. PA General Energy was second with 4 permits in Lycoming County.
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EQT Confirms Plan to Produce Jet Fuel from NatGas, but Few Details

Yesterday, we brought you the great news that the Marcellus/Utica region scored one of seven major hydrogen hub project grants being dished out by the Bidenistas (see Hydrogen Hub Winners Announced – WV Takes Prize in M-U Region). As we pointed out, West Virginia is the big winner, hosting most of the 15 projects associated with the Appalachian Regional Clean Hydrogen Hub (ARCH2). However, other states, including Ohio, Kentucky, and even Pennsylvania, will also benefit by having some projects related to ARCH2 funding located in those respective states. One such project, that we are just now becoming aware of, is a plan by EQT to manufacture low-carbon aviation fuel using natural gas as a feedstock.
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FTC Finalizes Consent Order from EQT Purchase of Tug Hill WV Assets

Nearly one year after EQT announced a deal to buy privately-owned Tug Hill Operating’s West Virginia shale assets for roughly $5.2 billion (see Confirmed: EQT Buys Tug Hill’s THQ Appalachia for $5.2 Billion), the deal was finally completed in August (see EQT Finally Completes Acquisition of Tug Hill and XcL Midstream). Both EQT and Tug Hill’s backer, Quantum Energy Partners, announced the deal was consummated. But was it?
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EQT Plaza in Downtown Pittsburgh May Convert to Residential

EQT Plaza

Is EQT getting ready to leave downtown Pittsburgh? The office building in Pittsburgh that bears the company’s name, EQT Plaza, has 32 floors and is the 13th largest office building in the city. In October 2019, MDN told you that EQT was looking to sublease space in its mammoth downtown office building (see EQT Looks to Sublease HQ Space – Leaving Downtown Pittsburgh?). The company shrunk its use to just 15 floors. Then, in February 2020, EQT announced it was shrinking its use of the building again, down to a piddly five floors (see EQT Subleasing Most of its Downtown Pittsburgh Office Building). Given the City of Pittsburgh’s hostility to the shale industry (and given various rumors we had heard), we theorized that EQT was getting ready to leave downtown. However, the company has a lease until 2024 (EQT does not actually own the building). EQT Plaza’s owner, Highwoods Properties, recently spoke to the Pittsburgh Business Times about potential plans for the building.
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EHB to Review DEP Finding of No PFAS Contamination by Chevron Well

Last November, MDN told you about a lawsuit filed by a family in Washington County, PA, against Chevron (now EQT) for drilling and fracking done in 2011-2012 near the family’s home (see PA Lawsuit Blames Chevron Fracking for PFAS Chemicals in Water Well). The lawsuit alleges Chevron used PFAS or “forever chemicals” in the fracking solution, and that those chemicals had leaked into the family’s water well. The PA Dept. of Environmental Protection (DEP) investigated and found that water contaminated with PFAS from Chevron’s drilling more than a decade ago did NOT pollute the family’s water well (see DEP Finds Chevron Drilling Did Not Contaminate Water Well with PFAS). The family, using a well-known anti-Marcellus lawyer, appealed the DEP finding. The Environmental Hearing Board (EHB), a special court in PA that hears appeals of DEP decisions, said it would review the DEP’s findings.
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23 New Shale Well Permits Issued for PA-OH-WV Sep 25 – Oct 1

New shale permits issued for Sep 25 – Oct 1 in the Marcellus/Utica were up a few ticks from the previous week. There were 23 new permits issued last week, up from 21 permits issued two weeks ago. Last week’s permit tally included 10 new permits in Pennsylvania, no new permits in Ohio, and a surprising 13 new permits in West Virginia. Two companies tied for top permittee, one you know, one you may not know. Olympus Energy received 5 permits to drill in Westmoreland County, PA. Consol Mining Company received 5 permits to drill in Monongalia County, WV. Consol used to own CNX Resources before spinning off CNX into its own company. Consol concentrates on coal mining. We were surprised to see Consol wandering back into shale drilling.
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21 New Shale Well Permits Issued for PA-OH-WV Sep 18 – 24

New shale permits issued for Sep 18 – 24 in the Marcellus/Utica were roughly the same as the prior week. There were 21 new permits issued last week, down 1 from permits issued two weeks ago. Last week’s permit tally included 11 new permits in Pennsylvania, 4 new permits in Ohio, and 6 new permits in West Virginia. Three companies tied for top permittee last week: PennEnergy Resources with 5 permits in Butler County, PA; CNX Resources with 5 permits in Washington County, PA; and Southwestern Energy with 5 permits spread between Wetzel and Ohio counties in WV.
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Major U.S. Shale Drillers Hedged 2H23 Gas Production Avg. $3.35

According to an analysis by S&P Global Commodity Insights, large U.S. shale gas drillers (namely Marcellus/Utica drillers) have hedged (pre-sold at a specific price) an average of 50% of anticipated shale gas production for the second half of 2023. The average price of the hedges is $3.35/Mcf, far above the average NYMEX Henry Hub price that has been bumping along between $2.25 and $2.75. CNX Resources is the top hedger, hedging 80% of its production in 2H23 at $3.04/Mcf.
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SRBC Approves Water Permits for 34 Shale Well Pads in NE Pa.

In August, the Executive Director of the Susquehanna River Basin Commission (SRBC) approved 34 water-use permits for individual shale gas well drilling pads in Bradford, Lycoming, Sullivan, Susquehanna, and Tioga counties. We’re just learning of the action via an official notice published in the Sept. 23 edition of the Pennsylvania Bulletin. The approvals, which are NOT subject to public review according to SRBC regulations, are general water permits. Each site will be required to receive a specific water withdrawal approval at a later date.
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