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Marcellus/Utica Drillers Post Strong Profits as Pandemic Recedes
RBN Energy is a fountain of great information about the oil and gas sector. Headed by industry icon Rusty Braziel, RBN tracks and reports on a number of O&G companies. One of the best features of their information service is tracking the performance of three groups of publicly-traded O&G companies: Oil-Weighted E&Ps, Diversified E&Ps, and Gas-Weighted E&Ps. That last group, the gas-focused companies, is a list of 10 E&Ps. Only two of the ten don’t have any operations in the Marcellus/Utica–all the rest do. RBN has just published a post about the financial performance in 1Q21 for all three groups. The numbers are very encouraging.
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Can we get an amen! We have an evangelist in the house. Toby Rice, CEO of EQT (the largest natural gas producing company in the U.S.) is preaching the gospel of natural gas. No surprise there. But what may surprise you (it did us) is just how much Rice is pushing natgas as the alternative to coal in power generation. In an interview with Barron’s, Rice declared we need “every tool” to end energy poverty around the world, and “natural gas is the most evolved tool” to do it. Amen!
All three M-U states received permits to drill new shale wells last week, but not a lot. In fact, it was one of the lowest overall number of permits issued in recent memory. Pennsylvania received just five new permits, and some of those were reissued permits. Ohio received four permits. And West Virginia just a single new permit.
As we reported a month ago, a group of West Virginia landowners/rights owners filed a claim against EQT alleging the company had allowed leases to lapse, then at a later date reentered their property and drilled new wells (see 
NGL (natural gas liquid) revenues for U.S. drillers soared in the first quarter of 2021–up 100% (i.e. doubled) over the same quarter in 2020, which was the quarter when COVID-19 began to seep into the public consciousness. In particular international demand for U.S. liquefied petroleum gas (LPG, or propane) helped propel NGL revenues higher in 1Q21. Guess which company posted the highest year-over-year increases for both NGL prices and revenues?
M&A, or mergers & acquisitions, is on everyone’s mind in the oil and gas industry. Particularly in the Marcellus/Utica region. EQT, under the leadership of Toby Rice, already the largest natural gas producer in the country, has been on the prowl. In the past eight months EQT has picked up all of Chevron’s M-U assets (see 
One of the criticisms often leveled against the shale industry is that shale drillers have destroyed shareholder value (the price of company stock) over the past decade or so (see 
The issue of expired leases has once again reared its head for EQT–this time in West Virginia. In 2006 a group of WV landowners/rights owners sued Equitable Production Company (now EQT) claiming, among other things, “damages for improper deductions of post-production expenses from their royalty payments and damages for breach of lease agreements, breach of fiduciary duty, fraud, violation of the West Virginia Consumer Credit and Protection Act…violation of the flat rate royalty statute… and punitive damages, all related to the improper payment of royalties.” That case was settled in 2010. However, a subgroup within the larger class action group has a new/different claim: that EQT let leases lapse and then reentered and drilled on property out-of-lease. It’s called trespass.
Analysts with S&P Global Market Intelligence say that shale gas drillers in the Marcellus/Utica region have finally learned their lesson and are sticking to their promise to keep capital spending restrained this year–even with an increase in the price of gas. Both spending and rig counts are predicted to stay low this year as drillers work on boosting free cash flow and improving company share price.
EQT Corporation, the nation’s largest natural gas producer (focused 100% on the Marcellus/Utica), held its annual meeting yesterday. This meeting had a lot less drama than the meeting in 2019, just two years ago, when brothers Toby and Derek Rice successfully took over the company (see 
The experts at RBN Energy have, for the past five years, closely tracked the spending and production of a representative collection of 39 major public E&P (exploration & production) companies. RBN splits the companies tracked into three groups: Oil-Weighted E&Ps, Diversified E&Ps, and Gas-Weighted E&Ps. In a recent post, RBN reveals what those 39 companies have announced they will spend, and produce, in 2021. For eight of the nine gas-weighted E&Ps that produce gas in the Marcellus/Utica, the numbers show drillers will spend 15% less this year, but overall will produce 2% more natural gas than they did last year.