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Weekly Shale Drilling Permits for PA, OH, WV: Jan 4-8
Two of three M-U drilling states received permits last week. Pennsylvania scored 10 permits to drill new shale wells. Ohio received 2 permits for Utica wells. West Virginia received no new permits to drill new shale wells.
NOTE: This post was updated on 1/14/21. We previously reported a set of 6 wells in WV in error–those wells received permits in 2020 and not 2021. Sorry! Thank you to a sharp MDN reader who flagged it for us.
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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.
On Monday we brought you the news that Gulfport Energy, the third-largest driller in the Ohio Utica Shale, had filed for bankruptcy over the weekend (see 
We hoped it wouldn’t happen, but warned you it might when Gulfport Energy announced several weeks ago it had missed a debt payment and was in “restructuring” talks (see 
When a pipeline company considers whether or not to build a new pipeline, the company conducts an “open season”–a time when drillers (producers) can sign long-term contracts to use capacity along the pipeline. Such contracts guarantee pipeline companies will be able to make back the considerable amount of money they have to spend to build the pipeline. What happens when a driller that signed to a 10- or 20-year contract goes bankrupt? Or what happens if a contract will force a driller into bankruptcy? Can such a contract be canceled?
While Gulfport Energy (big Ohio Utica driller) hasn’t officially filed for bankruptcy, it’s certainly a possibility (see 
We spotted a couple of stories, one in Barron’s the other in the Wall Street Journal, about the pickup in the futures price of natural gas over the past week, and how those recent gains have led to impressive gains in the share price for Marcellus/Utica drillers. Yesterday the NYMEX Henry Hub futures price closed up 4.11% to $2.74/Mcf. The rising tide lifts all boats.
Back in 2012 Gulfport Energy drilled a pair of exceptional Utica wells in Belmont County, Ohio–both on the same pad. The first was the Shugert 1-1H which had an initial production (IP) rate of 20 million cubic feet of natural gas per day (Mmcf/d). It also produced an initial 144 barrels of condensate per day, and 2,002 barrels of natural gas liquids per day (see 
Gulfport Energy, the third-largest (by number wells drilled) producer in the Ohio Utica Shale, issued its 2Q20 update yesterday. Back in June, the company said it would shut-in some of its production, delaying production until later this year (see 
Do you remember the child’s game called “Simon Says”? That’s what we were thinking when we read about a lawsuit in Ohio by landowners against a group of shale drillers. The lawsuit, initiated by several landowners in Belmont County, OH, claims the drillers drilled too deep–into the Point Pleasant rock layer–when the leases signed only mention the Utica rock layer. The lawsuit, which is seeking class action status, claims “unjust enrichment” by the drillers.
A word you will likely see a lot more of in quarterly updates by oil and gas drillers across the country is the word “impairment.” It’s an accounting term that means the value of an asset (leased acreage or wells) is adjusted, down, to reflect a company’s best guess as to how much revenue that asset can generate. We wrote about impairments back in 2015 (see 
As recently as early March Gulfport Energy, a major driller in the Ohio Utica Shale, and its single largest investor, Firefly Value Partners (owns 13.1% of outstanding shares), were sniping at each other. Firefly was actively trying to pack the board of directors with its own nominees (see 
Gulfport Energy, the third-largest (by number wells drilled) producer in the Ohio Utica Shale, issued an update yesterday to its previous plans on drilling in the Ohio Utica (and Oklahoma SCOOP), revising down the amount of natural gas it will produce and revising down drilling activity previously planned for 2020. The company says it will delay until later this year/early next year more of its production than previously announced–due to ongoing low prices for natgas.