M-U Driller’s Stock Prices a Mixed Bag Over Past 12 Months
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 Marcellus/Utica Drillers’ Stock Prices Near/At Historic Lows). The criticism is not without merit. In a talk at an industry event in 2019, former EQT CEO Steve Schlotterbeck displayed a chart showing the change in stock price for eight large M-U drillers. Five of the eight had seen their share prices decrease by an astonishing 85% ore more from 2008 to 2019 (see Former EQT CEO: Shale Revolution a “Disaster” for Investors). Today we offer an update on the share price/value destruction issue. How have large M-U drillers done, with respect to share price, over the past 12 months?
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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.
Gulfport Energy continues to try and wiggle out of legally-signed and binding long-term contracts with multiple pipeline companies, including deals that move Marcellus/Utica gas through the Rover and Rockies Express (REX) pipelines. Last year the Federal Energy Regulatory Commission (FERC) told Gulfport a very loud NO in breaking those contracts (see 
Last November Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), filed for a “pre-arranged” Chapter 11 bankruptcy (see 
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.
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 
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