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23 New Shale Well Permits Issued for PA-OH-WV Jan 2-8
New shale permits issued for Jan. 2-8 in the Marcellus/Utica included 14 new permits in Pennsylvania, 8 new permits in Ohio, and just 1 new permit in West Virginia. The top recipient of permits for last week was Apex Energy, grabbing 6 permits to drill on a single pad in Westmoreland County, PA. Right behind Apex was Coterra Energy with 5 permits to drill on a single pad in Susquehanna County, PA. Opposite sides of the state.
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What a difference three years can make! Three years ago, Henry Hub prices were hovering around $2 per thousand cubic feet (Mcf). Stock valuations for Marcellus/Utica drillers were majorly depressed (down 80-90% from previous highs), and gas producers were struggling. Fast forward to today. Balance sheets and earnings statements are through the roof. Most experts believe $4-$5/Mcf gas is sustainable–at least for the next X years. What does the future look like for M-U drillers? What are the risks? And can we keep the current bright outlook going?
Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), emerged from bankruptcy in May 2021 with a new board and new top management. By September of last year, rumors began circulating that the company was shopping itself for sale (see 
Expectations play a big role in investing. The financial markets do a lot of anticipating and forecasting and guessing about where a company or entire sector is heading. Such is the game being played right now with expectations for Marcellus/Utica shale gas companies and their forthcoming third quarter financial updates. Given the high price of natural gas during 3Q22, analysts expect shale gas companies to be swimming in free cash flow. The natural follow-on question is, what will they do with all of that extra cash?
Drillers (exploration and production companies, or E&Ps) were thrilled with record-high earnings and cash flow in the second quarter of this year. Soaring commodity prices and “strict financial discipline” on the part of oil and gas drillers resulted in pre-tax operating earnings and cash flows surging by 29% and 22%, respectively, from 1Q22. And 1Q22 was up too! So what did drillers, especially drillers in the Marcellus/Utica, do with all that extra cash? Did they pay down debt? Buy back shares of company stock? Issue higher dividends? Something else?
Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), emerged from bankruptcy in May 2021 with a new board and new top management. By September of last year, the rumors began circulating that the company was shopping itself for sale (see 
Gulfport Energy has successfully wiggled 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. In 2020 the Federal Energy Regulatory Commission (FERC) told Gulfport a very loud NO in breaking those contracts (see 
Wow! What a difference two years can make. At the dawn of the pandemic, the share price for publicly traded oil and gas stocks (in particular Marcellus/Utica drillers) was in the basement. With the pandemic now in the rearview mirror (we hope), and demand increasing for both oil and natural gas, the price of oil and gas has skyrocketed, and along with it, O&G companies are raking in the cash. How are M-U drillers using their newfound piles of cash to compensate investors?
Sources whispering to Bloomberg say that Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), is having exploratory talks with Encino Energy about selling itself to/merging with Encino. In March the rumor mill said Gulfport was in talks to sell itself to Ascent Resources (see