Chesapeake 1Q: $764M Net Loss, $532M FCF, 13 Rigs Drilled 41 Wells
Yesterday Chesapeake Energy Corporation issued its first quarter 2022 update. At a high level, the company generated just over $3 billion in revenue during 1Q with $1.7 billion in operating expenses. However, the company lost $2.1 billion on derivatives and hedges (bad bets on the price of oil and gas), leading to a net loss of $764 million for the quarter. Chesapeake managed to generate $532 million in free cash flow during the quarter. Of the company’s three main operational areas–the Marcellus, the Haynesville, and the Eagle Ford–the Marcellus still gets the most love with the most wells drilled and most money spent. But not by much. The company’s new Haynesville assets are seeing a huge investment and will likely overtake the Marcellus at some point.
Read More “Chesapeake 1Q: $764M Net Loss, $532M FCF, 13 Rigs Drilled 41 Wells”
Kimmeridge, a so-called “activist investment firm” that focuses on pressuring oil and gas exploration and production companies, told Reuters on Wednesday it has built a “stake” in Chesapeake Energy and has “started talks with the management team on changes to boost its value.” How much of a stake? A piddly 1.6% of outstanding shares. Hey Kimmeridge–go suck renewable wind.
Diversified Energy CEO Rusty Hutson and his wife Kimberly Hutson, both natives of West Virginia, recently donated $1.8 million to West Virginia University to help fund an experiential learning program, a nursing initiative, and neuroscience care at the university. We have chronicled a number of generous donations by Marcellus/Utica companies and their foundations. However, this has to be the single largest donation by an individual connected to the industry that we’ve seen, to date.
Pin Oak Energy Partners, a relatively young Marcellus/Utica driller based in Akron, OH (privately owned), has hired Detring Energy Advisors to market some of the company’s Utica Shale assets. The assets include 22,000 acres in Harrison and Tuscarawas counties, Ohio. According to the company’s website, Pin Oak owns some 317,000 net acres with some 207,000 “net deep acres” with Utica/Point Pleasant and Marcellus potential. Pin Oak owns and operates over 3,300 producing wells–most of them conventional, some shale.
Last week Pennsylvania issued 16 new shale well permits. EQT led the way with ten permits, all of them for wells in Greene County. You just HAVE to read the names of the wells (below). After getting skunked for two weeks in a row, Ohio finally issued permits once again last week–ten of them. Ascent Resources scored six permits, mostly in Belmont County. Encino Energy had four permits, all in Carroll County. Finally, West Virginia had nine permits. Antero Resources scored seven of the nine (six in Wetzel County), and Southwestern took the remaining two permits (both in Marshall County).
Coterra Energy, the new name for the merged Cabot Oil & Gas and Cimarex Energy, issued its first quarter 2022 update yesterday. Like other large Marcellus/Utica drillers, Coterra lost a bunch of money on derivatives (bad bets on the future price of oil and gas). However, unlike other large M-U drillers, Coterra still made money in 1Q22–a LOT of money. The company made $608 million in 1Q22 vs. making $126 million in 1Q21–nearly 5X as much. How? The price of natgas nearly doubled over the past year, that’s how. Coterra generated a massive $961 million in free cash flow, returning most of it to shareholders via dividends ($0.60 per share) and stock buybacks.
There’s no question that Southwestern Energy, a pure-play Marcellus/Utica driller as recently as last year, is now giving more love to the Haynesville Shale in Lousiana than to the M-U. In 1Q22 Southwestern spent 57% of its $544 million in capital expenditures on drilling in the Haynesville, versus spending 43% of capex on M-U drilling. During 1Q, Southwestern brought 21 Haynesville wells online to sales, and only 11 Marcellus wells online to sales.
An article in the Pittsburgh Post-Gazette highlights and focuses on the financial performance for four of the Marcellus/Utica’s largest publicly-traded companies, including EQT Corp., Antero Resources, Range Resources, and CNX Resources, during first quarter 2022. Even though the price natural gas is fetching is higher than it’s been in 14 years, M-U drillers are losing money. Why? Hedges and derivatives–bad bets on where the price of gas would go and locking in prices much lower than what the market currently supports.
Banpu is Thailand’s largest coal mining company. But Banpu is far more than just a coal company. It has multiple subsidiaries in various energy industries scattered around the globe. For example, here in the U.S. Banpu partners with Kalnin Ventures and operates BKV Corporation (Banpu Kalnin Ventures), the American shale drilling arm of Banpu. Reuters is reporting rumors that BKV has begun preparations for an initial public offering (IPO). Reuters is almost always right about these things.
Yesterday EQT Corporation released its first quarter 2022 update and held a conference call with analysts. The big news came from CEO Toby Rice, who said in his opening remarks, “We are currently in discussions with LNG end-users across various geographies and are contemplating equity investment opportunities in LNG export facilities.” Later in the call, in response to a question, Rice added, “Our ultimate prize that we’re looking for here at EQT is to get exposure to international markets…One of the ways that we get more flexibility towards accessing those contracts is to take an investment in the LNG facility itself.”
Antero Resources, one of the largest drillers in the Marcellus/Utica (with major assets in West Virginia) issued its first quarter 2022 update yesterday. We’ve often marveled at Antero’s ability to make money on its natural gas and NGLs with hedging–preselling gas and NGLs at prices that beat whatever the current market price is at the time (see 
CNX Resources issued its first quarter 2022 update yesterday, and boy what an update! CEO Nick DeIuliis took direct aim at leftist anti-fossil fuel policies that are harming the human race. He spared no words! Policies including PA Gov. Tom Wolf’s RGGI carbon tax and the so-called Paris Climate Accord came in for a round of attacks by Nick. Love it! But what about the company’s performance in 1Q22? How did CNX fare financially and operationally?
Nicor Gas, a local distribution company (LDC), otherwise known as a natural gas utility company, is headquartered in Naperville, Illinois–a suburb of Chicago. Nicor Gas is the largest natural gas distribution company in Illinois, serving more than two million customers in a service territory that encompasses most of the northern third of Illinois, excluding the city of Chicago. Two days ago Nicor announced it had signed a deal with ENGIE Energy Marketing NA to buy “responsibly sourced” natural gas for its customers.
In 2018, CNX Resources announced it had signed a long-term contract with Evolution Well Services to use Evolution’s 100% natural gas-fueled electric pressure pumping equipment (see