ECA Marcellus Trust I Gives Investors 7.6 Cents per Unit in 3Q21
ECA Marcellus Trust I, traded over-the-counter on the pink sheets, canceled distributions (dividends) to investors for the first three quarters of 2020 due to the pandemic and the crash in oil and gas prices. The company restarted paying dividends in 4Q20–a grand total of 9/10ths of one penny per unit (see ECA Marcellus Trust I Gives Investors <1 Penny per Unit in 4Q20). In 1Q21 ECA increased its distribution to 3.1 cents per unit (see ECA Marcellus Trust I Gives Investors 3.1 Cents per Unit in 1Q21). In 2Q21, ECA decreased the payout again, down to 2.8 cents per unit (see ECA Marcellus Trust I Gives Investors 2.8 Cents per Unit in 2Q21). However, in 3Q21 ECA hiked the quarterly dividend all the way to 7.6 cents per unit!
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Nearly two weeks ago MDN brought you the news that Southwestern Energy was in talks to buy a second (for them) Haynesville driller, GeoSouthern, for $1.7 billion (see 
While yesterday’s news that Southwestern Energy has brokered a deal to purchase a second Haynesville driller (see today’s lead story), Southwestern also issued its third quarter update yesterday. Let’s not overlook that important news! While Southwestern’s natural gas production continues to increase due to acquisitions, the big news (for us) is the drubbing the company took on hedges/derivatives. Southwestern lost $2 BILLION on bad hedges, leading to a quarterly net loss for shareholders of $1.86 billion. The company reported total production of 310 Bcfe (billion cubic feet), averaging 3.4 Bcfe per day.
Chesapeake Energy released its third quarter update yesterday. The company has newfound energy (pun intended) since emerging from bankruptcy earlier this year and ejecting most (but not all) of its top management along with an entire refresh of the board. The company reports a net loss of $345 million during 3Q21, which is better than the $745 million net loss in 3Q20. There’s no one big reason for the loss. Revenues were down a bit ($890 million in 3Q21 vs. $960 million the year before), marketing costs were up a bit ($625 million vs. $450 million), etc. The financial loss didn’t phase investors as the stock price popped up by 3.3% from the day before.
Coterra Energy, the new name for the two merged companies that were Cabot Oil & Gas and Cimarex Energy (a Permian driller), issued its third quarter update yesterday. Cabot has been and remains one of our favorite Marcellus/Utica drillers. According to Tom Jorden, CEO of Cimarex and now CEO of the combined company, the integration of the two companies is “well underway” and has been “a full court press” since May. In the aggregate, Coterra brought 61 wells online during 3Q and plans to operate seven rigs and four completion crews during 4Q. Five of the rigs are in the Delaware Basin (in the Texas Permian), and two of the rigs are in Susquehanna County in northeast Pennsylvania. What about details for Marcellus operations during 3Q?
Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), emerged from bankruptcy in May with a new board and new top management. The company issued its third quarter update yesterday. Unfortunately, the company got hosed on hedges, losing $622 million during 3Q21 on hedges which resulted in an overall loss of $463 million for the quarter. The company produced 973 MMcf/d (million cubic feet per day) during 3Q21, down slightly from an average 992 MMcf/d a year ago. That production is across both shale plays where Gulfport drills: the Ohio Utica and Oklahoma SCOOP.
It was a pretty paltry week for new shale drilling permits in the Marcellus/Utica. Two weeks ago Pennsylvania issued 21 permits to drill new shale wells. They must have shot their wad because last week PA issued just two new permits–the lowest number in PA we’ve seen in…we can’t remember how long. Ohio issued no new permits for Utica drilling last week…zero…goose egg. Only West Virginia held out some promise, issuing seven new permits for shale drilling last week.
Last week MDN told you the news that EQT Corporation has sold part of its reserve capacity along the Mountain Valley Pipeline (MVP) to “an undisclosed investment-grade entity for six years” (see 
EQT, the country’s largest natural gas producer, issued its third quarter update yesterday. There was a LOT of news in the update. Where to start? Three important things to note from yesterday’s update: (1) EQT blew it on hedges, losing $2 billion during 3Q21 compared with losing $600 million in 3Q20. (2) CEO Toby Rice says the company is done, for now, with expanding by buying other companies. No more mergers and acquisitions. (3) EQT produced a whopping 495 Bcfe (billion cubic feet equivalent) during 3Q21, up 35% from the same period last year. That works out to be 5.5 Bcfe per day.
Although three major Marcellus/Utica drillers provided third quarter updates yesterday, we only cover EQT’s update in today’s lineup of stories. Come back Monday for details from both Antero Resources and CNX Resources. S&P Global Platts reviewed all three updates from yesterday and noticed a difference in how each of the three companies is approaching hedging, or preselling production for a specific price up to a year or more in advance. According to S&P, regaining investment-grade ratings for company stock was a stated goal by executives at all three companies during their 3Q earnings calls. They all aim to maximize free cash flows and paying down debt. Hedging programs were touted as the pathway to accomplish these balance-sheet goals.
Chesapeake Energy, which has gone through a transformation since declaring bankruptcy earlier this year, announced yesterday it has selected oilfield services (OFS) company Nabors Industries as its preferred drilling contractor across all of the company’s shale oil and natural gas assets moving forward. Nabors is Chessy’s new dancing partner. What’s that? Who is Nabors?
It’s splitsville for EQT and Equitrans Midstream, the midstream company that was once part of EQT. In releasing details about third quarter performance, EQT announced yesterday it has sold nearly half of its contracted capacity with Equitrans for the Mountain Valley Pipeline (MVP). MVP, when it goes online next year, will ship gas south. It seems EQT is looking West. In the same announcement yesterday, EQT said it has signed a new contract with the Rockies Express (REX) pipeline to ship even more of its gas to markets in the Midwest.
For a variety of reasons, but mainly due to investor pressure, Range Resources will continue to produce about the same amount of natural gas next year as it is forecast to produce this year: right around 2.1-2.2 Bcfe/d (billion cubic feet equivalent of production every day). That was the takeaway from yesterday’s Range 3Q21 update. The company’s hedges (presales of production at a specific price) hurt the company’s finances. During Q3 Range had a $652 million derivative fair value loss due to increases in commodity prices. Range’s 3Q loss totaled $350 million vs. a $749 million loss in the same period last year–at least it’s an improvement.