EQT Lowers Pipeline Costs via New Deals, Eyes Export Opportunities
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.
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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.
A few weeks ago MDN tackled the question of why natural gas producers, in general, are not drilling more given the high price of natural gas right now (see 
Equitrans Midstream, owner of the 303-mile Mountain Valley Pipeline (MVP) and a related gathering pipeline called Hammerhead designed to feed 1.6 Bcf/d (billion cubic feet per day) of Marcellus/Utica gas into MVP, says an arbitration panel ruled in its favor in a dispute with EQT Corp. over the delayed startup of Hammerhead. According to an 8-K filing, Equitrans said the three-member arbitration panel ruled that the in-service delay beyond October 1, 2020, for Hammerhead was caused by a force majeure, so EQT has no early termination right under the Hammerhead gathering agreement or related right to purchase the Hammerhead project.
Last week Pennsylvania issued 21 permits to drill new shale wells. Most of the permits went to two well pads, one in Butler County drilled by PennEnergy Resources and the other in Tioga County drilled by Repsol. Ohio issued six new permits, three to Encino Energy, two to Utica Resource Operating, and one to Ascent Resources. West Virginia, for the second week in a row, issued just one new permit. Last week’s WV permit went to Tug Hill Operating in Marshall County.
In early June Southwestern Energy Company announced it would no longer be a pureplay Marcellus/Utica driller. Southwestern said it was buying Indigo Natural Resources, which drills for natural gas in the Louisana Haynesville Shale (see 
A leftist anti-fossil group calling itself Protect PT, in Penn Township (Westmoreland County), PA, backed with big money from Big Green groups, has for years challenged Penn Township ordinances that allow Apex Energy and Huntley & Huntley (now Olympus Energy) to drill and operate shale wells. Protect PT finally struck out legally at the Pennsylvania Supreme Court in May 2020 (see 
Last week America’s Rural Energy Coalition (AREC), a national organization created by rural community stakeholders and industry representatives from across the country to build sustainable rural communities by maximizing the opportunities and minimizing the challenges presented to them as a result of the development of their regional energy resources, held a regional meeting in Bradford County, PA. While AREC advocates for safe development of all forms of energy in rural America, front and center at last week’s meeting was the mighty Marcellus Shale and the critical role of oil and natural gas in the lives of every citizen on planet earth (and to the people of PA).
For years Chesapeake Energy has been the stepchild of the oil and gas investment world. Former CEO Aubrey McClendon, who founded Chesapeake as a natural gas-focused driller, larded the company up with debt–there’s no denying that. But then McClendon’s successor, Doug Lawler, compounded the problem (made it fatal) by attempting to convert the company into an oil company by purchasing an oil driller in the Eagle Ford for $4 billion in 2018 (see 
The Gas and Oil Association of West Virginia (GO-WV) released a new report yesterday called “Gas Facts” (full copy below). The report chronicles the impact oil and gas has had on the Mountain State over the past five years. According to Charlie Burd, GO-WV executive director, “Natural gas is the state’s top-paying sector, supporting more than 82,000 jobs and contributing roughly $5.2 billion in wages each year. Clean, abundant natural gas will continue to drive economic growth and opportunities for generations of West Virginians.” It’s an interesting report. One thing in the report caught our eye immediately: Two “top 10” lists for gas and oil production. We’re suckers for a good top 10 list…
ExxonMobil, which has a sizable presence in the Marcellus/Utica via subsidiary XTO Energy, has a rapidly growing cancer from within–it’s called the Exxon board of directors. Yes, the board of directors can and does change an entire company’s culture and future. In May, Big Green pushed and pressured and pouted and demanded–and finally won the right to appoint three of Exxon’s board members. A real tragedy. Those three members along with two other new board members are forcing the company to push for a carbon tax and abandon huge international projects that would make the company money for years to come. This is how the left defeats their opponents–eating them alive from within.
Yesterday we told you about a recent bankruptcy hearing for Pennsylvania shale driller Rockdale Marcellus, a hearing in which UGI Energy Services sought to gain access to details about Rockdale’s assets that are now up for sale (see