ECA Marcellus Trust I Gives Investors 2.8 Cents per Unit in 2Q21
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). Last quarter, 2Q21, ECA decreased the payout again, down to 2.8 cents per unit.
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Last week only Pennsylvania issued permits to drill new shale wells. Both Ohio and West Virginia issued no new drilling permits. Summer doldrums? Some 8 of the 11 permits issued in PA were to Seneca Resources, all of them in Elk County, and 7 of the 8 were for the same well pad. The other 3 permits were issued to EQT in three different counties.
Last Friday National Fuel Gas Company (NFG), the parent company for Seneca Resources and Empire Pipeline, issued its latest quarterly update for the quarter ending June 30 (NFG’s third fiscal quarter, everyone else’s second quarter). The exciting news from the update is that with two pipeline projects getting completed this year, Seneca Resources is ramping up its Marcellus/Utica drilling program to take advantage of selling more gas at higher prices.
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 (see 
Northeast Pennsylvania high schoolers are getting a look at what a career in the shale energy field looks like. The Susquehanna County Career and Technology Center in Dimock, in cooperation with Cabot Oil & Gas, is hosting its annual week-long Energy and Oilfield Career Experience summer camp. Susquehanna County, the only county where Cabot drills, is the #1 producer of natural gas in PA. Has been for years.
Privately-owned Penn Production Group, LLC, which concentrates on exploration and production for oil and gas in western Pennsylvania, closed on the purchase of certain assets owned by Greylock Energy in Clearfield County, PA on July 30. The assets include 20 miles of pipeline (called Mid Stream) that feeds the gas-fired Shawville GenOn Generating Station and the Dominion pipeline.
Cabot Oil & Gas announced on Friday as part of its second quarter 2021 update the company will *increase* production during the second half of this year. Cabot CEO Dan Dinges said because the Williams Leidy South Expansion Project will be fully online in 4Q and because the gas price outlook this winter is strong, the company plans to increase production by 4% in 3Q, and by a full 10% in 4Q. Finally! Somebody willing to drill more and produce more and make a profit doing it.
Southwestern Energy issued its second quarter 2021 update last Friday. Southwestern produced 276 billion cubic feet equivalent (Bcfe) during 2Q, up from 201 Bcfe in 2Q20 (before it acquired Montage Resources). That works out to be 3.0 Bcf/d, of which 79% (2.4 Bcf/d) was natural gas and the rest was liquids (NGLs). Like EQT, Antero, and other major M-U drillers, Southwestern blew it on “unsettled derivatives” during the quarter. The company posted a $608 million loss for the quarter overall, losing $772 million on derivatives.
Yesterday EQT, the largest natural gas producer in the U.S., issued its second quarter 2021 update. There’s a lot to unpack. While the company produced 4.7 Bcfe/d of natural gas and liquids in 2Q and $155 million in free cash flow, the company lost $936 million during 2Q21 versus losing just $263 million in 2Q20. The loss came from a bet on derivatives gone bad that cost the company $1.3 billion. Oops. There was plenty of talk about “sustainable shale” and ESG efforts. CEO Toby Rice touted the recent successful acquisition of Alta Resources, which closed on July 21.
Antero Resources, which drills almost exclusively in the West Virginia Marcellus/Utica, issued its second quarter 2021 update yesterday. Antero is the third-largest natural gas producer in the U.S. and the second-largest NGL producer. Big company. Important company. Antero is one of the best hedgers (preselling production at a set price) in the business. However, like EQT (see today’s lead story), Antero fumbled with a derivatives bet in 2Q and ended up posting a $523 million loss for 2Q21, versus losing $463 million in 2Q20. On the positive side, Antero generated $105 million in free cash flow during 2Q21.
As they have done in the past few quarters, CNX Resources again issued a quarterly update without an accompanying summary/overview. We have the raw numbers (below), and we have excerpts from the conference call with analysts. One observation from the numbers: It seems major M-U drillers collectively went over the derivatives cliff in 2Q21. CNX, like Antero and EQT (see those stories in today’s update) posted a 2Q loss of $354 million based on a derivatives loss of $539 million. The company did manage to generate free cash flow of $117 million and pay down another $89 million in debt.
Seneca Resources, the drilling arm of utility giant National Fuel Gas Company, is conducting its first experiment with electric fracking. We’re aware of at least three other Marcellus/Utica drillers that currently use electric fracking: Range Resources, CNX Resources, and Olympus Energy (former Huntley & Huntley). Seneca, like Range, will use U.S. Well Services to provide e-fracking. Seneca is conducting a field trial for a 6-well pad in Lycoming County, PA.