M-U Driller’s Stock Prices a Mixed Bag Over Past 12 Months
One of the criticisms often leveled against the shale industry is that shale drillers have destroyed shareholder value (the price of company stock) over the past decade or so (see Marcellus/Utica Drillers’ Stock Prices Near/At Historic Lows). The criticism is not without merit. In a talk at an industry event in 2019, former EQT CEO Steve Schlotterbeck displayed a chart showing the change in stock price for eight large M-U drillers. Five of the eight had seen their share prices decrease by an astonishing 85% ore more from 2008 to 2019 (see Former EQT CEO: Shale Revolution a “Disaster” for Investors). Today we offer an update on the share price/value destruction issue. How have large M-U drillers done, with respect to share price, over the past 12 months?
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It seems that EQT is a trendsetter. In January EQT announced it would partner with a Denver, CO company calling itself “Project Canary” to run a test on two of its shale gas pads, to prove the natural gas produces is “certified responsibly sourced.” A few weeks ago Chesapeake Energy said it would also use Project Canary (see 
Range Resources, the very first driller to sink a Marcellus well (back in 2004), released its first-quarter 2021 update and held a conference yesterday to review the numbers. The company reports the highest average premium (above benchmark) it has ever received for a barrel of natural gas liquids (NGLs) in Q1. Pricing was an average $26.35 a barrel for NGLs, up $8.33 a barrel compared to 4Q20 and up from $14.87 a barrel in 1Q20. However, the company reports a drop in income, down 84% from 1Q20. Fortunately, Range still made money in 1Q21–$27 million of income based on $193 million in cash flow.
Here’s a new truism of life you may not have heard before: Be careful that the corporation you climb into bed with actually has a spine. Interestingly, U.S. Steel in East Pittsburgh, whom you would assume has a steel spine, doesn’t have a spine at all! Merrion Oil & Gas found that out the hard way. Merrion, a privately-owned oil and gas company headquartered in New Mexico, signed a lease with U.S. Steel to drill a series of up to 18 shale wells on the Edgar Thomson Works property in Allegheny County. Following blowback from loud-mouth anti-fossil fuel nutters, U.S. Steel decided the project isn’t worth the negative press. So they caved and canceled the lease with Merrion. Shame on U.S. Steel.
The issue of expired leases has once again reared its head for EQT–this time in West Virginia. In 2006 a group of WV landowners/rights owners sued Equitable Production Company (now EQT) claiming, among other things, “damages for improper deductions of post-production expenses from their royalty payments and damages for breach of lease agreements, breach of fiduciary duty, fraud, violation of the West Virginia Consumer Credit and Protection Act…violation of the flat rate royalty statute… and punitive damages, all related to the improper payment of royalties.” That case was settled in 2010. However, a subgroup within the larger class action group has a new/different claim: that EQT let leases lapse and then reentered and drilled on property out-of-lease. It’s called trespass.
Cabot Oil & Gas hosts a series of in-person and virtual events called Think About Energy (TAE). Since the pandemic, the events have been all virtual (webinars). Earlier this week another virtual TAE event was hosted by Cabot executive director of public relations (and MDN friend), George Stark. George had an interesting discussion with Congressman Fred Keller, Republican from Synder County, PA, and U.S. House Whip Steve Scalise, Republican from Louisiana. The topic? American energy independence and the importance of shale energy to our country’s future.
Analysts with S&P Global Market Intelligence say that shale gas drillers in the Marcellus/Utica region have finally learned their lesson and are sticking to their promise to keep capital spending restrained this year–even with an increase in the price of gas. Both spending and rig counts are predicted to stay low this year as drillers work on boosting free cash flow and improving company share price.
EQT Corporation, the nation’s largest natural gas producer (focused 100% on the Marcellus/Utica), held its annual meeting yesterday. This meeting had a lot less drama than the meeting in 2019, just two years ago, when brothers Toby and Derek Rice successfully took over the company (see 
All three M-U states received permits to drill new shale wells last week. Pennsylvania received a whopping 17 new permits spread across various counties and drillers. Ohio received just 2 new permits last week, both for Ascent Resources on the same pad. And West Virginia received a big 12 new permits split between two drillers: Antero Resources and Tug Hill Operating.
American Energy Partners, Inc. (AEPT), based in Allentown, PA, is a small but diversified company. They have their fingers in a number of different oil and gas pies, including subsidies in drilling, remediation, water, valuation services, and education. AEPT announced a new deal today to purchase three conventional oil and gas operators with assets in Western Pennsylvania and West Virginia for $10.8 million. The three operators (unnamed) come with a collective 467 conventional wells and 1,250 MMcfe/d of natural gas production.
The experts at RBN Energy have, for the past five years, closely tracked the spending and production of a representative collection of 39 major public E&P (exploration & production) companies. RBN splits the companies tracked into three groups: Oil-Weighted E&Ps, Diversified E&Ps, and Gas-Weighted E&Ps. In a recent post, RBN reveals what those 39 companies have announced they will spend, and produce, in 2021. For eight of the nine gas-weighted E&Ps that produce gas in the Marcellus/Utica, the numbers show drillers will spend 15% less this year, but overall will produce 2% more natural gas than they did last year.
Who are the biggest natural gas sellers in the U.S.? You might be surprised to learn that the biggest *sellers* are not necessarily the biggest *producers* of natural gas. Oh, you might recognize some of the names of the top sellers (BP, Shell, ConocoPhillips). But others might be more of a mystery (Macquarie, Tenaska, Sequent, and J. Aron & Co.). Would it surprise you to learn that BP (i.e. British Petroleum) is the #1 seller of natural gas in the U.S. and has been for many years?
Is there something weird in the water over at EQT headquarters? Yesterday the company issued a statement supporting the draconian, over-the-top federal methane emissions rule implemented under Lord Obama that goes way beyond reasonable when it comes to trapping every last molecule of methane (extremely costly with no real benefit to the environment). President Trump wisely rescinded the Obama rule two months after taking office, back in 2017 (see 
We hate reporting these kinds of stories because of the pain and suffering experienced by the family involved, but report it we must. A contract worker (46-year-old man) who was working at a Cabot Oil & Gas well pad off Hoag Hill Road in Rush Twp. (Susquehanna County, PA) around midnight Tuesday was injured at the pad and rushed to the hospital in Montrose, PA. He later died at the hospital.