EnCap Keeps $6B Spigot Open to Fund New Shale Drilling
EnCap Investments is a venture capital investor that funds independent companies in the U.S. oil and gas industry. EnCap has its fingers in a number of pies in the Marcellus/Utica. According to a Bloomberg article, EnCap plans to use a pile of $6 billion in cash it’s sitting on to drill new oil and natural gas wells this year. EnCap currently runs 23 drilling rigs at its various portfolio companies. Two of those companies drill in the Marcellus/Utica.
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There is one court case in Pennsylvania that we’ve been concerned about since April 2018. The Briggs v Southwestern Energy case had the power to block most new Marcellus Shale drilling in the state. The case, revolving around the oil and gas “rule of capture” principle, was appealed by Southwestern all the way to the PA Supreme Court. We are elated to report that yesterday the Supremes ruled supreme and found in favor of Southwestern–retaining the rule of capture in the Keystone State. This is seriously good news for both drillers and leased landowners. Below we explain what the rule of capture is, the background of the case, and what the Supremes said in yesterday’s important ruling.
Yesterday the U.S. Environmental Protection Agency announced it has reached a settlement with Gulfport Energy over alleged air emissions violations found at 17 well pad locations Gulfport operates in the Ohio Utica. The violations happened in 2015. The settlement includes Gulfport paying $1.7 million in fines and spending another $2 million in “improvements” to cut down on volatile organic compound (VOC) emissions at the 17 well pads.
Seneca Resources, the drilling arm of National Fuel Gas Company, does most of its exploration and production in central and western Pennsylvania (although it also does some drilling in California). A spokesman for Seneca recently went on the record to talk about the company’s prolific 2019 production, with a forecast for 2020 (production is going UP). However, the company plans to ax one of its three rigs in 2020.
On Monday EQT, the nation’s largest natural gas producer (based in Pittsburgh) filed an update with the SEC to say it would write down the value (called an impairment) for some of it’s Marcellus/Utica assets–to the tune of $1.8 billion (see 
A long-simmering dispute between the Pennsylvania Dept. of Environmental Protection (DEP) and Range Resources has once again erupted into the public over allegations that a Range well drilled in Lycoming County, PA back in 2011 is leaking methane into the surrounding ground and water supplies. The DEP has, for years, maintained faulty cement casing allows methane to leak, and Range maintains methane was already in the ground/water supply before it drilled the well. Who’s right?
In a Securities and Exchange Commission (SEC) filing made yesterday, EQT, the country’s largest natural gas producer, informed the SEC (and investors) it will likely take an impairment charge (“write down”) for the value of some of its Marcellus/Utica assets–by $1.4 to $1.8 billion. Which pales in comparison to Chevron’s write down of it’s M-U assets to the tune of $5+ billion (see 
As we reported in December, New York Attorney General Tish James and her highly-paid associates were thoroughly, completely, 100% humiliated in court when their case against Exxon Mobil accusing the company of screwing shareholders by keeping secret knowledge they are toasting Mom Earth, is itself toast (see 
Yesterday Range Resources issued its 2020 budget plan, which calls for spending $520 million to drill mainly in Range’s Marcellus assets. That figure is down from the $728 million Range spent in 2019 (a 29% decrease). What about production? Will that drop in 2020 too?
Diversified Gas & Oil owns close to 8 million acres of leases with some 60,000 (mostly) conventional oil and gas wells. Their focus has been to acquire quality production and cash flow–regardless of the well or commodity type (gas or oil). They currently have over 400 M-U shale wells in their portfolio. In November Diversified closed on a deal to raise money via securitization–meaning to issue securities (“notes”) based on the value of their gas wells (see 