EQT Stock Falls 46% in One Day, but Investors Didn’t Lose 46%
Normally if a company’s stock falls upward of 50% in a single day, it indicates a catastrophe has happened. Bad news of biblical proportions. But such is not the case with EQT, the country’s largest natural gas producing company. EQT’s stock closed at $34.64 per share on Monday. By the end of Tuesday, it was $18.56, down 46.4%. Why? Because the company split in two, with EQT Corporation retaining all of the drilling assets, and a new company, Equitrans Midstream Corp., taking off with all of the midstream (pipeline) assets.
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It’s been five years in the making, but finally a class action lawsuit that began in 2013, on behalf of 10,000 West Virginia landowners and royalty rights owners against EQT’s practice of deducting post-production expenses from royalty payments, will finally get its day in court in two weeks. That’s what we learn from an extended article published by ProPublica and the Charleston Gazette-Mail on the topic of WV drillers and their practice of “whittling away payments” from rights owners. Just over a month ago MDN told you about an elderly WV couple who won their private lawsuit against EQT on the same matter (see 
As of today, EQT Midstream, a division of EQT (the driller), is no more. In its place is Equitrans Midstream Corporation–a completely new, standalone company that is no longer tied to, nor a part of, EQT. The changeover happened at 11:59 pm Eastern time last night. Today is the first full day of a new era for EQT and its former midstream division. Thomas F. Karam is president and chief executive officer of the new Equitrans Midstream. What led to the split between EQT (the driller) and EQT (the midstream company)? We’ll explain.
We’re not much of a fan of the federal Environmental Protection Agency–especially the agency under the jackboots of the Obamadroids. The Obama years saw egregious abuses and wild new regulations that tried to stamp out the fossil fuel industry. In March 2016, we told you about a new “voluntary” program set up by the Obama EPA called the Natural Gas STAR Methane Challenge Program (see 
The last time we checked in (June) on a brewing frack ban in Penn Township (Westmoreland County), PA, a challenge to a local ordinance which allows Apex Energy and Huntley & Huntley to drill and operate wells rested with a county judge. Things have since rapidly progressed. We’re guessing the local judge ruled in favor of allowing the wells to be drilled because the case was appealed to PA Commonwealth Court. Late last week the judges in Commonwealth Court issued a ruling in favor of Penn Township’s “special exception” permits awarded to Apex Energy, allowing them to drill shale wells.
The deal is done. On Monday, Encino Acquisition Partners completed its purchase of all of Chesapeake Energy’s Ohio Utica Shale assets for $2 billion, originally announced in July (see 
Last week National Fuel Gas Company (NFG), which operates drilling subsidiary Seneca Resources and pipeline subsidiary Empire Pipeline, issued its fourth quarter 2018 (everyone else’s 3Q18) update. Via Seneca Resources, NFG drills wells in northcentral and northwestern PA. Via Empire Pipeline, they build and maintain hundreds of miles of pipelines in PA and New York, where the company is headquartered. NFG operates a utility (gas and electric) company in addition to Seneca and Empire. A lot of spinning plates to watch. But they do a great job. Much of the focus of the update was on the upstream–on Seneca Resources. According to CEO Ron Tanski, in 2019 more than half of the company’s capital expenditures will go for Seneca’s drilling program. Seneca has and will continue to operate three drilling rigs, with plans to expand production by 24%.
On Wednesday a man in Clarksville (Green County), PA turned on his gas stove and it exploded, catching fire to and leveling the entire house. The man, his girlfriend and young child were helicoptered to a hospital burn unit. The working theory/assumptions are (a) the man didn’t smell mercaptan, therefore the source of the gas that exploded was not from the stove or line into the house itself, and (b) because there is an EQT shale well “across the street” and a gathering pipeline that runs “next to the house,” methane “may have” migrated from the shale well to the home, or methane leaked from the gathering line into the home.
Antero Resources, one of the biggest drillers in the Marcellus/Utica, passed an important milestone last month: Producing more than 3 billion cubic feet equivalent per day (Bcfe/d) in natural gas (and related hydrocarbons). All of that production is in the Marcellus/Utica. Looking strictly at the third quarter–July through September–Antero’s production averaged 2.7 Bcfe/d (29% of it liquids), which is a 17% increase over 3Q17 and an 8% increase over 2Q18. We’re pretty sure we are on solid ground in saying the only company that produces more is EQT, with an average of 4.1 Bcfe/d in 3Q18. Watch out EQT, Antero is catching up!
Huntley & Huntley, with some 100,000 acres leased in southwestern Pennsylvania, has kicked its shale drilling program into high gear this year. Yesterday we told you that a former Range Resources veteran in charge of Range’s Marcellus drilling program has joined up with H&H (see 
CNX Resources, formerly CONSOL Energy, issued its third quarter 2018 update yesterday. The company reports producing an average of 1.3 billion cubic feet equivalent per day (Bcfe/d) of gas, NGLs and oil, up 18% from 3Q17. They made $35 million in profit, up from a loss of $41 million for the same period last year. CNX drilled 23 Marcellus/Utica wells in 3Q18 using four rigs, and brought 35 wells online. Three frac crews completed 27 wells during the quarter. The 23 wells drilled over the past three months included: 15 Marcellus wells in Greene County, PA; 3 dry Utica wells in Westmoreland County, PA; 3 dry Utica wells in Monroe County, OH; and 2 Marcellus wells in Tyler County, WV. The company expects to produce close to 500 Bcfe for all of 2018. CEO Nick DeIuliis boasts, “the team is firing on all cylinders.”
Chesapeake Energy has just blown the minds (and confidence) of investors by plunking down $4 billion in cash and stock to buy WildHorse Resource Development Corp, a driller with big-time assets in the oily Eagle Ford Shale play in Texas. Investors didn’t like the news, punishing the stock by sending it 12% lower. Chesapeake Energy today is definitely not the same company it was even five years ago. Chessy was co-founded by the flamboyant Aubrey McClendon (God rest his soul). Aubrey, a landman by profession, founded the company as a natural gas driller–building it into the largest onshore natural gas-drilling company in the U.S. Today Chessy’s focus on gas is pretty much gone. While they still drill and maintain wells in both the Marcellus (in PA) and Haynesville (in Louisiana), most of the talk in Chessy’s 3Q18 update, which was issued yesterday, was oil, oil, oil.
The man largely responsible for the huge success of Range Resources in drilling in the Marcellus Shale, Range’s former senior vice president in charge of the Marcellus, John Applegath, is heading to Huntley & Huntley to helm the drilling program there. Applegath recently retired from Range, but he’s not ready for the pasture just yet! He’s jazzed to be working with the much smaller H&H and the team they’ve assembled, to drill in the Pittsburgh area. H&H has roughly 100,000 leased acres in southwest PA.