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Weekly Shale Drilling Permits for PA, OH, WV: Jun 14-20
Two of three Marcellus/Utica states received permits to drill new shale wells last week, and boy did they open the floodgates! Pennsylvania issued 30 new permits, the majority of which are located on three well pads operated by EQT, Chesapeake Energy, and Range Resources. Ohio issued no new permits. After getting skunked for two weeks in a row, West Virginia issued 16 new permits–to just two drillers: Antero Resources and EQT. All of the WV permits were issued in the same county.
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As temperatures rise across the U.S. and Americans flip on air conditioning which makes a big draw on the electric grid, stocks of natural gas in storage are decreasing. Natgas is used to generate electricity. When there’s less supply to meet existing or growing demand, economics 101 tells us the price of the good or service (in this case natural gas) goes up. And indeed that’s exactly what’s happening. As the price of natgas increases, so too does the share price for M-U drillers.
Range Resources has joined the bandwagon of Marcellus/Utica drillers paying homage to ESG (environmental, social, governance) concerns by pimple-faced Millennial investors who demand all companies, even oil and gas companies, bow down to the global warming gods. Range announced its board of directors has formed an ESG and Safety Committee, and that the company has enrolled in the same program several other M-U drillers have joined called Project Canary.
RBN Energy is a fountain of great information about the oil and gas sector. Headed by industry icon Rusty Braziel, RBN tracks and reports on a number of O&G companies. One of the best features of their information service is tracking the performance of three groups of publicly-traded O&G companies: Oil-Weighted E&Ps, Diversified E&Ps, and Gas-Weighted E&Ps. That last group, the gas-focused companies, is a list of 10 E&Ps. Only two of the ten don’t have any operations in the Marcellus/Utica–all the rest do. RBN has just published a post about the financial performance in 1Q21 for all three groups. The numbers are very encouraging.
NGL (natural gas liquid) revenues for U.S. drillers soared in the first quarter of 2021–up 100% (i.e. doubled) over the same quarter in 2020, which was the quarter when COVID-19 began to seep into the public consciousness. In particular international demand for U.S. liquefied petroleum gas (LPG, or propane) helped propel NGL revenues higher in 1Q21. Guess which company posted the highest year-over-year increases for both NGL prices and revenues?
M&A, or mergers & acquisitions, is on everyone’s mind in the oil and gas industry. Particularly in the Marcellus/Utica region. EQT, under the leadership of Toby Rice, already the largest natural gas producer in the country, has been on the prowl. In the past eight months EQT has picked up all of Chevron’s M-U assets (see 
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 
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.
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.
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.
The data crunchers at the Pittsburgh Business Times have been sifting through the data for 2020 and have composed a list of the “