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Weekly Shale Drilling Permits for PA, OH, WV: Jul 12-18
New permit activity once again picked up last week after the previous week showed a paltry number of permits. In Pennsylvania 10 new permits were issued, all but one of them in the northeastern dry gas area of the state. In Ohio 4 new permits were issued, all of them for the same driller on the same well pad. And in West Virginia, 7 new permits were issued. One of the permits appears to be issued to a private landowner drilling his own shale well! And in another oddity, four WV permits were issued to a midstream company.
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According to an analysis done by S&P Global Market Intelligence, the five largest drillers in the Pennsylvania Marcellus Shale resumed their drilling in June in a big way. S&P’s analysis shows those five drillers were responsible for 51% of the new drilling permits issued last month, up from 28% of new permits issued in May. Perhaps we know why. The price of natgas at regional hubs in PA rocketed over the past month. At the Leidy Hub in the northeast’s dry gas window (centered on Susquehanna County, PA), cash prices went from a low of 93.7 cents/MMBtu on May 3 to $3.07/MMBtu at the end of June.
“I’m greener than you!” … “No, I’M greener than YOU!!” So we imagine the backroom squabbling that’s going on among Marcellus/Utica drillers as we watch companies engage in a form of brinksmanship for how clean and green their natural gas is versus a competitor’s. EQT announced that in addition to the myriad of environmental programs they already belong to, they’ve joined a United Nations program to further prove their commitment to reduce global warming (see today’s related post). Not to be outdone, Southwestern Energy stepped up its commitment to a program it first joined in 2018 to certify some of its production as responsibly developed. Now ALL of Southwestern’s M-U gas will get the TrustWell certification.
Each quarter NGI (Natural Gas Intelligence) runs the numbers and publishes a list of the 25 top natural gas marketers in the U.S. These are not necessarily the top 25 producers of natural gas (although in some cases they are), but the top 25 sellers (vendors, jobbers) of natural gas. NGI’s latest quarterly report shows overall the biggest sellers of natgas “lost ground” once again in 1Q21, which continues a two-year trend of year over year declines in the amount of gas sold.
On Joe Biden’s first day occupying the White House, he signed an Executive Order (EO) suspending new oil and gas leasing on all federal while the Interior Department reviews existing leases and permitting practices for 60 days (see 
Analysts at S&P Global Platts continue to track the performance of some of the country’s biggest shale gas drillers (most of them located in the Marcellus/Utica). S&P tracks production, spending, and the performance of their stock price. The price of natural gas has gone up over the past three months and along with it, the stock price for most (not all) shale gas drillers. For example, the share price for Range Resources has soared, gaining 42% in value over the last 90 days.
So-called ESG (environmental, social, governance) programs are popping up everywhere–kind of like spring dandelions. Especially programs aimed at the E (environmental) part of that acronym. EQT Corporation, the country’s largest natural gas producer (focused 100% on the Marcellus/Utica) has recently gotten the ESG religion. EQT has joined (by our count) no less than four ESG programs this year. The latest is a program sponsored by LNG export king Cheniere Energy, aimed at monitoring and cutting down on methane emissions at drill sites. Two other M-U drillers are joining the Cheniere effort too.
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 
Southwestern Energy, a pure-play Marcellus/Utica driller with 786,000 net acres and operations in all three M-U states (concentrates on drilling in WV and northeastern PA) issued its first-quarter 2021 update last Friday. The company made $80 million in net income during 1Q21, versus losing $1.5 billion in 1Q20. Southwestern produced 3 billion cubic feet equivalent per day (Bcfe/d) during 1Q21, of which 2.4 Bcf/d was gas and the rest (103,000 barrels per day) was liquids.
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