Southwestern Energy 3Q16: Still in Red, but Trims Loss by Half
Southwestern Energy issued its third quarter 2016 update yesterday. The good news is that the company continued to drill in 3Q16 in the Marcellus, and was able to lower their losses. Southwestern is still in the red, losing $735 million in 3Q16. But that’s down from losing $1.8 billion in 3Q15–so they cut their losses by more than half. Still, you can’t be in the red forever. The average price Southwestern received for natural gas in 3Q16 was $1.73 per thousand cubic feet (Mcf), down from the $2.21/Mcf they averaged in 3Q15. In northeast PA Southwestern drilled 18 new wells in 3Q16, completing 9 of them. However, production in NEPA was down, from 93 billion cubic feet (Bcf) in 3Q15 to 84 Bcf in 3Q16. In Southwestern’s southwest PA/WV area they drilled 4 new wells and completed 8 wells. Production in that region stayed even at 37 Bcf/d. The company said they expect to exit 2016 with 85 drilled but uncompleted wells (DUCs). Here’s the update issued yesterday…
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We can’t say enough good things about Rusty Braziel and 
There’s certainly more than one way to make money on fracking in the Marcellus/Utica. Billionaire hedge fund manager David Tepper (Appaloosa Management) has found such a way. Tepper knows a good company, or four, when he sees them. In the fourth quarter of 2015, when Marcellus/Utica company stocks were at one of their lowest points, Tepper loaded up, buying stock in four leading northeast drillers. Half a year later he turned around and sold that stock, for a 100%+ return on his investment. He doubled his money. Smart man. Which drillers’ stocks did Tepper buy and then sell?…
The answer to the question posed in the headline of this article, asking where drillers are starting to drill again now that they are starting to drill again, is–it depends on the driller. There is no particular geography in the Marcellus/Utica, nor is there a preference for a given layer (Marcellus or Utica) across the major players. Each of them is following their own strategy. Here’s a rundown for several major players and their strategies…
As you have no doubt noticed, we are in the midst of quarterly reports season. Public companies (those with stocks) must file quarterly financial reports with the Securities and Exchange Commission. Along with those filings comes a version of the same news constructed for consumption by investors and the general public. The overall “feel” of reports coming from most Marcellus/Utica drillers has been upbeat. The obvious trend is that the big drillers–EQT, Cabot, Southwestern, others–plan to drill more wells in 2Q16 than originally forecast. However, given the recent severe downturn, most drillers are sounding notes of caution as a balance to the good news that more drilling is on the way. Perhaps “cautiously optimistic” is the best way to put it…
Yesterday Antero Resources, one of the largest Marcellus/Utica drillers, issued an operations (not financial) update for second quarter 2016. The big news in the update is that they’ve picked up another 13,000 net Marcellus acres, and with it 3 million cubic feet per day of production, for $108 million. This is related to Antero’s purchase of 55,000 acres from Southwestern that we reported in June (see 
Antero Resources announced yesterday that the company has just cut a deal with Southwestern Energy to purchase 55,000 net acres located in Wetzel, Tyler and Doddridge Counties in West Virginia for $450 million. Antero says the acreage is in the “core” of the Marcellus and some 75% of the acreage also includes Utica Shale rights. The acreage Southwestern is selling is acreage they themselves bought in 2014 from Chesapeake Energy. Chessy originally signed the acreage with landowners for $5 per acre (peanuts). Southwestern paid Chesapeake $12,000 per acre (see 