Epsilon Energy Production Down, Revenues Up in 1Q21
Epsilon Energy concentrates most of its effort on the Marcellus in Susquehanna County, PA. Epsilon doesn’t typically do its own drilling. The company joint venture partners with (gives money to) other companies, like Chesapeake Energy, and the other company typically does the drilling. Epsilon issued its first-quarter update last Thursday. The company’s Marcellus net gas production averaged 27.4 million cubic feet per day (MMcf/d) in 1Q21, compared to 30.3 MMcf/d of net gas production in 1Q20 (a 10% decrease). However, revenues were up a big 31% in 1Q21 vs. 1Q20.
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We are sick and tired of the Chicken Little scaremongering that comes from so-called “independent consultants” and the reports they issue for states like Pennsylvania claiming (falsely) that average temperatures in the state are set to rise by 6 degrees Fahrenheit by 2050. It is a demonstrably false claim. Yet that’s what is now being reported as fact.
Jim Snell, Business Manager at Steamfitters Local 420 (Philadelphia area) has written a powerful editorial appearing in the Delaware Valley Journal. Snell begins his article by saying President Biden’s “build back better” proposal overlooks the backbone of America’s energy system: pipelines. Snell goes on to make an irrefutable case for how Marcellus Shale drilling in northeastern and southwestern PA benefits Philadelphia and southeastern PA.
Anecdotally it seems as though there has been less drilling activity in the Marcellus/Utica over the past year. Some say it’s due to the coronavirus pandemic. Others say there’s more to it than that. If you’ve tracked public announcements by drilling companies, they claim to have pulled back on drilling and won’t increase current levels of drilling even when/if the price of natural gas increases. Why? They must turn a profit, or investors leaving for greener pastures (pun intended). But is there really less drilling happening in the M-U today than say one year ago?
An important issue we don’t often think about is pipeline maintenance. Natural gas pipelines have to be inspected and sometimes repaired. When that happens, it takes a portion of the pipeline out of service. When pipelines are taken out of service, natural gas doesn’t have a way to get to the same markets it was flowing to, meaning it begins to pile up in the location where it’s extracted. Further meaning too much supply in a given location, which leads to lower prices. That’s what appears to be happening in northeastern Pennsylvania right now.
A new so-called study has appeared sponsored by the radicals at Heinz Endowments. It is bought-and-paid-for “research” that claims the Act 13 law passed in Pennsylvania in 2012 hasn’t done a darned thing to prevent shale wells from being drilled closer than 500 feet from houses and schools. Duke University, Harvard University, and Boston Children’s Hospital took money from Heinz and prostituted themselves, putting their names to this filthy propaganda. Heinz then instructed one of their own, StateImpact Pennsylvania (which Heinz also funds) to publish a “news story” about the study, hoping to catch the interest of leftist, lazy “reporters” (like those at Bloomberg, AP, etc.) to pick up the story and repeat it. This is how news gets manufactured in today’s world.
Cabot Oil & Gas is and has been (for years) one of the premier drillers in the Marcellus Shale. Cabot concentrates their drilling in one location in northeastern Pennsylvania: Susquehanna County. Cabot has lower costs to drill than almost any other driller. They also turn a profit year after year, unlike many other drillers. During 1Q21 Cabot made $126 million in net income, versus $54 million in 1Q20. Yet the company’s stock price continues to languish, something that has CEO Dan Dinges “hacked off.”
Here’s an interesting lawsuit in Pennsylvania with potential ramifications for both landowners and drillers. In 2013 a landowner in Warren County, PA filed a lawsuit against Mitch-Well Energy claiming the company had abandoned its leases (and its rights) by not producing marketable quantities of natural gas from several conventional wells. The company had also not paid a required annual fee in lieu of production royalties. For 18 years! Several lower courts ruled in favor of the landowner. Last week the PA “Supreme” Court (we use that term loosely) reversed the lower court rulings and said in this case, not producing gas for 18 years and not making any payments to the landowners during that time is not (yet) enough to claim the energy company has abandoned its lease rights.
According to an extensive article appearing in the Pipeline & Gas Journal, “the oil and gas industry [in the Marcellus/Utica] is ready to pick up where it left off in 2019.” The Ohio Oil & Gas Association (OOGA) says “2021 is looking up.” However, nobody in the midstream is planning to build new pipelines anytime soon. That spells trouble ahead for prices. Increasing production without new pipeline capacity to transport the increased production to other markets equals stagnant (or even falling) prices.
While the Philadelphia Inquirer has at least one reliable and objective reporter working in its ranks–Andrew Maykuth–the same can’t be said for the lefties who populate the editorial board at the newspaper. Yesterday’s unsigned editorial declares that “Fracking jobs will disappear. Pennsylvania has to manage the decline.” Like he!!. The lefties on the editorial board base their brazen (and false) statements on Joe Biden’s plan to decimate the fossil fuel industry with his warmed-over Green New Deal vomit. The editorial board presumes Biden’s attempts will be successful. They will not.
Here’s a new truism of life you may not have heard before: Be careful that the corporation you climb into bed with actually has a spine. Interestingly, U.S. Steel in East Pittsburgh, whom you would assume has a steel spine, doesn’t have a spine at all! Merrion Oil & Gas found that out the hard way. Merrion, a privately-owned oil and gas company headquartered in New Mexico, signed a lease with U.S. Steel to drill a series of up to 18 shale wells on the Edgar Thomson Works property in Allegheny County. Following blowback from loud-mouth anti-fossil fuel nutters, U.S. Steel decided the project isn’t worth the negative press. So they caved and canceled the lease with Merrion. Shame on U.S. Steel.