EQT could sell off part of royalty interest in natural gas production

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Hello out there. Thought I might see more activity on here with everyone under stay at home orders unless in a deemed necessary for life position but surprised at the quiet. Decided to just pick a subject and comment and see who's looking for some conversation. :0) 

So, I read the article on EQT selling off some of its royalties and think it is an excellent idea to bring in some much needed capital to get the company on more solid ground while restructuring as well as trying to stay above water during the natural gas pricing slump. Fortunately, natural gas operations weren't on the close down order so EQT can remain in operation, though I did read that they had a Covid-19 positive in one of their site employees so have temporarily shut down fracking operations. Wise and taking care of employee safety. However, the royalty interest sell off will not affect land owner royalties (as the sell off is of the company's percentages of production royalties) and would provide a good source of income for the business. They may MAKE less on some of the gas produced but will be able to pay down/off debts and create a more stable company, overall. That would net a better position overall. EQT seemed to be bloated and bursting at the seams with unnecessary expenses weighing it down when shareholders asked the Rice Team to come in and try to save the company by replacing former management and restructuring the business. This move SEEMS to be a smart one, from my perspective, with the little information that I have. Hopefully we'll see a rise in stock prices and more positive production moves benefiting current land owners.

That said, how is everyone out there weathering this pandemic?  Hope all are well and aside from some cabin fever are healthy and doing OK, as well as following all of the guidelines to stop the spread. Would be happy to hear from all and fill some of the boredom as well as check on everyone. Looking forward to some replies if only a hello - we're fine.

Lori

I think EQT is stoping stock distributions also.  

Yes, they stopped paying dividends for the time being. We own a small amt of shares and to be honest, I'd rather see them get the company on solid footing than worry about dividends, which there likely aren't any, anyway. The stock has dropped 50% in value since we bought shares about 6 months ago but had a minor rise in the past couple of months. Still way below what we bought at. We didn't buy to make anything on the shares; we bought to have a better communication line as a shareholder vs landowner and a (small) vote in company decisions.

Something interesting on CNBC today
Jim Chanos Kynikos Associates Founder
The shale business will never be profitable it’s nothing but an accounting scam
As none of the frackers accounted for depreciation on their wells
I wonder if he is right
I sure hate to think about our tax dollars bailing out EQT CHK or any other reckless companies
Their situation is due to their own greed and stupidity
Sorry no money for you

Gassers can be very profitable , so can select oil drillers , its all up to the price of gas and oil

Actually, the shale business has been destroyed by alternative energy activism trying to ban all fossil fuels with untrue claims and assaults, as well as govt regulations and red tape costing companies millions in order to operate particularly while natural gas prices continue to go down, making the production profitability often in the negative vs drilling costs. States and localities demanding large severance taxes and other operational fees on top of corporate business taxes (and in PA, Impact Fees) while blocking infrastructure to get the product (pipelines) to market where it is badly needed and sold, creating an over-supply in natural gas regions. The REASON consumers have lower gas bills to heat their homes and water, and use their stoves is due to the shale gas drilling companies and supply to the country at reasonable rates vs what consumers were paying just a decade ago. Anit-frackers would have us paying subsidies to alternative energy sources such as wind and solar, that don't have the capacity to handle the demand and would cost consumers triple what natural gas does today, once it's all said and done. What is the difference between a "subsidy" to a failing business and a "bail out" to one that can save the American consumers and make the country energy efficient with clean energy? CNBC is a leftist anti-fossil fuel propagandist mouthpiece. Anything you hear from them, think the opposite. I have followed the natural gas industry since it came to the region and have made no bones about making my voice heard if anything hinky was going on. EQT under its former mgt was handled badly and bloating at the seams with excess, particularly with the industry market in such a slump due to marketing battles, but shareholders seeked out a proven team to replace the former mgt to attempt to restructure the company and bring it back in line. As far as "our tax dollars", that includes the millions paid out by both drilling companies and landowners on their royalties, to say nothing of the countless supporting businesses such as trucking companies, machine mfg, and many more too numerous to mention, and WITHOUT the natural gas production American consumers would still being paying $12 - $14 per thm instead of the avg of about $2 today, thanks to the plentiful supply of natural gas produced by those evil gas companies. For the record, Chesapeake is already bankrupt and not being bailed out, through their own fault and poor mgt. "Frackers" don't own the wells; they only frack them for the drilling company unless the driller fracks their own wells, and in either case, the wells are co-owned by the gas company and the land owner that the wells are drilled on (albeit a higher % to the driller than the land owner). Any gas company that DOESN'T know enough to depreciate their wells does not belong in business or needs a new accountant. Land owners as well. This guy you are quoting sounds like a no-nothing anti-fracker trying to make trouble by making things up and further damaging the image of an industry that has done nothing but bring property in one way or another to American consumers and land owners. There will always be unscrupulous business people and companies, as well as so called experts and news media. I can NOT say all natural gas companies are completely above board and doing everything right. They are, after all, a business, with shareholders and land owners to account to. Chesapeake is perfect example. Scam? That's laughable considering the cost and major operation it is to just get a unit developed and well pad permitted, set, and drilled to production.I'm sure many on this forum will have other comments to make to add to mine - for better or worse - but better get your earplugs out the day that natural gas stops flowing to American consumers from the shale gas industry and their gas bills skyrocket to pre-shale drilling costs. And stop listening to CNBC. It will damage your God given intelligence.

The SHALE industry has been its own worst enemy .. Soaring gas production has destroyed prices ... 

 

production will decline shorty ...... 

 

I do agree. By leasing every bit of drill-able land they could get and putting wells in everywhere BEFORE they had a consistent infrastructure to get the gas produced to market created over-supply in a short period of time with not enough customers. Result: gas loses value.  The EXACT SAME THING is happening right now with oil because Russia and the United Arab Republic are over producing and there are ships loaded with oil literally sitting in the ocean with nowhere to take the cargo, dropping oil prices due to over supply. While this may look good to consumers at the gas pump, eventually the oil companies will start to lose profits and risk going under. It is however due to reduced demand due to the Corona Virus throughout the world, combined with short sighted management in the producing countries not anticipating the reduction and backing off production. As far as the natural gas companies, their shortsightedness was at the onset by not pacing production with infrastructure development (pipelines) to get the product to market. There IS a demand for natural gas; it just can't get there. Hence, over-supply and reduced value. I don't believe any of it was due to scammers or accounting errors. It was lack of caution and over confidence in states and leadership providing the infrastructure necessary without a battle. Naive, to say the least. The BEST actions I've seen in the drilling companies - at least in EQT's restructuring - is selling off undrilled leases and shrinking the production areas to already developed, proven units and cutting drilling costs. There is still a need for reasonable cost natural gas to consumers where transmission lines already exist and eventually, lines will reach in to the areas that are crying for reasonable energy, such as NE (despite the NY ban). However, too much too soon DID cause the decline without a doubt. It just wasn't about scamming anyone. The gas companies lose more than everyone when the gas can't be sold or is being marketed cheaper than it cost to produce.

The Painter gas well (Number 1 well)  was drilled by Travis Peake. Plans were in place to lay a pipeline from there west to Abplanalp another well site and then to be hooked to a Dominion at Sabinsville.  And this is exactly what took place.  Other wells planned for the Flat Castle gas deposit were also lined up to feed into this pipeline and thence on to Dominion pumping station and their storage wells. As it happened My property had a small slice of ground (15 acres) in the Painter well unit.   Other units that were to be drilled on the Flat Castle were never drilled and I don't think Abplanalp's well was drilled although the drill pad  was made ready.  That pipeline ROW was never extend any farther to include any other wells as far as I know. Only the Painter wells, (number 1 and number two) feed into that 16 inch pipe.  Many other wells were drilled but no attempt was made to run pipeline ROW's to them.   

Granddad Ladd

O&G has always been referred to as a “Boom Bust” industry.  You may watch to much far right propaganda.  Every industry has some amount of outside negative pressure.  Every problem in the world isn’t caused by left wing propaganda.  Just a few weeks ago in another thread you were calling Covid 19 a leftest propaganda pitch.  Smart people enhance God given intelligence with education.  The smarter someone is, the more likely they will seek out experts when needed and not rely on their hunches.

The Left has been attacking the Oil / Gas sector for years /......... 

 

Most Dem Pres contenders want to ban fracking ........ 

Mr. Biden responded: “So am I,” seemingly agreeing with a ban before saying, ”No more —no new fracking … no more drilling on federal lands.”

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