Gulfport rumored to be shutting down all Utica drilling

http://marcellusdrilling.com/2015/11/rumor-gulfport-energy-suspends...

Ray Charles could have seen this coming.

Maybe they need to stockpile/purchase some more leases they can't drill.  Yuck, yuck. 

Gulfport spent a ton of money on financially wretched prospects other Okies generated.  When I would read about the transactions I always thought to myself: "these Okies are flinging billions of dollars between themselves, saving each others hides by finding new victims and wasting other peoples money.  There is something very wrong/toxic here."

There has to be a reckoning.  A terrible reckoning!

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Permalink Reply by martin on November 10, 2015 at 3:57am

They will only produce as much as they need to stay a float until gas prices go up. When the profit margins go up so will the number of rigs. Companies don't spend that much money and not get a good return. Gulf Port is sitting on an enormous amount of dry gas. Its a waiting game at this point. 

Permalink Reply by Joseph-Ohio on November 10, 2015 at 4:17am

If it's FACT and NOT RUMOR, do you think it could have anything to do with the upcoming election / the current anti-hydrocarbon administration at the helm / Keystone XL not being approved by the current anti-hydrocarbon administration ? ?

I do.

If only we could ask Ray Charles.

Maybe we should try Stevie Wonder ? ?

Permalink Reply by martin on November 10, 2015 at 6:18am

It has to do with the low gas prices and when and if more power plants convert to natural gas. A really cold winter wouldn't hurt either.  I could care less about keystone and Canadian sand oil, lets focus on what we have.

Permalink Reply by Undecided About Oil on November 10, 2015 at 7:17am

OhioNatGasPowerPlants

At least six gas-fired power plants are being built or on the drawing boards in Ohio ... Ohio regulators recently told state lawmakers that they expect 4,300 megawatts of electricity to flow from new gas-fired power plants by 2019.

An old but relevant Apr 9, 2015 article.

Mike MurphyPermalink Reply by Mike Murphy on November 10, 2015 at 9:10am

Don't see the relevant from your article to Gulfport stopping drilling in the Utica.........Please explain the relevants to this discussion

Permalink Reply by James M Stephens on November 10, 2015 at 9:52am

Gulfport currently has two drill rigs up and running in Washington TWP of Belmont county, they are also fracking three recently finished wells in the same area. So they have not stopped drilling, but they have slowed down, it will pick up once the prices rise as mentioned above.

Permalink Reply by Joseph-Ohio on November 17, 2015 at 5:16am
Yeah, I read ya'.

But, that's you.

How about them (Gulfport) ?

To get the gas they bump into the oil and the extra oil has nowhere to go right now.

(A Typo. Rewrite)
Permalink Reply by Bluflame on November 10, 2015 at 9:57am

Paul, 

    As of last week's analyst call, GPOR announced they were shutting in ~100MMcfe/d of Utica production or roughly 15% of total Utica production until at least the first of the year. This is due to low prices. Since that announcement is very fresh and was made by their CEO, Mike Moore, I'm skeptical of the rumor. Not much has changed with prices in the ensuing week.

    Since GPOR is heavily leveraged with the Utica, and like all the E&P's, has debt payments to cover, it seems terminating all production would be counter-productive. They do have room under their credit line, but I cannot imagine they'd incure additional debt to avoid low prices. Their dry gas wells are still profitable, as I interpret the charts on the latest investor presentation.

BluFlame

Permalink Reply by Bluflame on November 10, 2015 at 10:01am

Also, their hedging programs somewhat offset the low prices.

BluFlame

Permalink Reply by Paul Butler on November 10, 2015 at 10:38am

I agree with everything you said; however, I'm thinking Operators are worried about lawsuits. 

With current prices, Lessors are going to start screaming bloody murder about producing in this market.  If you sold a landowner's timber, pursuant to a timber lease, could you sell it so cheap that the landowner gets no money, in fact gets sent a bill for transporting the lumber.

I don't know what type of obligation the Lessees have to the Lessors regarding prudent operating under either their leases or statutorily or under Common Law.

Are the Operators breaching any duty to their shareholders by depleting assets/losing more and more money producing further.

I expect we will find out soon.

I believe the Bankers are going to end up with everything. 

The irony is they didn't even have to leave Wall Street/NY.  For example, in the book the Frackers, Aubrey throws a fancy dinner at 21 in NY for a roomful of big shots.  Currently it's unclear exactly who the joke was on.

One Wall Street Banker described the drunken sailor/fee paying Shale Players to me as a "bevy of slobbering bovine, fresh for the slaughter."

A pox on both their houses!

Permalink Reply by Joseph-Ohio on November 10, 2015 at 10:22am
GPOR 'Shutting In' some of their production will reduce the Market Supply and if more outfits do it, it ought to cause prices to rise.

How much prices rise would seem to be a matter of how much  Market  Share producers who scale back production own.

Wonder what % of the Market is owned by GPOR.

I'm thinking it will take more producers than just GPOR to have any really meaningful price hikes in the overall Market.

What's your read BluFlame ?
Permalink Reply by Bluflame on November 11, 2015 at 2:49am

J-O,

  IMHO, all the Utica E&P's would reduce output by 15%, and it wouldn't effect prices one iota. As someone else on this string has written, if new well drilling activity continues at current greatly reduced rates, the decline curve will eventually reduce supply. In theory, this should increase commodity prices. The question then becomes at what price point doodled rigs come on stream. There are lots of idled rigs than could come back into play quickly.

   BTW, I believe the only Ohio Utica E&P's still drilling are GPOR, RICE, AR & CHK. and I think CHK is "on the fence". Maybe EQT in Monroe County?

  Thanks for asking my opinion!

BluFlame

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