Surging Natural Gas Prices

How are the surging natural gas prices affecting drilling this year, and what about going into 2022?  Are the gas companies taking advantage of these higher prices?  What`s next?

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Permalink Reply by Ralph cramdon on February 9, 2022 at 1:40am

Gas prices are in freefall as Weather forecasts trend warmer ...... Did your favorite gasser hedge when gas was over $5 ???? One could 'hope' so ....

Permalink Reply by farmgas on February 9, 2022 at 2:29am

How does the gas industry & investors look at Diversified Energy as a viable producer in both the Permian & Appalachian Basins?  They continue to purchase declining wells plus rights for drilling in some locations.  How will the major gas companies use them to dispose of their declining wells to reduce maintenance cost?

Permalink Reply by Ralph cramdon on February 9, 2022 at 3:05am

Diversified ??? WOW Farmgas , you are on top of your gas game ....... I had once owned for a few years " Carbon Natural Gas " , a compettitor of Diversified ...... Diverse buys and owns legacy wells that the 'big boys ' no longer wants .... Diverse has a decent Free Cash Flow projection .... My concerns are twofold ... Diverse probably has a very low Beta [ lack of interest ] and what are the costs that will be incurred to clean up those thousands of low producing gas wells ...... Well closures can get expensive and Governments are keenly aware that these wells must be closed properly ...... The low beta [ public interest ] is a problem for me and Diverse is listed overseas is another reason I walk away after looking at Divers now and then ...... 

 Farmgas asking about Diverse !!!! Farmgas knowws more than he lets on ...

 PS .. I attended a couple of Carbon annual meetings in NYC over the years ,, plenty of promises , most not kept ,, they sold the gas division to Diverse and now are called Carbon California ....

Permalink Reply by farmgas on February 9, 2022 at 3:32am

Ralph, I`m just a frustrated landowner waiting a VERY long time to see gas royalties who has spent an enormous amount of time following the gas industry.  I have the belief the more I know the better informed I am to understand the future of the gas industry, and the prospects of receiving those royalties..  Just maybe someday my time will come to receive gas royalty deposits into my bank account.  In Western PA Diversified has purchased many of those legacy wells you mention and I have several on my land.  They have been a good gas company to work with so far but I understand their business plan is to maximize profits from old wells while minimizing their expenses.  Sounds like a common business plan, right!  Personally I never could figure out how they make money from declining wells after spending millions to get them.  I suppose they could avoid plugging wells as long as they continue to produce gas, albeit even in small amounts.  I have read that Diversified Energy is now purchasing declining Marcellus wells.  I`m not certain if Utica wells are being added to their ownership yet.  My point in an earlier discussion is with all of these wells being purchased by Diversified Energy, how much of a factor will they be for dominance or influence within the gas industry, or maybe not.

Permalink Reply by Ralph cramdon on February 9, 2022 at 4:00am

After our discussion it appears that Diverse is now expanding into OK and Haynesville as well ... Their presentation shows that they are 

sniffing in Texas and the Bakken as well ..... Are they getting too big for their 'britches ' ?? Time will tell .... Farmgas  its not clear if you currently have a deal with Diverse ... I hope you do , and also hope the Utica in your region gets attention some day .... As tier #1 lands get used up , the hunger for #2 lands will increase ....... N gas will be needed for years to come ....... 

 Do you own cropland or Timberland ? 

Permalink Reply by farmgas on February 9, 2022 at 4:22am

I do receive gas royalties from Diversified wells on my land.  These wells are old shallow wells drilled by Dominion 20-30 years ago.  Deep gas rights are owned by another major gas company and would be considered Tier 2 acreage to them.  That hunger you mention would be nice if drilling came sooner then later.  I`m not naive into thinking I`m alone with my wish for new drilling.  I know there are many, many folks who have visited GMS over the years who have their own land waiting for development.  It is frustrating for all of us to wait it out hoping to see development in our lifetimes. 

My land is primarily timberland. 

Permalink Reply by Ralph cramdon on February 9, 2022 at 6:39am

I hear  you Farmgas , as I have mentioned earlier , I hold rights in the wonderful State of NY ,,..... I would guess the probablity of you getting a deal is light years ahead of my possible deal ..... In addition...  it appears that the Marcellus thins out in NY ... Possible Utica though ... I have doubts about a deal in my lifetime ... Probably a better chance playing the Lottery 

Permalink Reply by Ralph cramdon on February 10, 2022 at 2:23am

RRC gave a 4 qtr update last night ,,, great free cash flow expected .... BOA predicts 20% yield or better ........ 

Permalink Reply by Ralph cramdon on February 10, 2022 at 6:33am

RRC up8% so far today .....    AR yet to report ,,, might be worth a looksie ......... 

Permalink Reply by farmgas on February 10, 2022 at 2:31pm

How about EQT?  Their call transcript comments showed a lot of excitement for the current & future plans.  A new well design was discussed too.

Permalink Reply by Ralph cramdon on February 11, 2022 at 12:50am

EQT is recommended by Creddit Suisse , and Bank of America ...... Its free cash flow is good ,, RRC cash flow is projected to be better ..... 

 New technology  is happening all the time ... When I first got into gassers, a gas well with 1mmcf/d was a BIG DEAL 

Permalink Reply by farmgas on February 14, 2022 at 12:33pm

Everything seems to have gone quiet in the PA gas patch since the Q4 reports.  Anyone seeing new rigs or pipelines being built?  I saw recently that Diversified has purchased the well plugging company they have used in the past.  Does that mean more marginal wells to be plugged by them? Owning this plugging company may mean lower costs & a more aggressive well plugging program.  

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