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 paleface on February 15, 2022 at 8:31am

Seneca is up grading pads that Shell had shut down and stopped drilling and plan to drill with there drilling technique. As Ralph said new technology.

Permalink Reply by Ralph cramdon on February 16, 2022 at 6:43am

Nat Gas is rebounding once again .... {Just follow the bouncing ball ] ...Farmgas , your CNX has held up reasonably well lately .... AR reports tonight , numbers 'should' be very good , but you NEVER know .......

 Watch CHK and its variable dividend , it could be interesting ... DVN declared last night with a 8% floating yield ...

Permalink Reply by farmgas on February 20, 2022 at 8:50pm

What is the strategy for gas companies to not rush out and drill more wells?  After-all the gas price is still relatively high, and with the geopolitical problems in Europe it would seem the time is right to drill.  Are there just too many DUC wells available to TIL and increase production?

Permalink Reply by paleface on February 21, 2022 at 7:18am

Bidens fed candidate doesn't want banks to lend money to fossil fuel company's.

Permalink Reply by Ralph cramdon on February 21, 2022 at 11:28am

Farmgas where does any increase in N Gas end up ??? Europe ??? Nope .... 

Permalink Reply by farmgas on February 21, 2022 at 4:33pm

OK, I`m game.  Where does new NG end up?  Has domestic demand increased?  We know about the current and increasing demand for LNG in Europe.  Is it the gas industry strategy to keep supply low to increase prices?  

Permalink Reply by Ralph cramdon on February 21, 2022 at 7:16pm

That is a problem for increasing production ... Where is the new capacity outside of the Permian ??? OK  Anadarko ,has some spare capacity but gas there is more costly ... As Coal plants continue to close , gas will capture much of that demand ... LNG is just about maxed out until new plants are built , that for the most part is years away ..... As a Energy Investor I like the current situation ... Cabot 'gave ' away a lot of gas in the $2 range ... The old equation hasn;t worked for a number of years .. 6 to 1 ratio ... If oil is priced at $60 , nat gas 'should ' ' be at $10 .....  which is the diffence in BTU values .....  That all changed when fracking went horizontal.. Prior to Fracking a 1 MMCF/D  ....was a big deal ... Today the Industry yawns at a IP of 20 MMCF ......... Too much gas is a problem for the royalty owners , producers , investors ,,, good for Industries and consumers .... 

Permalink Reply by farmgas on February 21, 2022 at 8:23pm

So now that FCF is so essential for gas companies to attract investors, when will existing wells & DUC wells begin to fade capacity to sustain even or small incremental growth?  This almost seems to me to be a pitfall for gas companies to maintain minimal growth vs producing enough production for FCF goals while being prepared for the time when a more aggressive growth in production is needed.  How do their war rooms plan for this strategy and prepare itself for a time when more production is needed under these conditions?  Thanks for your thoughts Ralph.

Permalink Reply by Ralph cramdon on February 22, 2022 at 7:40am

Quality producers are paying down debt like never before .... Most are close to having debt below  1X Ebitda by the close of 2022 ...  Banks had become reluctant to lend due to several factors including the cries from the 'climate change ' gang .... Notice on the producer presentations how much attention is now given to ESG ..... A term that was never heard about  just a few years ago  ... Now  gas producers are seeking 'certifications ' from ESG groups that hey harvest N gAs 'responsibly' ..... .... 

 Mergers will continue as good grounds get used up ... The most competitive outfits win , the feeble ones fade away .... Its all about the quality of rock they own and good Management .........Even the King of LOW COST , COG , went away due to perceived lack of future drilling sites .... Winners today in the amount of drilling sites remaining seem to be AR , RRC and EQT ..... CNX has had a decent month , but concern remains about its future , something will need to be done via merger or sale ..... NFG is N PA is a very decent player with ZIPPO Beta .... NFG grounds are not really that good , but its low royalty exposure is helpful ......  I respect NFG , but choose not to own it .....I like our chats FARMGAS , it helps to write  some of my thoughts to reinforce my positions .... You ask VERY good questions ,, much deeper than the average shareholder of these gassers .... 

Permalink Reply by farmgas on February 22, 2022 at 7:06pm

Ralph, I have delayed a response to your message as I collect my thoughts today.  Tonight I sit atop trillions of cubic feet of natural gas and wonder what my future will be to receive gas royalties.  After-all  I can sell timber, stones or whatever from my property for income.  It`s natural gas that is the problem.  I own the mineral rights down through the earth to it`s core but have minimal influence over it`s value.  I am at the mercy of a gas company whether they drill or not.  I am like I thing other landowners who want to sell their natural gas resources.  Am I being selfish or self-serving....hell yes I am!!  Do I want our country to be independent for fuel... hell yes?  I concede I`m being selfish but I understand the gas industries need to adapt to market conditions and whims.  I just want gas royalties!  

My attempts to stimulate conversation for the local gas industry is to connect the dots about what might happen next.  So what is next?  Let`s keep talking & sharing information.  I appreciate your insights & perspectives Ralph.  The good old days are behind us, what`s next?

Permalink Reply by Ralph cramdon on February 23, 2022 at 7:43am

RRC reported last night , very impressive ,,, CHK reports tonight ..... 

I sense your frustration on a lack of movement on your property , and its understandable ... Hopefully you don't need that money to pay your day to day bills .... 

 

Another issue for your land is ,, how far away are you from a major pipeline ??? Looks to me that the action in Tioga has been near pipes .... Marketing / gas transport gets expensive ... 

 I own rights in Lindley NY with a pipeline right down the road , thanks to NY politics , my land is also useless ..... 

 The Marcellus gassers seem to have ten years or better of #1 lands in inventory so it might be awhile till they come knocking at your door .... If you really need the cash , there are outfits that might buy your rights ,,, BUT I would not sell those rights unless you are unable to put food on your table ....

 In the meantime ,, you could invest in your favorite gas producers and 'hope' to make some $$$$ while you wait ..... 

 After a few very lean years , gas producers are paying down debt , getting strong financials and finally starting to reward Investors ..... 

 Chessie / CHK reports tonight .....with the purchase of Chief , I believe that Chessie is now the King of NE PA ....

Permalink Reply by farmgas on February 23, 2022 at 8:28am

Bill paying is not an issue.  Quality of life conditions are always a benefit from new income though, and I think I`m no different then other folks in the "fairway" wanting to receive gas royalties.  Let`s hope that the 10 year wait is reduced in our lifetime!

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