• 4 minutes China - EU: Xi Says Cooperation Is Mainstream In Their Ties
  • 8 minutes The Mining Industry Has Had It Easy For Far Too Long
  • 11 minutes Lawsuit-Happy Councilor Wants to Take Big Oil to Court
  • 15 minutes U.S. Shale Output may Start Dropping Next Year
  • 3 hours Dutch Populists Shock the EU with Election Victory
  • 41 mins Venezuela Says Russian Troops Land to Service Military Equipment
  • 1 hour Trump to Make Allies Pay More to Host US Bases
  • 9 hours Multi-well Pad Drilling Cost Question
  • 19 hours U.S.-China Trade War Poses Biggest Risk To Global Stability
  • 2 hours Public Companies that attended OPEC "THREAT DINNER" at CERRAWEEK must disclose any risks in their SEC Financial filings.
  • 3 hours 3 Pipes: EPIC 900K, CACTUS II 670K, GREY OAKS 800K
  • 2 hours England Running Out of Water?
  • 2 hours Read: OPEC THREATENED TO KILL US SHALE
  • 1 hour Mexico Demands Spain and the Vatican Apologize to Indigenous People for the Spanish Conquest
  • 1 day One Last Warning For The U.S. Shale Patch
  • 1 day European Parliament demands Nord-Stream-ii pipeline to be Stopped
  • 2 days Modular Nuclear Reactors

Shale Gas Is Back With This $2 Billion Acquisition

Shale Rig

A nearly $2 billion natural gas deal could signal a sign that companies are interested in gas drilling again after a long downturn.

Gulfport Energy announced plans to issue new shares in order to finance a $1.85 billion acquisition of acreage in Oklahoma’s SCOOP basin. The SCOOP has emerged as arguably the next most exciting shale play, with acreage still largely undeveloped.

The Marcellus and Utica Shales in Pennsylvania and Ohio have been home to the bulk of the shale gas revolution, although Oklahoma has seen years of shale gas drilling as well. Now with the Marcellus having been poked with tens of thousands of wells, natural gas drillers are moving on to greener pastures. The rig count outside of the handful of major shale basins is now at its highest level in almost a year.

Adding fuel to the fire is the recent rise in natural gas prices, with Henry Hub now up to about $3.60/MMBtu. Natural gas production peaked earlier this year, dipping by about 5 percent. The sector has shown some recent signs of life however, with supplies tightening and demand continuing to rise. The record levels of natural gas inventories are also starting to come down to more reasonable levels, although they remain elevated. Cold weather across the country has added a bit of bullishness to the fuel in recent weeks.

Related: Oil Traders See Market Balance By Mid-2017

Investors were not exactly keen on the deal, with Gulfport’s share price falling the most in two years on the announcement. Gulfport will issue 29 million shares to pay for the purchase. “It’s a combination of dilution from the transaction and just uncertainty on the strategic direction of the company,” Gordon Douthat, an analyst at Wells Fargo & Co., told Bloomberg in an interview. “It caught people off guard, an acquisition outside their core Utica area.”

It is too soon to tell, but the SCOOP could be the next big thing in shale gas drilling. If that is the case, Gulfport is getting a head start.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com: 



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News