New York — As the collapse of OPEC+ talks on production cuts sent energy stocks into a tailspin, one corner of the industry defied the rout: U.S. natural gas drillers.
Shares of gas producers including Cabot Oil & Gas Corp., Southwestern Energy Co., Range Resources Corp. and EQT Corp. climbed on speculation that the nosedive in crude prices will force oil explorers in the Permian Basin of West Texas and New Mexico to pull back.
Soaring gas output from the basin, where the fuel is extracted as a byproduct of oil drilling, has contributed to a massive glut.
“The collapse in the crude market is going to create a more constructive gas setting,” said Matthew Portillo, managing director of exploration and production research at Tudor, Pickering, Holt & Co. “Slowing U.S. growth is going to significantly affect associated gas production.”
U.S. gas producers still face obstacles to recovery, however. Prices for the heating and power-plant fuel are trading near four-year lows as output from shale basins continues to climb, albeit at a more measured pace. The coronavirus outbreak has sapped global gas demand, prompting buyers to refuse U.S. cargoes of the fuel and stoking concern that American exports will slow.
Cabot rose as much as 11% to $16.59 a share. EQT jumped 9.1%, while Southwestern was up 7.9% and Range gained 4.6%.
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*Sayer Devlin – Bloomberg