Higher oil prices are helping many American shale drillers. But they are hurting companies that frack for natural gas, The Wall Street Journal reports.
As companies respond to rising oil prices by drilling more, they often unearth gas as a byproduct, which has further weighed on already low gas prices, pressuring shale frackers in regions that primarily produce gas.
The average share price for the five top companies focused on the oil-rich Permian Basin in Texas and New Mexico are up more than 16% over the past year. Share prices for the top five producers focused on the Marcellus Shale in Appalachia, the country’s largest deposit of natural gas, are down more than 9%.
Demand for natural gas is predicted to rise globally over the next decade as many countries switch from coal-fired power plants to gas-powered ones. However, that isn’t expected to solve gas drillers’ problems in the short term.
To handle the squeeze, Southwestern Energy, the third largest in the U.S., has been slashing expenses to try to cut costs. Others are taking similar action.
The Southwestern Energy’s share price is about a 10th of what it was in 2010. CEO William Way has had to lay off 40% of Southwestern’s staff in the last two years and shut down all of its oil drilling. He says they’re still weathering the storm.