In order to keep the public updated on the current energy industry and the business environment surrounding it, Cabot is happy to introduce a series of podcasts by George Stark, External Affairs Director.
In light of the possibility of a Severance Tax on the natural gas industry in Pennsylvania by Governor Wolf, Cabot has shed some light on the current struggles and a lack of capital expenditures that companies are now experiencing, via podcast, which would only worsen with an additional tax imposed on it.
In this second volume of Cabot’s podcast series, Stark highlights the stress that the energy industry has been under recently when it comes to capital expenditures. Poor market conditions that lead to company layoff and a drop in well counts contribute to overall net losses for the natural gas companies in the Commonwealth causing capital expenditure reductions. As previously mentioned inPodcastVolume 1: Natural Gas Struggles, big companies in Pennsylvania like EQT Corporation, Cabot Oil & Gas Corporation, CONSOL Energy, Range Resources Corporation, and Southwestern Energy have been experiencing rough business conditions leading them to spend less. For example, Cabot Oil & Gas Corporation is spending 44 percent less in 2015 than it did in 2014 which leads to less investment in the coming year across the Commonwealth. Range Resources Corporation cut its capital expenditure spending by 40 percent since last year and continues to cut its rig count from 15 to six by the end of the year.
The natural gas industries struggles are not only reflective on their own success but also the success of everyone around them. Less capital expenditure means less investment in the community as a whole. If that’s already not enough, the potential for a Severance Tax on the industry would only do more to weaken the already struggling industry, which would affect us all, too. Instead of raising unnecessary taxes on a vital business, lawmakers should focus on how to gather our energy industry’s resources and help to make the business conditions favorable for it to succeed, leading to the success of us all.