Shares in most pure-play shale gas producers posted double-digit gains in value over the past month, alongside the one-third increase in the October futures price for natural gas, according to Sept. 14 data from S&P Global Market Intelligence.

"The biggest news on the day surrounded the energy markets, as natural gas prices rose 6% on the day [Sept. 13] racing past $5 up to $5.23/MMBtu to close the day," Raymond James & Associates oil and gas analysts said. "The European gas market is in a particularly difficult situation as low output from wind generation has forced natural gas generation to 'fill the gap,'" increasing the need for U.S. LNG at a time when U.S. onshore production is flat and hurricanes have cut into the Gulf of Mexico's natural gas output.

Future contracts for the coming winter months through February 2022 were all above $5/MMBtu at midday Sept. 14, according to NYMEX. The October prompt month contract was up less than 1% at midday Sept. 14 at $5.277/MMBtu, NYMEX said.

"We expect gas prices to remain well above historical average in the near and medium term," analysts at Jefferies LLC said Sept. 14. "In the near term, European gas inventories remain well below the 5-year range, LNG supply disruption remain above average, while the impact on Asian demand from natural gas to fuel oil substitution should be limited. Longer term, we expect the global LNG market to remain tight through 2025."

Texas-Louisiana producer Comstock Resources Inc., the shale gas driller directly exposed to Gulf Coast LNG terminals, showed the largest gain in the past month, followed by all the Appalachian shale gas producers, according to S&P Global Market Intelligence.

The jump in gas prices affects supermajor U.S. oil and gas companies as well, Jefferies said. "Chevron Corp. and Exxon Mobil Corp. have the highest exposure to North American gas prices," Jefferies said. "BP PLC is the most exposed to Henry Hub [U.S.] among the European supermajors, with roughly 1% of cash flow from operations impact for every $1/MMBtu change in Henry Hub."

Coal producers may start seeing some favorable impact as gas prices rise and utilities switch from gas to cheaper coal, analysts at B. Riley Securities Inc. said. "Energy prices posted another strong week of gains with Henry Hub natural gas prompt prices rising 10.4% to $5.20/MMBtu, the highest October level since 2008," Jefferies said. "The increase adds to growing inflationary pressures across our coverage. The tightening market presents a net positive for Consol Energy Inc., Peabody Energy Corp., Arch Resources Inc. and Hallador Energy Co."

Increasing prices will be a headline problem for shale gas producers, most of whom are hedged for the rest of this year at prices below $3/MMBtu, analysts noted. Those players will have to take noncash charges against their income to account for the gap between the hedged price and the settlement price of the galloping NYMEX contract this fall. While analysts and others will strip out that one-time noncash bookkeeping to adjust a company's results, regulations require the loss to be considered in reporting net income under accepted accounting principles.

"For 2022 at an upside scenario of $3.50/MMBtu Henry Hub, we expect the majority of hedged producers to have hedging losses with EQT Corp., Ovintiv Inc., Southwestern Energy Co., Antero Resources Corp., Murphy Oil Corp. and National Fuel Gas Co. with the most hedging losses on a $/Mcfe basis," Goldman Sachs anticipated in late August. "Among gassy [exploration and production companies], Cabot Oil & Gas Corp. remains unhedged with upside exposure to our bullish gas prices."