Shares in shale gas producers retreated May 9 as the bottom fell out of the market after double- and triple-digit-percentage gains over the past 12 months.

"Ouch," Raymond James & Associates Inc. oil and gas analyst John Freeman told clients before the markets opened May 10. "Markets (particularly energy) hemorrhaged something fierce during Monday's trading with the S&P finishing down 3.2%, finishing below 4,000 for the first time since March 2021."

The S&P 500 and broader stock market were down because of an economic slowdown and the Federal Reserve's move to raise interest rates in response to inflation.

Both oil and gas futures contracts retreated, with the benchmark New York Mercantile Exchange gas futures contract losing 12.6% to settle at $8.043/MMBtu. The major shale gas producers were down again as of 12:30 p.m. ET on May 10.

Brian Kessens, Tortoise Capital Partners LLC senior portfolio manager, said some of the decline was simply the result of profit-taking after a year in which shale gas stock values doubled and tripled. Higher commodity prices, with increased visibility on LNG demand and with capital discipline among corporate managers, have led shale stocks to outperform the market, Kessens said in an e-mail late May 9.

"This is a tough market to put new money to work in, especially in securities that are higher on the year," Kessens said. "With valuations still low versus historical levels, over the long run this is a buying opportunity."

Appalachian shale driller Range Resources Corp. was the worst performer in the group on May 9, losing 12.5% on the day after gaining 170.5% for the year prior.

Vertically integrated National Fuel Gas Co. — insulated by its regulated gas utility in New York and midstream gathering and transportation operations in the Northeast — was the best performer in the group, losing less than 4% of value on May 9. Over the past year, National Fuel has been the worst performer in the group with a 32.3% gain in value.

Appalachian operator Antero Resources Corp., the biggest gainer over the past year, was the second-worst performer on May 9, giving up just over 11%.

"Energy markets bore the brunt of the damage yesterday with both commodities and equities," Raymond James said before the market opened May 10. "E&P index was the biggest loser, down 10.4%; Clean Tech was close behind, down 9.7%; while midstream fell 5.1%."

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