US Natural Gas Producers Eye More Production Cuts as Prices Fall

After prices fell nearly 40% in just two months, major U.S. gas producers plan to curtail their production further during the second half 2024.

The Henry Hub futures price has dropped below $2 per million British Thermal Units (mmBtu) while Waha gas prices in West Texas have fallen to a record low so far this year. As temperatures were cooler than anticipated, the demand for gas fell. In the meantime, supplies had increased as producers boosted production in the second quarter following a 47% increase in prices between April and May.

EQT is one of the largest gas producers in America. The company has planned to implement strategic curbs of around 90 billion cubic foot equivalent this fall if market conditions remain depressed. CFO Jeremy Knop stated during the second quarter earnings conference call.

Stephen J. Riney, CFO of Houston-based Apache, told investors in a call with analysts last week that the company will also curtail 90 million cubic foot per day (mmcfd), more gas, in its third quarter.

In its second-quarter earnings report, Apache said that it curtailed gas production by 78 million cubic feet per day (mmcfd) due to extreme prices in the Permian basin.

The company stated in last month's second quarter earnings that Chesapeake Energy plans to delay some well completions until the market improves.

In their earnings reports, Antero Resources Corporation and EGO Resources said that they would also do this.

Robert Wilson, Vice President of Analytics at East Daley, said that Chesapeake’s decision to delay well completions is a smart move, as they can wait for the expected increase in LNG demand, which will boost prices.

Coterra Energy, the shale gas producer, reversed curtailments towards the end of second quarter but expects more.

Blake Sirgo is the senior vice-president of Coterra's operations. He said in its Q2 results that the company was prepared to cut further as summer sales are rolled off into the shoulder seasons.

U.S. Natural gas production

The average will be around 103.3 Bcfd

In its short-term outlook report for August, Energy Information Administration (EIA), said that this is the year.

This is down from the forecasted 103.5 billion cubic feet per day in the July report. Reporting from Scott DiSavino, New York; Georgina McCartney, Houston. Additional reporting by Arathy Sommesekhar. Editing and production by Liz Hampton and David Gregorio.

(source: Reuters)