Earnings Highlights EQT, RRC, MTDR
Q2 2024 earnings and producer guidance forecasts are now rolling in for the oil and natural gas producers. The overall theme is the continuation of efficiency gains in 2024 and even an acceleration of efficiency gains for producers. Additionally, the 2024 producer forecast guidance looks to be revised slightly higher compared to the prior reporting quarter, albeit only 3 out of 32 producers have reported so far. A higher producer forecast guidance from oil and gas producers will cause the SynMax long-term production forecast to be revised higher for 2024, but it is still early in the reporting season.
EQT
Completion efficiency gains for EQT are exceeding the high end of expectations. Some of it is due to improved water management. After adjusting for curtailments, EQT would have produced above the high end of guidance during Q2 2024. The company had another quarter of operational outperformance. A recent rig drilled 25% faster than wells drilled in 2022. Completion times are up 6% YOY on average for 2024. EQT expects to see improved completion times in 2024 and into 2025. Q2 2024 CapEx came in below the guidance range, highlighting efficiency gains. EQT continues to see higher than expected performance from their wells. EQT curtailed 1 Bcf/d for most of Q2 2024. This impacted production by 60 Bcfe in Q2 2024.
EQT increased their hedges during Q2 2024. The company is 60% hedged in the second half of 2024 at $3.24 / MMBtu. EQT is 60% hedged in the first half of 2025 at $3.25 / MMBtu. The company is actively building a hedge position in the second half of 2025. EQT expects to actively curtail production in the second half of 2024.
90 Bcfe of production curtailments in the second half of 2024 is embedded in their guidance. The production curtailments add 5% to their cost structure. The company will actively pursue curtailments should prices remain low. The great majority of their 90 Bcfe of production curtailments will occur in September and October of 2024 where Dominion South forward prices remain below shut-in pricing levels at $1.25 / MMBtu.
EQT is watching for a Q4 2024 production surge which would put a lid on NG pricing in 2025. The company has not seen any reaction on production from MVP. EQT is in maintenance mode for production. They expect to have production maintenance mode as well in 2025. EQT kept their full year 2024 production guidance unchanged from the prior reporting quarter. Their Q3 and Q4 quarterly production guidance range is very wide at nearly 10% from the high to the low. If EQT does not shut-in production in the second half of 2024, expect their production to be above the high end of their guidance range.
Range Resources
Range Resources continues to have more efficient operations and stronger performance from their wells. Their production during the second quarter of 2024 was higher than expected. Given strong well performance and continued optimization of gathering infrastructure, the company expects annual production to be near the high end of their guidance range. As a result, the company’s full year 2024 production guidance forecast is revised higher by 1% compared to the prior reporting quarter.
Range Resources remains constructive on the long-term outlook for natural gas and NGLs. Range is targeting a maintenance production program in 2024.
Matador Resources
Well outperformance and significant efficiency gains are driving up the large step-up in their 2024 annual production guidance from the prior reporting quarter. The company increased their 2024 full-year natural gas production guidance by 4.8% from the prior reporting quarter. The increased production revisions have nothing to do with the acquisition of Ameredev.
The company performed their first trimulfrac completion operation successfully. Trimulfracing has yielded a 50% reduction in completion time. Matador turned a record number of wells in line in Q2 2024. Simulfrac and trimulfrac operations continue to add production efficiency gains. Most of their CapEx reductions are from efficiency gains. Matador will add a 9th drilling rig as soon as possible. The company brought on 2 additional gross wells than expected in Q2 2024. The incremental gains from trimulfrac have been stronger than expected.
