Northeast Producers Further Retrench
Along with EQT and CNX Resources, National Fuel’s Seneca production arm announced that they will be curtailing about 5 Bcf of natural gas production in the Northeast due to persistently low natural gas prices in the region and the company reduced its full year 2024 natural gas production guidance by about 1.4% compared to the prior reporting quarter. National Fuel joins a growing chorus of Northeast natural gas producers who are temporarily shutting-in production, deferring TILs, and reducing drilling and completion activity. The obvious reason is because prices remain around $1.25 / MMBtu at the main Northeast trading hub, Dominion South. Additionally, the fixed price forward curve for Dominion South (now called Eastern Gas South) has come down significantly in recent days and it now appears that shut-in production won’t come back on until October 2024 or November 2024. It was originally estimated that the production curtailments would end in July 2024 as Dominion South prices for the delivery month were at $1.71 / MMBtu. However, over the past few weeks, July 2024 Dominion prices have gone back below $1.50 / MMBtu, further extending the natural gas production curtailments.
Permian Producers Confirm
So far, the great majority of Permian producers have confirmed their full year 2024 production guidance forecasts and are still on track to meet their production plans for 2024, thanks in large part to persistently high crude oil and propane prices. Even though cash market natural gas prices in the Permian have been persistently below zero since March 11th, producers remain unfazed and continue unabated. Diamondback Energy, ConocoPhillips, ExxonMobil, and Chevron remain on track for their 2024 production plans. In general, Permian producers also plan to increase activity and production in the 2nd half of 2024.
Hyperion Update
Natural gas frack crews, as measured by Hyperion, remain near the lows of 2024. This is no surprise given that natural gas prices are well below the cost of drilling and completing a new well, which is around $2.30 / MMBtu in general.
Oil frack crews remain surprisingly stagnant and sideways given that crude oil prices remain above $80 / MMBtu. Earnings calls from many Permian producers indicate that they will be adding frack crews during the 2nd half of 2024.
