Some natural gas producers have reported their 1st quarter 2024 earnings and have updated their 2024 production guidance forecasts. Most of the producers who have reported so far are Northeast producers. In general, production guidance forecasts have been either revised downward significantly or left unchanged from the prior reporting quarter (4th quarter 2023). Overall, production guidance forecasts so far are lower as a group compared to the prior reporting quarter. This will likely translate to a lower production forecast for Hyperion’s long-term production forecast model, which is primarily based on producer guidance. It is important to note that while many producers will once again be lowering their 2024 full year production guidance forecasts due to lower capital expenditures, lower drilling and completion activity, and significant TIL deferrals, efficiency gains in drilling and fracking remain for the Lower 48.
EQT
EQT lowered their full year 2024 production guidance forecast by approximately 4.4% compared to the prior reporting quarter. The primary reason for the lower production forecast is due to the continued curtailment of 1 Bcf/d of production in Southwest Pennsylvania into the month of May. We expect EQT to continue the 1 Bcf/d of production shut-ins into the month of June and then they should bring back their production by July if the current Dominion South July 2024 natural gas price of $1.70 / MMBtu holds. Excluding the 1 Bcf/d of production curtailments, EQT did say that their wells are continuing to outperform expectations.
EQT also states that Mountain Valley Pipeline could come online by June 2024, which will be a welcome relief to production in the Northeast as prior estimates had Mountain Valley Pipeline being online by July 2024.
EQT’s long-term macro-outlook for natural gas demand remains very bullish as they see the potential of 10-18 Bcf/d of power demand growth by 2030 due to the expected rapid growth of electricity from the AI data demand centers. EQT also sees 27 Bcf/d of US LNG export capacity by the year 2023, which would be a near doubling of LNG export capacity from current levels.
CNX Resources
CNX Resources also significantly reduced their full year 2024 production guidance by about 5.2% compared to the prior reporting quarter. CNX will be deferring 11 well completions during the first half of 2024 due to weak natural gas prices and due to the steep contango of the natural gas forward curve. The company also reduced their 2024 capital expenditure guidance by about 9% from the prior reporting quarter.
Antero Resources
Antero Resources kept their full year 2024 natural gas production guidance forecast unchanged from the prior reporting quarter. The company also raised their full year 2024 natural gas liquids production forecast from the prior reporting quarter. Fortunately for Antero, the company has a substantial portion of their production from natural gas liquids in the Northeast. The company also continues to experience efficiency gains from fracking as they achieved record levels in lateral lengths for their wells and record high completion stages per day.
Summary
Natural gas producers overall as a group continue to lower their 2024 production guidance forecasts due to lower drilling and fracking activity, lower capital expenditures, and long duration TIL deferrals. While production forecasts are lowered in 2024, the 2023 efficiency gains in drilling and completion times continue into 2024.
