Natural gas producers are currently under hedged for 2024 as of the last 3rd quarter 2023 earnings report. Natural gas producers were 29% hedged on their production at the end of the 3rd quarter 2023, significantly lower than the usual ~40% hedged on production. Natural gas producers continue to express bullish optimism on natural gas due to the expected 2024 LNG export demand expansion in the Lower 48 US. As a result, natural gas producers are currently under hedged for 2024. Oil producers are roughly hedged as they usually are at around 6% for 2024. Oil production is dominated by the super majors who have corporate philosophies to never hedge production with financial derivatives. Instead, they rely on natural hedges for their oil production such as refineries.
2023 capital expenditure guidance for the producers was about 9% lower in Q3 2023 compared to Q2 2023. Producers continue to significantly increase production while simultaneously reducing capital expenditures. Efficiency gains for producers are increasing very rapidly as a result and producers are bragging to Wall Street about how they can increase production and lower or keep capital expenditures constant at the same time.
Overall natural gas variable costs are at around $1.39 / MMBtu for the 3rd quarter 2023. Natural gas variable costs were about $1.34 / MMBtu for the 2nd quarter 2023. Oil variable costs are approximately $14.86 / Bbl for the 3rd quarter 2023. Oil variable costs were about $14.18 / Bbl for the 2nd quarter 2023.
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