Around a year ago, we looked at several of the most unhedged publicly traded natural gas producers and how they would be negatively impacted from the plummeting natural gas market. Natural gas prompt month futures prices at the Henry Hub have dropped substantially, going from around $4 / MMBtu a year ago to around $2.50 / MMBtu today.
The 2 tables below are the natural gas hedge ratios from a year ago and from the latest reporting 3rd quarter of 2023. As shown by the 2 tables, all these producers, apart from Chesapeake Energy, are even less hedged than they were a year ago.
Excluded are the natural gas producers who have more oil production than natural gas production such as the Permian producers and the super major producers (ExxonMobil, ConocoPhillips, Chevron Corporation, and Occidental Petroleum). These super major producers are all completely unhedged from a financial derivative perspective. Instead, they have so-called natural hedges from the ownership of assets such as refineries and chemical plants that are naturally short oil and natural gas.
Another item of note is that the financial health ratio (as measured by the market capitalization of the stock divided by the total debt of the company) of some of the unhedged natural gas producers has materially deteriorated over the last year while at the same time they are less hedged than they were a year ago. These companies include Comstock Resources and Tellurian. Comstock as of the 3rd quarter of 2023 was still operating at a slim profit. However, Tellurian was operating at a loss even when natural gas prices at the Henry Hub were at $4 / MMBtu. Tellurian is at a probable risk of going bankrupt without any future additional financing if natural gas prices stay below $4 / MMBtu.