By Georgina McCartney and Scott DiSavino
HOUSTON/NEW YORK (Reuters) – Major U.S. manufacturers are preparing to further curtail production in the second half of 2024 after prices fell nearly 40% in the past two months.
Henry Hub gas futures have fallen to around $2 per million British thermal units (mmBtu), while in West Texas Waha prices have turned negative a record number of times so far in 2024. Prices fell as demand weakened after cooler-than-expected temperatures. Supply had meanwhile increased as some producers ramped up production in the second quarter after prices rose by around 47% in April and May.
EQT (ST:), one of the largest U.S. gas producers, implemented about 90 billion cubic feet of strategic curtailments this fall, which the company will implement if the market remains depressed, CFO Jeremy Knop said at the company’s second meeting . quarterly earnings call.
Houston, Texas-based Apache also plans to curtail another 90 million cubic feet per day (mmcfd) of gas in the third quarter, CFO Stephen J. Riney told analysts in an investor call last week.
Apache curtailed $78 million in gas production in the second quarter in response to price extremes in the Permian Basin, the company said in its second-quarter earnings report.
Chesapeake Energy (NYSE:), which will be the largest gas producer in the US after it completes its merger with Southwestern Energy (NYSE:), plans to delay the completion of some wells while the gas market is weak, and wait until supply and demand imbalances are corrected, the company said in its second-quarter earnings report last month.
Rivals Antero Resources (NYSE:) Corp and EGO Resources are choosing to do the same, they said in earnings reports.
Chesapeake’s move to delay well completions makes sense because it can sustain an expected surge in LNG demand to prop up and boost prices, Robert Wilson, vice president of analytics at East Daley, told me to Reuters.
Meanwhile, shale producer Coterra Energy (NYSE:) reversed some cuts at the end of the second quarter, but is bracing for more cuts.
“We are prepared to make further cuts as some of our summer sales commitments expire during the shoulder season,” Blake Sirgo, Coterra’s senior vice president of operations, said in the company’s second-quarter earnings call.
U.S. natural gas production will average around 103.3 bcfd this year, the Energy Information Administration (EIA) said in its August edition of the Short-Term Energy Outlook Report.
That compares with the 103.8 bcfd produced last year, and is down slightly from the 103.5 bcfd forecast in the July edition of the report.
