Wouldn't be shocked if it's a rough year for natty players. I think 2H 2024 on could be very good to them, but without the prospect of a lot of new LNG (not counting freeport) in 2023, it's tough finding a home on pipe for all that gas. We've gotten too good at producing large volumes of gas in the shale era for high prices without LNG terminals to last fot very long.

I agree, long term natty above $5 is hard to sustain. I also think natty at elevated levels gave some of the marginal liquid rich plays added juice.

I will say this but in the last 2 weeks I've talked to 3-4 private guys that are laying down rigs or stopping frac fleets. This is decent sized private players

Yeah I've posted that before but one of the bigger HV privates (Dallas based) is laying down 33% of their rigs from what has been discussed with us.

Any of you work in the midstream commercial/marketing space? Specifically the Permian. Would enjoy connecting.

HouAggie said:

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Most of the newer US LNG deals are priced based on TTF or JKM. But I think the Qataris still sell % of Brent.

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I remember some of the deals in the US were based upon fixed fee plus HH. Depends on who owns what and how it was structured.

~egon

Gas dropping tonight. $2.70 atm.

4.50 if you want to fund development and be free cash flow positive. I look at a lot of deals, with basin diffs I feel good on my handle on what it takes.

Gordo14 said:

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Wouldn't be shocked if it's a rough year for natty players. I think 2H 2024 on could be very good to them, but without the prospect of a lot of new LNG (not counting freeport) in 2023, it's tough finding a home on pipe for all that gas. We've gotten too good at producing large volumes of gas in the shale era for high prices without LNG terminals to last fot very long.

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Good assessment here. Improved cycle times, longer laterals, optimized stimulations…it's just too easy to grow volume quickly and without LNG exports increasing this year, supply was bound to catch up.

I agree, I will be interested to see how muted growth is. Associated gas will grow but gas was really helping eagle ford economics.

I could see the Haynesville, South Texas, PRB, and Oklahoma lay down considerable rigs at current realized prices.

Agree- Natty is a really hard investment given the ease to grow supply much quicker than crude oil.

I know a few pure gas players that have been process of laying down several rigs just for the fact of how much gas production came online in such a short period last year and seeing the acceleration of price drop in Dec due to supply demand balance.

Too many undeveloped prolific gas plays domestically and not enough export capacity to keep a healthy price.

sts7049 said:

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it was obvious to me that Wael was going to be a candidate at some point. he was moving rapidly up the leadership ladder. he hasn't been in his current role very long, but I didn't anticipate Ben leaving either really.

Wael is a pretty no nonsense kind of guy, I've met him once in person. hard to say yet though how much our strategy might change with him at the helm.

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welp, a few weeks into the job and phase one of his "simplification" has begun. seems minor at this point, shrinking the EC and grouping some businesses together which means some senior folks will be redundant, but you never know what this can turn into.

more carnage for Nat gas. Warm up next week and then its almost spring time.
If Feb is like January we should drop below $2 at some point

JP_Losman said:

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more carnage for Nat gas. Warm up next week and then its almost spring time.
If Feb is like January we should drop below $2 at some point

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It's all pretty fascinating to me and shows how short term of a memory people have. The global supply chain still needs more infrastructure to support Europe, and at this rate that isn't going to happen.

This winter was mild, but I feel like there is this false sense of security because of it. Highly doubt anything is done before next winter. So we going to have a global panic and surge again, then? Or we just going to hope and cross our fingers they have another mild winter?

I think for L48 nat gas, the issue is you're going to have high storage levels coupled with no additional LNG exports in 2023. You're setting a scenario where you have storage and limited exports to keep a lid on prices. US gas producers (and gassy Permian bois) are too good at finding natty.

I've been digging through a lot of the haynesville, arkoma, and Northeast producers to understand ecomomics. I'm expecting lager number of rigs dropping in addition to frac crews as most will go free cash flow negative to maintain production. I just do not see a scenario where that is advisable from either the public or private side.

I also expect differentials to further pressure the Tx/La Haynesville guys.

This chart shows when natty will get better.



https://www.eia.gov/todayinenergy/detail.php?id=53719

Agree. Just a complete rug pull on natty

It's strange reading the posts on NG prices with opposite emotional reactions

Winter of 2013-2014 is the model we would need to see a recovery in gas pricing.
Blizzards in April up the east coast and rust belt etc

I agree with this. Every third-tier rock/basin generally has a higher GOR, you have all that trash in Oklahoma, parts of delaware, some really deep stuff in east texas, dry gas windows in Eagle Ford that all can ramp quickly.

I'm just not sure you can see sustained long term pricing in natty. With weather, and ease of bringing to market (even with pipe constraints), it can really ramp quickly.

Esp with Haynesville bois brining on 30,000 mcf/d bangers.

one MEEN Ag said:

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Cyp0111 said:

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This chart shows when natty will get better.



https://www.eia.gov/todayinenergy/detail.php?id=53719

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I was just about to pull that chart and you beat me to it.

Honestly, though, I don't even think those projects will long term upset the balance of natural gas prices. We'll be having the same discussions here in 2027. The amount of gas produced will rise, but there will always be more that can come down the pipeline. Gas with a spot to land just invites free wheeling on shale wells. Suddenly every marginal play is back in business, taps are flung open, and then..ohh **** where'd the price of natty go?!

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We're in an era of cheap energy.

6 bcf/ day of incremental export demand over next 24 months is hardly anything and will be met by shale and associated gas in Permian easily. Hard to see a big runup in '24. Plenty of gas , and weather will continue to matter. Plus you'll have renewable energy creep from the IRA $$$'s that will eat into nat gas power demand over time.

Are those 30,000mm peak 30 or what?

yes- they all fall off pretty fast/hard from my observation.

Good article - the wildcard will be midstream development, but even then, there is a ton of gas in TX, OK and LA that will not be as constrained by lack of pipelines (meaning pipes will get built if needed). Appalachia is another story, good luck building a new pipe out of there, but I'm not convinced that needed LNG supply can't be met by TX/LA/OK, etc.

I think it can be met largely within the gulf coast/Oklahoma. However, current price levels will not incentivize production to come online so depending on when we clear storage (likely next winter now), we could see bullish support in late 24.

At then end of the day, Producer supply is the wildcard for 2023. But as the article implies, new added production is already coming our way so we'll see more bearish pressure and probably see more lower prices before we see more modest prices. If we have a delayed winter (cold March) we *could* see 3.50 to 4 prices, unlikely though.

Pricing in Europe hasn't helped on NG.

Down to $17.64 mmbtu from $60-80 during the summer Ukraine crisis

Cyp0111 said:

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I think it can be met largely within the gulf coast/Oklahoma. However, current price levels will not incentivize production to come online so depending on when we clear storage (likely next winter now), we could see bullish support in late 24.

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<$2.50/mcf will not incentivize but stable at more than $3.00/mcf will. More than $4.00/mcf will flood market like it did this year. Rangebound $2.50-$3.50 feels right for next several years, with weather-driven short-term exceptions of course??