US gas market fundamentals ‘balanced’: EQT

The largest US natural gas producer by volume assured investors today that the pace of US gas production is appropriate relative to demand, despite benchmark prices hitting fresh three-year lows this week.

US gas storage being 10.6pc above the five-year average "is really just the result of a really warm El Niño winter," EQT chief financial officer Jeremy Knop said, referring to the weather pattern partly responsible for recent months being the warmest ever recorded. "If we had just had normal weather, the market would be balanced right now."

The Appalachian producer, which focuses primarily on Pennsylvania and West Virginia, sought to push back on the narrative that producers are pushing too much gas onto the market, given how much heating demand has been erased by the past two warm US winters. EQT posted fourth-quarter production today that was on the high end of guidance, attributing the results to strong well performance. The expectation beat mirrored those of Seneca Resources, which last week revised its 2024 gas production upward on unexpectedly strong well performance, and Coterra Energy, which in November posted third-quarter gas output above the high end of guidance.

"We're really not that far out of whack on the fundamentals," Knop said.

Nymex gas for March delivery at US benchmark Henry Hub settled Tuesday at $1.689/mmBtu, the lowest since July 2020.

Several analysts asked EQT executives today on a conference call how far gas prices would have to fall for the company to curtail production. The company replied that the fastest way to balance the market would be for operators to reduce activity in the Haynesville basin of east Texas and northern Louisiana — not in the more established shale basins of Appalachia, where gas production is cheaper.

Furthermore, curtailing activity this year would not reduce production until next year, when prices are expected to rebound, Knop said. But any gains in the 2025-calendar strip could be erased by further delays in the in-service dates of new LNG export terminals on the US Gulf coast.

"Eventually, we will have a normal winter," EQT chief executive Toby Rice said.

By Julian Hast