Expand Energy, the largest producer of US natural gas by volume, is betting that the US gas market will need a large shot of supply in short order, but exactly when remains in question.
The company, formed on 1 October following the completion of Chesapeake Energy's $7.4bn acquisition of rival gas producer Southwestern Energy, has amassed 58 drilled but uncompleted wells and another 58 wells that have yet to be brought on line. It plans to build on that inventory by year-end, increasing its ability to flood the market with an additional 1 Bcf/d (28mn m³/d).
"We will be prudent in turning production on line and ready to rapidly respond to market conditions when prices improve," Expand Energy's chief executive Nick Dell'Osso said today.
The company declined to give a price that would trigger a supply response. It is planning on bringing some of those wells on line next year but could keep them in reserve if gas prices remain soft, Dell'Osso noted.
That growing backlog of wells underscores how large US gas producers are coping with sharply lower gas prices and the prospect that prices will rebound once new LNG export capacity starts up along the US Gulf coast. That on-demand supply could leave the market less prone to a lasting supply shortage.
Producers, including Chesapeake and EQT, reined in drilling and curtailed output in response to a collapse in US gas prices and to avoid compounding the oversupply in the US market. Expand has curtailed about 200mn cf/d of output across its operations, the company said today.
Spot prices at the Henry Hub so far this month have averaged $2.23/mmBtu, or 25pc lower than a year earlier. High US natural gas inventories and forecasts for a mild start to the winter heating season have weighed on gas prices. Delays to large LNG projects have also dimmed chances that prices will turn around quickly next year.
The US Energy Information Administration earlier this month revised lower its forecast for US LNG exports after the developers of the Golden Pass LNG postponed the terminal expected start to the second half of 2026 from fourth-quarter 2025. The agency also said it expected the stage 3 of the Corpus Christi LNG terminal to start production in the second half of 2027 instead of mid-2025.
Expand Energy, during the third quarter, produced 6.75 Bcf/d of natural gas equivalent (Bcfe/d), or about 17pc lower than output of the two companies during the same year-earlier quarter. Southwestern's output during third-quarter 2023 was 4.6 Bcfe/d, while Chesapeake produced 3.5 Bcfe/d.
Expand says it will cut two rigs next year because of "current market conditions" but will boost output to about 7 Bcfe/d. The company plans to operate a total 10-12 rigs in its key operating areas: the Haynesville shale in east Texas and northern Louisiana and the Marcellus shale in Pennsylvania and the adjoining states. Its preliminary 2025 capital spending budget is $2.7bn.
