Aethon Energy Management has little incentive to increase production from the Haynesville until gas prices increase, president Gordon Huddleston said at the Jan. 7 Goldman Sachs Energy, Cleantech and Utilities Conference. Speaking on a natural gas market panel that also included Expand Energy president and CEO Nick Dell’Osso and Tourmaline Oil President and CEO Michael Rose, Huddleston said bringing significant development online will probably start with $5.00/MMBtu prices.
Aethon, backed by the Ontario Teachers’ Pension Plan and RedBird Capital Partners, holds around 420,000 net acres on the Louisiana side of the Haynesville, according to its website, and around 1,850 gross operated wells as of mid-2024, according to its latest Operator Profile from Enverus Intelligence® Research (EIR). The company averaged 2.5 Bcf/d in 2023, although it is reportedly producing around 3 Bcf/d now.
In November, Reuters reported the company was exploring options for its upstream and midstream assets, including a potential sale or IPO at a $10 billion valuation. Sources familiar with the matter said the company was working with Goldman Sachs and Citigroup to evaluate options, adding that a transaction could occur in 2025.
Speaking on the same panel, Dell’Osso said marginal production in the Haynesville begins to break even around $3.50/MMBtu and prices would need to climb materially higher to justify new volumes. Expand, formed through the October merger of Chesapeake Energy and Southwestern Energy, said in its 3Q24 earnings presentation it was forecasting 4Q24 production of 2.4 Bcfe/d from the play, down from nearly 3 Bcf/d of pro forma output in 1Q24.
As of the end of 3Q24, Expand had 21 wells it had deferred turning in line and 29 drilled uncompleted wells in the Haynesville, and was running eight rigs and three frac crews in 4Q24. Dell’Osso said Expand was aiming to level its overall production, at least partially, at around 7 Bcfe/d in 2025—compared to forecast volumes of about 6.4 Bcfe/d in 4Q24—by bringing curtailed production back onstream and utilizing deferred capacity.
The U.S. is due to see higher gas demand in the coming years, through both new LNG export projects coming online and higher gas-fired electricity generation, driven in large part by demand from new data centers. However, EIR said in a November report it expects the global LNG market to be oversupplied by about 1 Bcf/d in 2025-2027 before becoming significantly undersupplied from 2028 through 2035. In a separate November report, EIR said the global gas market risks being oversupplied by 2-4 Bcf/d through 2027.
Aethon delivered the four best test rates in the Haynesville in Enverus Foundations® data reported in the latest Upstream Pulse.
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