Page 15 - NorthAmOil Week 30

NorthAmOil PERFORMANCE NorthAmOil

EQT restores curtailed gas production

APPALACHIAN EQT, the largest natural gas producer in the US, metres) in May and $2.40 per mmBtu ($66.38
BASIN said this week that it had restored all of the out- per 1,000 cubic metres) in June.
put it curtailed in May, and that there had been EQT said it sold 346 bcf (9.8bn cubic metres)
no degradation in well performance. The news of gas equivalent in the second quarter of 2020,
came in the company’s second-quarter earnings down from 370 bcf (10.5 bcm) equivalent during
call. the same quarter of last year. Despite the decline,
The temporary curtailment was brought in on the company noted that its sales volumes were 21
May 16 for the duration of the second quarter bcf (595 mcm) equivalent above the midpoint of
of 2020, and comprised about 1.4bn cubic feet its second-quarter guidance.
(39.6mn cubic metres) per day of gas equivalent In the third quarter, EQT expects sales vol-
on a gross basis. It came as Henry Hub bench- ume to rise to 360-380 bcf (10.2-10.8 bcm)
mark gas prices sank to 25-year lows owing to equivalent.
the impact of the coronavirus (COVID-19) pan- The results come a year after Toby Rice
demic on demand. became CEO of EQT following a proxy battle.
According to the US Energy Information The company set about overhauling its business,
Administration (EIA), Henry Hub prices aver- warning even last year that it would reduce pro-
aged $1.75 per million British thermal units duction during this process. On the earnings call
($48.41 per 1,000 cubic metres) in May and $1.63 this week, Rice talked up the progress that has
per mmBtu ($45.09 per 1,000 cubic metres) in been made since, saying that “every day, we are
June. While gas prices have been low for some getting closer to being the natural gas leader that
time, causing shale gas producers to proceed we all hoped for”.
with caution even before COVID-19 spread Despite this, he added that he expected to run
worldwide, this nonetheless marks a decline the company “at the maintenance level” for the
compared with 2019, when Henry Hub aver- next few years as a result of the challenging mar-
aged $2.64 per mmBtu ($73.02 per 1,000 cubic ket environment.™

Hess raises 2020 production outlook

US US independent Hess has raised its production Hess chartered three
outlook for the whole of 2020 by 10,000 bar- VLCCs for storing its
rels of oil equivalent per day (boepd) to about crude in order to avoid
330,000 boepd. The upward revision comes after curtailing production in
the company increased its number of active wells the second quarter.
in North Dakota’s Bakken play and delayed the
planned maintenance of its Tioga gas plant in
the state from the third quarter of this year until
2021.
Analysts from Credit Suisse commented that
the upward revision was not a surprise given the
delay in maintenance, but they expect it to be an many other operators did, the company char-
outlier in the current environment, with other tered three very large crude carriers (VLCC) to
companies largely scaling back plans. store the crude that was not being absorbed by
Excluding Libya – where a force majeure is in the market because of low demand caused by the
place, leading Hess not to factor it into any of its coronavirus (COVID-19) pandemic.
current results – the company produced 334,000 Nonetheless, Hess did post a wider loss on
boepd in the second quarter of 2020. This a y/y basis for the second quarter – though the
marked a 22% increase on the second quarter of loss was still smaller than expected by analysts.
2019, when net output reached 273,000 boepd. The company’s net loss widened to $320mn, or
Hess attributed the improvement primarily to a $1.05 per share, from a loss of $6mn, or $0.02 per
39% rise in Bakken production, as well as out- share, a year earlier.
put from the Liza field offshore Guyana, which The producer continues to transport crude
entered service in December 2019. on the Dakota Access pipeline for now. But Hess’
While some other producers are also starting CEO, John Hess, said on the company’s earnings
to report year-on-year increases in output, many call that it had the flexibility to move all of its
others are anticipated to post second-quarter Bakken output by other means if the pipeline –
declines, so Hess may be an outlier on this too. which is in the middle of a legal battle – is forced
However, instead of curtailing production like to shut down.™

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