Executives from oil and gas firms have revealed where they expect the Henry Hub natural gas price to be at various points in the future as part of the recently released first quarter Dallas Fed Energy Survey.
The survey highlighted that the average response executives from 144 oil and gas firms gave when asked what they expect the Henry Hub natural gas price to be at the end of 2024 was $2.59 per million British thermal units (MMBtu). The low forecast in the survey was $1.50 per MMBtu, the high forecast was $7 per MMBtu, and the Henry Hub price during the survey was $1.44 per MMBtu, the survey pointed out.
In the previous Dallas Fed Energy Survey, which was released in the fourth quarter of last year, the average response executives from 140 oil and gas firms gave when asked the same question was $3.09 per MMBtu. The low forecast in that survey was $1.50 per MMBtu and the high forecast was $5.30 per MMBtu. The Henry Hub price during that survey was $2.48 per MMBtu, that survey showed.
The first quarter Dallas Fed Energy Survey also asked participants where they expect Henry Hub natural gas prices to be in six months, one year, two years, and five years. Executives from 128 oil and gas firms answered this question and gave a mean response of $2.21 per MMBtu for the six month mark, $2.64 per MMBtu for the year mark, $3.18 per MMBtu for the two year mark, and $3.94 per MMBtu for the five year mark.
This question was not posed in the fourth quarter Dallas Fed Energy Survey.
Survey Comments
Natural gas prices were highlighted several times in a ‘comments’ section of the latest Dallas Fed Energy Survey, which the survey outlined showed comments from respondents’ completed surveys that had been edited for publication.
“Natural gas prices remain challenged, primarily due to the overhang of storage and lack of winter demand,” a comment from one exploration and production firm noted, according to the survey.
“Crude oil markets have continued to be constructive. We have decreased capital investments in our natural gas portfolio and increased capital investments in our oil portfolio,” it added.
Another exploration and production firm commented that “natural gas is currently pricing at or below costs of production”, the survey showed.
“Natural gas is the primary commodity for our industry in East Texas,” another exploration and production firm is said to have commented.
“This makes our activity depend on pricing for natural gas. The low prices we are experiencing now are causing us to tuck it in and keep our powder dry,” it added.
One support services firm is said to have commented that “lower natural gas prices, combined with E&P consolidation, and their unrelenting focus on capital and operational efficiencies, are causing U.S. lower 48 rig count to remain flat-ish”.
“The outlook for the first half of 2024 is for U.S. lower 48 rig count to move sideways and for an increased rig count in the second half of 2024 driven primarily by private E&P incremental rig adds in oily basins,” it added.
“Until gas-directed activity rebounds, however, U.S. lower 48 rig count will remain more muted. There are reasons for optimism later this year and especially for 2025,” it continued.
In comments listed under a ‘special questions’ section of the survey, one exploration and production company is said to have commented that “natural gas prices need to be in the $4 per MMBtu range to attract our exploration attention”.
“Current wellhead prices barely cover overhead and have deceased free cash flow,” it added.
Also in that section, an oil and gas support services firm is said to have commented that “a healthy natural gas price is essential to the energy industry”.
Other Price Projections
In its latest short term energy outlook (STEO), the U.S. Energy Information Administration (EIA) projected that the Henry Hub spot price will average $2.20 per MMBtu in the first quarter of this year, $1.79 per MMBtu in the second quarter, $2.28 per MMBtu in the third quarter, $2.82 per MMBtu in the fourth quarter, and $2.27 per MMBtu overall in 2024.
The EIA forecast in its March STEO that the Henry Hub spot price will average $2.90 per MMBtu in the first quarter of 2025, $2.67 per MMBtu in the second quarter, $3.00 per MMBtu in the third quarter, $3.20 per MMBtu in the fourth quarter, and $2.94 per MMBtu overall in 2025.
In a report sent to Rigzone last week, Standard Chartered projected that the NYMEX basis Henry Hub nearby future price will average $4.80 per MMBtu in the second quarter of this year, $4.70 per MMBtu across the third and fourth quarters, $4.80 per MMBtu in the first quarter of 2025, and $4.70 per MMBtu in the second quarter of next year.
The company forecast in the report that the commodity will average $4.80 per MMBtu overall across 2025 and 2026, and $4.50 per MMBtu overall in 2027.
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