East Daley Analytics’ natural gas balances show a need for more Haynesville supply later in 2025, which will require operators to step up drilling. But there’s little appetite for new spending right now, setting up a potential mismatch down the road.
BP could be the first to step forward. Last week, the supermajor said it was “contemplating increasing rigs” into a “very, very solid” natural gas forward strip in late 2025 and 2026.
The Henry Hub averaged $4.12/MMBtu during a cold January, according to Bloomberg pricing data. The December ’25 contract recently traded at $4.49, and the Cal ’26 strip averaged $3.94. The forward curve is well above East Daley’s estimate of a ~$2.40 breakeven for core Haynesville acreage, and would even support development of emerging acreage to turn a profit at an estimated $3.75 breakeven (see map).
Accordingly, we’re bullish on Haynesville growth, as shown in the figure. In the Macro Supply & Demand Report, EDA expects rigs to grow from 36 to 72, and model residue gas production topping 17 Bcf/d by the end of 2025.
This growth will be critical to balancing a market with plenty of demand growth ahead. We model an incremental ~3 Bcf/d of LNG demand growth by YE25 from Plaquemines LNG Phase 1 and Corpus Christi Stage 3, and another 2.7 Bcf/d from Golden Pass LNG by YE26. Plaquemines has been flowing 1.2 Bcf/d through the first two months of 2025, signaling that after an extended lull, the next LNG infrastructure wave is finally here. The additional demand along with a cold winter has put US natural gas storage into a deficit (to the 5-year average) for the first time in two years, and EDA expects this deficit to persist into mid-‘26.
The question remains: Who will bite first at $4 gas prices? BP has signaled that the current price environment is favorable. But other large Haynesville producers aren’t so eager.
Aethon, the largest private producer in the Haynesville, said earlier this month that it will need prices to top $5/MMBtu to justify new development. Expand Energy (EXE) also said prices need to climb “materially higher” than a $3.50 breakeven before it would consider bringing online new production. Aethon and EXE are currently running 7 rigs each in the basin, by our count. Comstock Resources (CRK), the other “Haynesville major,” is furiously drilling its western Haynesville exploratory play, running 4 of its 6 rigs on that acreage.
At the moment, Haynesville producers appear to be playing a game of chicken. Prices are strong enough to turn a profit. But if operators commit to an aggressive drilling program and demand doesn’t materialize fast enough, they could end up punished by investors. On the other hand, more nimble producers could find profit in the forward curve, adding needed incremental supply and delaying the $5-handle the big fish are waiting for. – Oren Pilant Tickers: BP, CRK, EXE.
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