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Natural Gas Price Forecasts

1Q 2020 –

  • The precipitous decline in drilling activity as a result of the impacts of COVID-19 and the Russia/Saudi price war has led to a significant decrease
    in projected associated gas production. These declines will likely be partially offset by a decline in industrial and LNG demand along the Gulf
    Coast as global demand falls amidst an already oversupplied international gas market. In the near term, the decrease in supply is likely to
    outpace demand destruction leading to stronger Henry Hub pricing in the second half of 2020 and into 2021.
  • Oil production curtailments in the near-term and sustained production declines in the long-term are expected to remove significant associated
    gas volumes from the market, particularly in West Texas. The loss of associated gas volumes in the market is expected to put significant upward
    pressure on basis markets across the west as volumes from West Texas moving into the Rockies and Midcontinent are likely to decline. In gasfocused plays such as the Haynesville and Marcellus & Utica, outright pricing is expected to improve in late 2020 and 2021 to support the return
    of activity to the regions as associated gas production declines, opening space in the market for incremental gas-focused production.

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