Watch for Falling Gas DUCs: E&Ps Resume Completions at $4 Gas

The U.S. gas-well DUC count is declining precipitously, particularly in the Marcellus Shale, according to new Enverus data.

Typically, more gas wells are turned inline (TIL’ed) beginning after summer to capture winter-month futures prices.

But U.S. producers departed from this in 2023 as a persistently low Henry Hub price resulted in the total number of gas DUCs climbing to more than 600 in January 2024, according to the Enverus data.

Some were completed the following month, bringing the total U.S. gas DUC count down to just more than 500.

The number held steady through the year at about 500, until September.

But producers resumed the autumn completions tradition when Appalachian Basin operators in particular began to work through their DUC inventory, reducing the basin’s DUC count by about 26%, from approximately 400 to 295.

In the Haynesville Shale, the DUC count declined by 45 to a total of 72, according to the Enverus data.

Publicly held E&Ps with the most gas DUCs at year-end were Coterra Energy with 59; EQT Corp., 50; Expand Energy, 42; Range Resources, 37; and CNX Resources, 22.

Strip is currently some $4/MMBtu, compared with roughly $3/MMBtu a year ago, according to CME Group data.

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Expand’s 140 DUCs and DTILs

Among producers that have deferred TILs (DTILs) and inventoried DUCs, Expand declined a Hart Energy request to comment on whether its curtailments had changed since it last gave guidance to investors.

David Deckelbaum, analyst with TD Cowen, reported earlier this month that he expects Expand will consider taking output to more than 7.2 Bcfe/d in the fourth quarter this year from 6.4 Bcfe/d in the past quarter.

He counted Expand having 80 DTILs of swing capacity with 1 Bcfe/d choked that can be turned online.

With first-half 2025 gas futures “rocketing from $2.85 to $3.67 in the past few weeks,” Deckelbaum wrote, and a 2025 strip of $4, he expects “management to look prudently at DTILs” to grow to more than 7.2 Bcfe/d before year-end.

Expand also has 60 DUCs, by his count, that would add 0.5 Bcf/d upon completion and being turned online, he noted. The 60 DUCs could be completed for $300 million, he added.

Expand is the recently merged Chesapeake Energy and Southwestern Energy, both U.S. gas pure-plays. Combined, the operator has 650,000 net Haynesville acres, all in the northwestern corner of Louisiana, and 1.2 million net Appalachian acres.

In the Haynesville, the company’s first-quarter production, before building DUCs and TILs, was about 2.7 Bcfe/d; in Appalachia, 4.3 Bcfe/d, according to Deckelbaum.

“The company made the decision to build up so many deferred TILs and DUCs due to low commodity prices in 2024 and the expectation of better supply/demand dynamics in 2025,” Deckelbaum noted.

While turning the DTILs online is pending market dynamics, “management has stated that they will not add new deferred TILs in 2025,” he reported.

“If markets are better than expected, Expand also has the optionality to complete its 60 DUCs.”

In addition to higher gas futures, Deckelbaum expects Expand to benefit from what he expects will be Gulf Coast LNG export capacity to grow to 40 Bcf/d—up from roughly 15 Bcf/d currently.

EQT, Range, Antero

EQT, the No. 2 U.S. gas producer by volume, told Hart Energy that “at less than $1.50 local pricing, we look to pull back volumes and then add back once prices improve.”

The spokesman added, “As for DTILs and DUCs, we never made any changes to our operational plans in response to the pricing environment, so it's business as usual on that front.”

TPH & Co. analyst Matt Portillo expects U.S. gas producers will remain conservative through the year.

“Outside a recovery in volumes from producers who prudently allowed production to roll aggressively last year, like Expand,” Portillo wrote on Jan. 23, “we aren't expecting public operators to meaningfully deviate from maintenance capital plans in the Northeast and Haynesville in 2025.”

At Range, J.P. Morgan Securities analyst Arun Jayaram expects the company to keep production flat through 2025 at 2.2 Bcfe/d.

His forecast “assumes that the company continues to build its DUC inventory in order to provide a tailwind to 2026-plus capital efficiency,” he wrote.

Antero Resources has a five-well pad that was DUCed, Jayaram wrote. Management last said the pad would be completed at a strip better than $2.50. Antero produces 3.4 Bcfe/d, all from Appalachia.

“Given the increase in strip pricing over December, we believe Antero likely completed the five-well pad prior to year-end,” Jayaram wrote.

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U.S. gas production at year-end was 104.6 Bcf/d, according to Jayaram. Demand was 111.1 Bcf/d, up 16% from a year earlier. LNG exports were 14.3 Bcf/d; exports to Mexico, 5.6 Bcf/d.

Of 102 rigs drilling gas targets, 26 were at work in Appalachia and 30 in the Haynesville.