Jordan Blum, editorial director, Hart Energy: We are here at CERAWeek 2025. I am joined by Gordon Huddleston, the president and partner at Aethon Energy. Thank you so much for being here, I really appreciate it. So obviously you all are the top private player in the Haynesville now. You all are producing quite a bit. We had the energy secretary here yesterday. Permits are flowing for LNG, again. Obviously, a lot of construction is underway, more coming online later this year. I really just wanted to get your thoughts on just the bullishness for the Haynesville with everything going on with LNG and just where things stand, how excited you are.

Gordon Huddleston, president and partner, Aethon Energy: I think there's been a market shift with the new administration and [Department of Energy] Secretary [Chris] Wright. They have been quick to look at the projects and start issuing permits as we've seen and as a producer, we see that as being very constructive and ultimately there's significant appetite for U.S. LNG

JB: Very good. So obviously the Haynesville is more LNG reliant, but we have tons and tons of talk about data centers, AI, everything. How additive is that from your perspective right now?

GH: Well, while AI is a big topic, that demand is going to take a while to materialize and ultimately its significant, but compared to LNG, the build out is a smaller piece. I think what's interesting about it is we've always felt like power forecast, even pre this AI boom, we're understated and that we were going to need more power than [the] industry was forecasting. And now you have this additional layer of demand from the AI side with a very broad application base. So even if we see additional efficiency on the chip side and the models which should occur, I think the applications here are quite robust, but compared to LNG, it's still a small amount. So it's just these things ultimately add up, just like layers on a cake, you ultimately get to a pretty big number. And that's where industries as a producer, we're trying to respond accordingly.

JB: Very good. Now like you mentioned, power demand has been understated in the past and has been flat for a while now with all the projections going on with all the AI and data center stuff. Do we think we're almost swinging the pendulum too much with prognosticators, maybe overstating power demand or are you going to leave that to the experts?

GH: I think it's hard to say what that ultimately looks like. I think the point I was making is that there were a lot of efficiency, historical efficiency gains that were modeled into a go forward that didn't have specific ways that those were going to materialize. And I think that's a dangerous thing when you're trying to forecast and determine what the U.S. grid build out is going to be. I think we all want to have the cleanest, most reliable energy possible, but I don't think Americans are going to be okay with not be able to flip their light switch on and have the lights turn on. So, I think it's a long way of saying that there was a lot of generation that through the renewable build out, a lot of gas generation also was not being built and then you had coal retirements going on as well as some of the nuclear, and I think you can do that for a while, but it catches up for you. These are long cycle time projects and so that's probably our concern is that we think there's been an underinvestment and generation capacity and now you have this additional demand.

JB: Natural gas prices have been on the upswing, obviously a bit. LNG demand globally is hopefully going to, I guess, boost that a bit more. I wanted to get your thoughts on just where the sweet spot is in terms of pricing for ramping up activity and where things stand in the Haynesville.

GH: So, the Haynesville being close to the LNG exporters, that's where one of the largest gas providers to the LNG export terminals. And I think the problem is it's a huge amount of gas that comes on a pretty rapid clip. So in a perfect world, this would be more stair stepped and we would be more gradual, but that's just not the way it's shaking out with just the way the construction has occurred as well as the timing of these projects. And so it is a lot of gas and so you're going to have some volatility associated with that. We think we need $5 plus sustained because it is not just about what the returns are in the Haynesville or the returns in Appalachia or in other parts of the country. We need to see a lot of capital moving into the space and secondary and tertiary areas in addition to the primary basins. And then that's going to require a higher price to justify the risk associated with that exploration.

JB: Now I know you don't have the cliched crystal ball, but any thoughts on when we might get closer to that sustained $5?

GH: Well, we were been very open. I was talking about this back in January that we needed to see $5 gas. We're now seeing $5 gas, but it's really in a pretty limited time window. And so when we think about spending capital and allocating capital, we're looking at year-long development programs with these wells have a long life associated with them. And so that's why it's important that we see 2027 kind of move up closer to where 2026 is trading now and justify that longer term investment. But price is always difficult to predict, but what we can see are what returns are. And we also can see for both ourselves and other producers and other basins. And I think that's where we look at that and say, really to justify this, you're going to need to see higher pricing. And we also are a firm believer that I think Secretary Wright and the broader Trump administration looking at energy reform, there's a lot of gas in this country, it's just not in the right place. And as what we believe we're the highest margin producer in North America, partially because we own our own midstream, but also because just the nature of the rock quality we have and the inventory that gives us a different view. But you're not really concerned about the high margin player, it's the low margin that last marginal molecule. So that's where we need to see higher pricing to justify that type of risk taking.

JB: You all are one of the pioneering producers more in the western Haynesville as well out in  Robertson and Leon counties, [Texas]. It's a bit more expensive, but the higher gas prices will help with that. Can you talk about just kind of where things stand, the incremental growth out there?

GH: Sure. So we've been looking at that [the Haynesville] since 1819, so quite a while. When we went and mapped the area, we found what we felt like was really a core sweet spot. We have a partnership with Black Stone Minerals and are developing high temperature, high pressure wells there. And we took a lot of those key learnings and put them into our Western Haynesville acreage. We think it's early days, but we're very encouraged by the results. But again, I think with any new exploration type play, you try to be measured in your approach to make sure that you're minimizing unproductive capital and trying to learn as much as you can as you develop these assets to maximize the economics associated with them.

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JB: Any new trends or anything else you can talk about in terms of lateral lengths? Frack intensity, especially with the higher pressure om the Haynesville.

GH: I think in the western Haynesville it's deep and so you've got a lot of overburden and risk is always going to be crushing. So you have the sand or the proppant and if you get crushing, you can have an embedment, you can have a situation where those fracture, that fracture network you've created, closes off and that can take a while to show up. So [we] really want to be thoughtful there and really make sure that we understand what's going on with the reservoir. Our reservoir simulation team is doing a good job of trying to understand that, making sure that we're modeling it appropriately from a completion standpoint. So I think again, we're encouraged, but we're trying some different things and we'll see what we think ultimately results in the optimal completion.

JB: [You] started out by talking about Aethon as a top private producer. As such, there's always going to be a lot of speculation about whether y'all are going to IPO sell, buy, grow, where things stand, if you don't mind updating us on the latest.

GH: Sure. So it's been no secret for some time that we have been in a position to where we could operate in the public sphere in terms of the readiness of the business and from a controls and process, which we think are just good governance as is. We don't have anything to announce right now, but we can continue to be focused on shareholder returns. And last year we saw a lot of volatility and we're seeing that again just on the other side from a pricing standpoint. And so we curtailed production and then we deferred turning wells to sales. And today we're trying to be measured in responding to the pricing as well. I think producers got in front of demand last year, so we want to make sure we understand and start really seeing actual demand pull from these new projects and in the event they get delayed, we don't want to be out in front of that and we feel better about it now.

And I think, again, our concern is now on the other side, we also don't want to see demand destruction through significant volatility from gas or a view that gas is too expensive because ultimately U.S. natural gas, there's a lot of it, but a lot of it's not in the right places. And we can with the right policies that I think the Trump administration is very focused on ultimately get this to the consumer in the cleanest, safest way possible and deliver a very reliable product, especially for LNG and U.S. power demand.

JB: Sounds good. Yeah, a lot of things come back to wanting that sustainable $5.

GH: Yeah, Aethon is a bit unique and we try to be careful about the way we look at things because we have the midstream revenue, our breakevens are much lower. And so you have to make sure you're aware of what the broader market and the broader producer community, the pricing that they're looking at when we try to think about investment decisions. So we're cautiously optimistic, but as anyone who's been in natural gas for a long time knows that things can move very quickly in directions you don't anticipate. So risk management is really critical.

JB: Very true. Thank you again so much for being here at CERAWeek. We really appreciate it. To read and watch more, please visit online hartenergy.com.

GH: Thank you.

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