US gas companies EQT and Range increase output plans for 2025
EQT, a U.S.-based energy company, and Range Resources, a U.S.-based oil company both expect to produce additional natural gas by 2025 in order to meet the rising demand without increasing planned expenditure.
Energy analysts predict that demand for liquefied gas for powering data centers and export to other countries will continue to reach record levels in the coming years.
Dennis Degner, CEO of Range, told analysts during a call to discuss earnings on Wednesday that the company is "extremely well-positioned" to support these initiatives. Range is one of only a few producers in Appalachia to have sufficient inventory of high-quality natural gas to provide the long-term supply of durable natural gas. Range's second-quarter earnings saw its capital budget reduced to $650-$680 millions, compared with the $650-$690million range it had given in its first-quarter guidance.
Range has also increased its production forecast for 2025 to approximately 2.225 billion cubic foot of gas equivalents per day. This is up from the first quarter guidance of around 2.2bcfed.
Range reported that it produced 2.2 billion pounds of feed in the second quarter. This is the same amount as the first quarter.
Range announced in a presentation of its earnings that it would spend $650-700 million annually on capital expenditures between 2025 and 2027. This should increase daily production from 2.4 billion pounds in 2026 to 2.6 billion pounds in 2027.
In afternoon trading, range shares were barely changed at $35.63.
EQT EXPECTS A HIGHER OUTPUT
EQT, which is the second largest gas producer in the world, increased the amount of gas that it expects to extract from the ground by 2025 while maintaining planned spending at the same level. EQT reaffirmed in its second-quarter earnings that it expects to spend $2.30-$2.45billion on capital expenditures by 2025, and increased its estimated total sales volume from 6.30-6.58 bcfed.
This is an increase from EQT’s first-quarter 2025 production expectations of 6.03-6.30 bcfed. It compares to capital expenditures of $2.266 billion in the past year, and production averages of 6.10 bcfed. Mizuho analysts said that investors are primarily focused on the details of EQT's gas supply agreements to the Shippingport power generation project in Pennsylvania and Homer City.
EQT says the Pennsylvania projects will increase the reliability of the regional electric grid, and provide energy for Artificial Intelligence Data centers that are being developed.
EQT said it couldn't disclose the specific terms of the contracts or the end customers but that the company expected the projects to generate approximately $250 million in recurring free cashflow by 2029.
We will first reallocate volume to meet this new demand. Then, we'll see steady growth in the mid-single digits over a multi-year period. We can grow production by 2 bcfd or more to meet these new volumes. This means that we have set ourselves up to responsibly grow our business by 30% in the next few years," EQT's Chief Financial Officer Jeremy Knop said on a conference call.
EQT shares fell about 4.2%, to $52, putting it on course for its lowest closing since early May.
According to Mizuho, "based on recent investor conversations, we believe that (the free-cash flow uplift) is at the lower end expectations." The uplift was linked to several projects including a West Virginia power generation project.
Mizuho, in a statement referring to EQT, said that "overall, the improving demand in Appalachia is expected to be a tailwind" for the low-cost manufacturer. (Reporting and editing by Paul Simao, Scott DiSavino).
(source: Reuters)
