Sitting, Waiting, Wishing - Haynesville Gas Producers Hold Steady Ahead of Expected LNG Export Surge

Monday, 02/10/2025  Published by: Lisa Shidler  rbnenergy.com

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Producers in the Haynesville Shale had anticipated that growth in LNG exports in 2024 would goose prices and propel the play’s role as a crucial source of LNG feedgas. Instead, lackluster demand, exacerbated by delays at the Golden Pass LNG project, contributed to lower-than-expected natural gas prices, which caused some producers to scale back drilling plans and trimmed Haynesville production from about 16 Bcf/d in the first half of 2023 to less than 14 Bcf/d by the end of 2024. So, what do they have planned for 2025? In today’s RBN blog, we’ll discuss the Haynesville’s promise and challenges and highlight what E&Ps there are planning. 

We’ve written a great deal about the Haynesville Shale (yellow-bordered region in Figure 1 below) — one of the OG’s of shale development which stretches across portions of Northeast Texas and Northwest Louisiana — in the RBN blogosphere (see 50 Ways to Leave Louisiana) and its role as an essential source of LNG feedgas. The Haynesville along with the prolific Permian Basin and the Eagle Ford are among the most prominent and promising sources of additional feedgas for new export facilities being built along the Gulf Coast (colored diamonds in Figure 1), and a long list of pipeline projects are being planned and built to transport increasing volumes of gas from those basins to LNG export facilities. However, unlike the Permian (and a large swath of the Eagle Ford), where gas is produced largely as a byproduct of oil, and thus sensitive to oil prices, the Haynesville (along with parts of the southern Eagle Ford) is primarily a gas-producing region, and is correspondingly sensitive to gas prices.

So, when the pace of new export-capacity additions began to slow dramatically in 2023 and no new liquefaction/export capacity came online in 2024 (dashed red box in Figure 2 below) for the first time since the start of the U.S. LNG export boom in 2016 due to major construction delays at Golden Pass LNG and minor delays at Plaquemines LNG (see Tired of Waiting for You), that stifled a forecast price rise which, in turn, cascaded back to gas-focused producers in the Haynesville. Producers are not incentivized to boost output when prices aren’t supportive or when doing so would only serve to oversupply the market. More often these days, sophisticated producers adjust their plans based on current price signals balanced against any hedging they’ve done (see I Walk the Line). 

Golden Pass’s delays were a contributing factor to a drop in natural gas prices from levels anticipated the year prior. In Figure 3 below, the Henry Hub forward curve from November 2023 (solid green line) is compared to the curve in January 2024 (solid red line) and where the curve stands currently (blue line). In December 2023, Golden Pass announced the delay (marked by the vertical orange line); by January, the 2024 annual average Henry Hub forward curve had dropped by $0.87/MMbtu, from $3.61/MMbtu before the announcement (dashed green line) to $2.73/MMBtu after (dashed red line). Front-month Henry Hub gas prices (black line) stayed below $3/MMBtu until late November 2024, while the forward curve was still in contango — indicating the lack of growth in LNG feedgas requirements and other economic factors reduced demand for gas and put downward pressure on prices in the short term.

Those lower prices were a signal to Haynesville producers to pump the brakes, and many producers have cited low energy prices and market conditions as reasons for cutting production — particularly those public firms that answer to shareholders. Producers want prices to go up and stay that way so that they can hedge against future price drops and begin to drill more wells.

Fortunately for them, the growth trajectory for LNG exports is expected to resume in 2025, although Golden Pass LNG (gold-and-black checked diamond in Figure 1 and gold bar segments in Figure 2) isn’t expected to take feedgas before the second half of this year. On the other hand, Plaquemines LNG has begun exporting commissioning cargoes. Hand-in-hand with that, the current forward curve rises modestly through the summer and fall before angling up at the end of 2025, when Golden Pass is anticipated to ramp up.

Given all that background, it’s not surprising that producers are crafting different drilling strategies, with some holding back until prices show some stability at a higher level while others are plowing ahead. We’ll address their strategies below.

Aethon Energy Management LLC 

Aethon is one of the largest private producers operating in the Haynesville and has multiple rigs (pink rig icons in Figure 4 below) operating on both the Texas and Louisiana sides of the Haynesville. Aethon began reducing its Haynesville rig count by nearly half in early 2024 to just seven rigs; this year, it expects to have about five or six rigs in operation. Its president, Gordon Huddleston, said at the Goldman Sachs Energy, Cleantech & Utilities Conference on January 7 that he didn’t anticipate increasing production until prices begin to lift. Specifically, he said it would take $5/MMBtu gas prices to push more development. Henry Hub’s March contract settled at $3.31/MMBtu on February 7, which means the price would have to increase by about 51% to reach that level.

Aethon’s production averaged about 2.8 Bcf/d in 2023, according to Enverus data, all of it in the Haynesville. Aethon has grown its footprint there with a pair of acquisitions. In May 2024, Aethon acquired Tellurian's Haynesville assets for $260 million, which included about 31,000 net acres and gathering and treating systems with a capacity of about 100 MMcf/d. This deal expanded Aethon's total footprint in the Haynesville to more than 375,000 net acres. In October 2024, Tellurian finalized a separate deal to be acquired by Woodside (read more here).

In 2020, Aethon was so committed to actively drilling that it signed a deal with Black Stone Minerals that involved drilling 15 wells annually starting in the third year. But in December 2023, Aethon exercised its “timeout” provision to suspend drilling for up to nine months around Angelina and San Augustine counties in East Texas. In September 2024, the two companies amended the deal; the partnership still exists but with more guardrails to adjust for market conditions.

It’s worth noting that Haynesville producers, not just Aethon, strive to control costs, particularly in a low natural gas price environment, to improve their economics. That’s notable because drilling in some parts of the shale play can be expensive and time-consuming due to its high-pressure, high-temperature conditions. New Haynesville wells typically come in with big initial production (IP) rates but need sufficient netback prices for their gas to offset the costs and make the wells’ economics work. The average vertical depth of Haynesville wells in 2024 was 11,700 feet, according to Enverus data. Also, Haynesville is filled with limestone, anhydrite, shales and sandstone, making drilling in certain areas complex and resulting in drill times that averaged 45 days per well in 2024. Longer drill times means more cost.

To that point, Aethon says it has improved its drilling cycle and is now completing wells in about 30 days — about 40% quicker than the company has in the past.

Expand Energy Corp.

Another major player in the Haynesville with about 650,000 acres is Expand Energy Corp. (medium-blue rig icons in Figure 3), formed by the $7.4 billion merger of Chesapeake and Southwestern En... in October 2024. Prior to that, in May 2024, operating as Chesapeake, the firm said it would curtail gas production by about 400 MMcf/d, with roughly half that volume coming from the Haynesville and half from its Marcellus acreage. And before that, the company had said it was deferring some turn-in-lines (TIL) — that is, delaying the process of turning completed wells to production.

Expand President and CEO Nick Dell’Osso agreed with Aethon’s assessment that prices must climb “materially higher” to reignite Haynesville production and that the market could remain loose for another two and a half years. Because he doesn’t anticipate significant changes in prices and doesn’t just want to grow for a season, but for the long term, he said his firm will level out production across all of its gas-producing assets at around 7 Bcf/d. The company has said it will reduce its rig count this year from eight to six in the Haynesville and is also reducing rig counts in other basins.

Comstock Resources

Comstock Resources (purple rig icons in Figure 4), which is controlled by billionaire Dallas Cowboys owner Jerry Jones, is also a giant player in the Haynesville, with about 470,000 net acres in the western portion of the shale play. Comstock has reduced its drilling but production has remained relatively steady. As noted in Bad Moon Rising, Comstock released one frac crew and two of its seven operating rigs in its legacy Haynesville area as part of an expected 34%-41% decline in 2024 capex. Comstock operates about five rigs and two frac crews in the Haynesville and added back one crew in September 2024 after a brief pause. The company, in its Q3 2024 earnings, described the Haynesville play as having a “very bright future.” Its Q3 2024 production there averaged 1.4 Bcf/d.

Since 2020, Comstock has secured 350,000 net acres in the western Haynesville and drilled 18 wells across 26 miles in that area. However, company executives compared their Haynesville acquisitions to “a dog chasing a car and catching it” — now that they’ve caught the car, they need to figure out how to drive it. In the case of the Haynesville, that means finding out the best way to develop the acreage.

Company leaders said the key to their success in the Haynesville has been slashing drilling costs. Among other things, Comstock recently finished drilling its first “horseshoe” lateral well in DeSoto Parish, LA, at a cost of $32 million, or $8 million less than the cost of drilling two wells with the same horizontal length. A horseshoe well, also called a U-turn, is a well featuring a 180-degree turn in the wellbore — creating a U-shaped or horseshoe-shaped well path. This is in contrast to traditional wells that have a vertical section followed by a single horizontal lateral. The first horseshoe was a 9,382-foot lateral; Comstock’s shorter wells are typically closer to 4,500-foot laterals. Based on its initial success, the company plans to convert 57% of its short Haynesville well locations to horseshoe wells. But they haven’t drilled these yet.

TG Natural Resources

Just one year ago, TG Natural Resources LLC (red rig icons in Figure 4), an affiliate of Tokyo Gas, finalized its $2.7 billion purchase of Rockcliff Energy II LLC, which was owned by Quantum Capital Group. With the deal, TG Natural Resources now has more than 400,000 net acres and 1.3 Bcf/d of production in the East Texas/Northwest Louisiana region. Despite the acquisition, the company has made moves to reduce its production around the Haynesville slightly. TG Natural Resources expected production to decline by up to 5% in 2024 and 2025 as it executed a three-rig, two-frac crew program on the new acres in Harrison and Panola counties in East Texas.

BP

BP (lavender rig icons in Figure 4) has about 500,000 net acres in the Haynesville, across Louisiana and Texas, and has slowed its drilling in the area this year. It operates just one rig in the Haynesville compared to four each in the Permian and Eagle Ford basins. The company said in its Q1 2024 earnings that it considers its Haynesville acreage “absolutely the best spot” in the play and is focused on “obligation drilling,” which means drilling only when necessary to maintain leases and fulfill contracts (for more, see Hold on Tight). BP has been drilling some of its longest laterals in the Haynesville, with some wells reaching just under 15,000 feet, and is considering the possibility of 20,000-foot laterals in the future.

Other strategies

Other players have adopted different strategies and don’t appear to be reducing production in the Haynesville, but not all firms are public about their intentions. For instance, Sabine Oil & Gas, which operates entirely on the Texas side, has significantly increased its production since 2018 and, according to Enverus, averaged 670 MMcf/d in 2023. Sabine has a total of 237,382 net acres in East Texas. Executives have said efficiency and reducing costs are crucial to their success but have not commented on expectations for future production.

Finally, we should note that forward gas prices, even in 2026, are averaging just about $3.95/MMBtu and declining after that — which suggests that gas production from the basin might remain guarded. We know there are many factors impacting gas prices — weather and the economy, along with the addition of future LNG export facilities, will all play significant roles and could either be a catalyst or a thorn in the side for Haynesville production. But producers there won’t just be sitting, waiting and wishing. They’ll be honing their strategies and striving to improve their economics to make the most of any increase in prices.