EQT Cuts Sales Guidance, Plans to Cut Production Through May

(Bloomberg) -- EQT Corp., the largest US producer of natural gas, is now taking output cuts through May as prices hover near four-year lows because of weak demand. The company also reduced its sales guidance for 2024.

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The move underscores that this year’s low natural gas prices aren’t sustainable for the industry. US gas futures have touched pandemic-era lows in recent months. A mild winter curbed demand at the same time that soaring production from shale drillers has flooded the market.

EQT now sees its sales volume for the year at 2,100 to 2,200 billion cubic feet equivalent, down from 2,200 to 2,300, the company said in a Tuesday earnings statement. That’s based on production curtailments of 1 billion cubic feet per day through May, with the potential to lower output even further, depending on the market.

EQT had previously said it would cut 30 to 40 billion cubic feet of net production through March. The company will consider further cuts if prices drop below the level needed to recover the cost of drilling wells, which is about $1.50 per million Btu, Chief Financial Officer Jeremy Knop said in a quarterly call with analysts Wednesday. Futures on Wednesday traded near $1.70.

“We’re always watching the market,” Knop said. “We will change our decisions if the facts change.”

The guidance also assumes that the Mountain Valley Pipeline will come into service in June, the company said in a published presentation. EQT recently announced it will buy back its former unit Equitrans Midstream Corp., the owner of the controversial project that is behind schedule and over budget.

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