Antero Resources Cuts Spending Amid Natural Gas Price Collapse

Antero Resources (NYSE:AR) soared +10.9% in Thursday’s trading, marking its best close so far this year. The surge came on the heels of better-than-expected Q4 earnings and an announcement that the company plans to curtail its 2024 drilling and completion capital budget by 26%, down to a range of $650M-$700M.

As part of its cost-cutting measures, the company will be reducing its number of operational rigs from three to two, and phasing out one of its two completion crews.

“It is encouraging to see operators taking decisive action to taper drilling and completion capital in response to prevailing gas prices,” said TPH & Co. analyst Jake Roberts. Antero’s (AR) full-year plan is being regarded as a much-needed slowdown in spending and production.

Earlier this week, leading natural gas producer EQT (NYSE:EQT) narrowed its FY 2024 production guidance range by approximately 50B cfe from its most recent outlook, down to 2.2T-2.3T cfe. This adjustment includes some leeway to curtail volumes if prices continue to weaken, with output amounting to 2.016T cfe in 2023.

“The market is not only demanding production cutbacks, but also reductions in activity,” remarked EQT CFO Jeremy Knop during the company’s post-earnings conference call.

In a similar move, Comstock Resources (CRK) declared this week that it will be scaling back its operational rig count from seven to five, and suspending its dividend until gas prices make a sufficient recovery.

U.S. natural gas prices have plummeted to lows not seen in three-and-a-half years, with the front-month contract dropping 24% in the past eight days to close at $1.581/MMBtu on Thursday.

“If drillers continue to announce dwindling production forecasts and the weather stabilizes, natural gas could soon hit a short-term nadir, potentially prompting a long-overdue relief rally,” stated energy consulting firm EBW Analytics Group.

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