First Look: Chesapeake curbs 400 MMcf/d in 2Q 2024, anticipates further declines in 2H 2024

Oil gave up some of today's earlier gains to trade near yesterday's lows as of publication
- June ’24 WTI gained nearly 30c this morning to trade around $79.28/Bbl (8:30 AM)
- Yesterday, oil prices finished $3 lower to $79/Bbl after the EIA reported a larger-than-forecasted build of 7.3 MMBbl to 460.9 MMBbl, the highest level since June 2023
- Furthermore, the Fed decided to maintain interest rates, citing persistent inflation that could hinder economic growth and weigh on oil demand
- Additionally, there are signs of easing tensions in the Middle East – including the prospect of a defense pact between the US and Saudi Arabia
  - Secretary of State Antony Blinken met with Saudi and Israeli leaders to discuss a deal involving Saudi recognition of Israel for a U.S. defense pact contingent on Israel ending the Gaza war and advancing Palestinian statehood
UAE raises oil production capacity to 4.85 MMBbl/d ahead of OPEC meeting (Bloomberg)
- The UAE's national oil company, ADNOC, increased its production capacity to 4.85 MMBbl/d, up from 4.65 MMBbl/d at the end of last year
- This capacity boost gives the UAE leverage to negotiate for a higher production baseline at the upcoming OPEC+ meeting scheduled for June, where output levels for the second half of 2024 will be decided
- UAE, with over 1 MMBbl/d of idle supply, has previously been at odds with Saudi Arabia over production levels, reflecting differing stances within OPEC on managing supply to support global oil prices

Natural gas prices trade higher ahead of storage data
- June ’24 Henry Hub is up 5.1c this morning to trade around $1.983 /MMBtu
- The Summer ’24 strip is up 2.4c to $2.329 and Winter ‘24/’25 strip is up 0.9c to $3.397
- Today's Euro Ensemble maintained its colder trend, decreasing Lower 48 temperatures by 2.9 degrees, affecting all regions except the West, with a cool weekend forecasted before a warming next week (Criterion)
- Additionally, Corpus Christi reduced feedgas intake yesterday by 0.75 Bcf/d as the facility began scheduled maintenance (Bloomberg)
Chesapeake curbs 400 MMcf/d in 2Q 2024, anticipates further declines in 2H 2024 (Criterion)
- Chesapeake Energy's natural gas production dropped from 3.35 Bcf/d in 4Q23 to 3.2 Bcf/d in 1Q24 between their Appalachian & Haynesville positions, with further decline to 2.67 Bcf/d expected in 2Q 2024
- The 2Q 2024 forecast includes 400 MMcf/d of selective curtailments, with further decreases anticipated throughout the year due to TIL deferrals and DUC builds
- CHK has built its productive capacity by adding 22 deferred TILs and 24 DUCs in 1Q24, aiming to close 2024 with 35 DUCs and 80 TILs, providing 1 Bcf/d of productive capacity
- Additionally, CHK has increased its hedging positions for 2H25 and 1Q26, adding 26 Bcf for 4Q25 and 30 Bcf for 1Q26 as part of their "hedge-the-wedge" strategy