The number of active natural gas rigs in USL48 stood at 85 on April 21, which is a 54% decrease from the same period last year. Haynesville, being a major natural gas producing basin, was averaging approximately 55 rigs throughout 2018 and 2019 reduced to approximately 33 rigs as of April 24th. Haynesville has seen mild growth in production throughout the past few years and was averaging slightly above 12 billion cubic feet per day (bcfd) in January 2020.

By assessing the readjustment of capital expenditure (capex) of eight companies, which account for approximately 67% of total production from Haynesville, GlobalData estimates a reduction of 748 mmcfd in output from this group of companies as compared to the forecast for 2020 before the sector crisis happened.

Per GlobalData analysis, the rig count is estimated to drop further by 6 rigs, from 33 rigs reported as of end of April 2020 to 27 rigs by the end of 2020. Overall, this rig reduction is a result of capital expenditure cuts summing up to approximately US$ 630 million reported by operators.

GlobalData estimates, the average position full cycle breakeven gas price for top operators in Haynesville atUS$2.74 per thousand cubic feet (mcf). The full cycle position takes into account wells brought online in the past 2 years, which bring an important share of production and are arguably still recovering their investment

The United States natural gas industry outlook does not look promising in both short and long terms due to high level of working natural gas inventory, further aggravated by the demand reduction across all industries amid the current pandemic. However, the loss in demand will be offset marginally by the reduction in associated natural gas production and the increase in residential power usage with upcoming summer weather.