Do U.S. E&Ps Need Higher Natural Gas Prices to Offset Demand and Inflation? Yes, Says Moody’s

Natural gas development costs in the United States are rising, stung by rising consumption, inflation, supply chain issues and labor shortages, all of which are eating away at the margin, according to Moody’s Investors Service.

The credit ratings agency recently hiked its medium-term Henry Hub natural gas price range by 50 cents to $2.50-$3.50/Mcf. The price estimate is designed to help determine at what gas price exploration and production (E&P) companies may reinvest profitably. 

The updated price range “marks the return to our medium-term price range before the pandemic, and reflects our expectation that inflation in natural gas production costs is rising,” said Moody’s Elena Nadtotchi and Steven Wood.

[Want to visualize Henry Hub, Houston Ship Channel and Chicago...