Change coming to Permian Waha gas pricing?

[cmm3rd]

Interesting analysis of how coming ngas pipeline capacity changes for Permian to Gulf Coast will affect discounts. Author uses a "mid" case scenario that assumes WTI hovering in the mid 40s in "the coming months and years." That, plus other assumptions (specified) lead to, among others, this conclusion:

3. Following the completion of PHP and Whistler, capacity surpluses will tighten the Permian gas market, resulting in a significant narrowing of price basis between Permian Waha and Henry Hub. After averaging a discount to Henry Hub of almost $1.00/MMBtu in 2020, Waha basis is expected to narrow to only $0.25/MMBtu below Henry in 2022.

If this (reasonably conservative) scenario were to occur, I would think it would be very helpful to Permian gas producers (or any producer who is subject to pricing influenced by Waha pricing.

https://rbnenergy.com/some-beach-part-4 ... as-markets

[dan_s]

It will be extremely helpful to all of the Permian Basin companies, some of which had negative gas prices (net of transportation fees) in 2019 and 1H 2020.

For example:
Diamondback's realized ngas price for the year 2019, including some positive cash settlements on hedges, was $0.83/mcf
This year FANG's realized ngas prices were $0.42/mcf in Q1, $0.33/mcf in Q2 and $0.95/mcf in Q3.
A $1 increase in their realized ngas price on 2021 forecast production of 360,000 mcfpd will be a revenue boost of $131.4 million.