(Reuters) – U.S. energy companies EQT and Range Resources expect to produce more natural gas in 2025 to meet rising demand for the fuel without boosting planned spending.
Demand for gas to produce power for data centers in the U.S. and for export to the rest of the world as liquefied natural gas is on track to keep hitting record highs in coming years, according to energy analysts.
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“We believe Range is incredibly well positioned to support these initiatives, being one of the few producers in Appalachia with sufficient high-quality inventory to support the required long-term durable supply of natural gas,” Range CEO Dennis Degner told analysts on an earnings call on Wednesday. In its second-quarter earnings, Range revised its all-in capital budget to $650 million-$680 million, down from the company’s first-quarter guidance of $650 million-$690 million.
Range also boosted its annual production estimate in the second quarter to around 2.225 billion cubic feet of gas equivalent per day (bcfed) in 2025, up from its first-quarter guidance of around 2.2 bcfed for the year.
In the second quarter, Range said it produced about 2.2 bcfed, the same as in the first quarter.
Looking ahead, Range said in an earnings presentation that it planned $650 million-$700 million in annual capital expenditures from 2025 to 2027, which should boost daily production to around 2.4 bcfed in 2026 and 2.6 bcfed in 2027.
Range shares were little changed around $35.63 in afternoon trade.
EQT EXPECTS HIGHER OUTPUT
EQT, the second-biggest gas producer, also boosted the amount of gas it expected to pull out of the ground in 2025, while keeping planned spending flat. In its second-quarter earnings, EQT reaffirmed its total capital expenditure guidance of $2.30 billion-$2.45 billion in 2025 and boosted its expected total sales volume to 6.30-6.58 bcfed.
That is up from EQT’s first-quarter production expectation of 6.03-6.30 bcfed for 2025 and compares with capital spending of around $2.266 billion last year and average production of 6.10 bcfed in 2024. Analysts at Mizuho said in a note that investors were largely focused on potential details from EQT’s recently announced gas supply deals to the Shippingport and Homer City power generation projects in Pennsylvania.
EQT said the Pennsylvania projects will add to the reliability of regional electric grid and supply energy to Artificial Intelligence data centers under development.
EQT told analysts it could not disclose specific contract terms or end customers, but said the company expects the projects to add approximately $250 million of recurring free cash flow by 2029.
“Initially, we will reallocate volumes to fill this new demand, followed by steady, mid-single-digit multi-year growth. We have the capacity to grow production by at least 2 bcfd to backfill these volumes, which means we’ve set the stage to responsibly grow the business by at least 30% over the coming years,” EQT Chief Financial Officer Jeremy Knop told analysts on a call.
EQT shares were down about 4.2% to around $52, putting the stock on track for its lowest close since early May.
“Based on recent investors conversations, we believe (the free cash flow uplift) was at the lower end of expectations,” Mizuho said, noting the uplift was tied to several projects, including a power generation project in West Virginia.
“Overall, improving demand in Appalachia should be a tailwind for the low-cost producer,” Mizuho said, referring to EQT.
Reporting by Scott DiSavino; Editing by Paul Simao
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