First Look: EQT's 1Q24 earnings highlight expanding data center demand and managing production

Oil is trading lower, around $82.30, extending losses from yesterday
- The WTI cash roll, which trades in the days after the contract expiry, has reached the highest level since October 2022
US repels Red Sea missile attack (BBG)
- The US military said that missiles launched by Houthi militants at ships in the Red Sea were “successfully engaged”
- A US warship and two commercial vessels were targeted
- This is the first on vessels in the Red Sea since April 10, as it appears military intervention has been somewhat successful in reducing the operational abilities of the Houthis
Venezuelan sanctions lead to cheaper crude for China (BBG)
- Refiners in China are paying less for Venezuelan oil after the US reimposed sanctions on the South American country
- Merey crude, a heavy oil, recently traded at a discount of $-14/Bbl to ICE Brent compared to $-11/Bbl before sanctions were reimposed
- China will likely purchase more Venezuelan crude now that sanctions have been reinstated

Natural gas prices trade lower ahead of storage report
- May ’24 Henry Hub is down 0.6c this morning to trade around $1.647/MMBtu
- The Summer ’24 strip is down 3.2c to $2.201 and Winter ‘24/’25 strip is down 1.3c to $3.420
- Today's Euro Ensemble indicates above-normal temperatures in the South Central region, reaching up to 80°F in the daytime, beginning tomorrow and continuing for the next few weeks
EQT's 1Q24 earnings highlight expanding data center demand and managing production (Criterion)
- EQT projects over 10 Bcf/d increase in natural gas demand by 2030, driven by data center and AI growth and coal retirements, with the potential to reach 18 Bcf/d
- Correspondingly, a report from McKinsey forecasts a 10% annual growth in U.S. data center demand, expecting it to double from 15 GW to 30-35 GW by 2030
- Further emphasizing this trend, Tudor Pickering Holt estimates AI data center power usage will triple to 42 GW by 2030, contributing an additional 2.7 Bcf/d in natural gas demand
- In response to market conditions, EQT extended their 1 Bcf/d production curtailments into at least May 2024, with potential further cuts if gas prices fall below $1.50/MMBtu
  - EQT has also begun adding natural gas hedges for the first half of 2025, covering 2.5 MMDth/d, adding to existing hedges for 2024, covering 45% of production at a $3.40 floor