US Gas Market Poised for Supercycle: Bernstein Analysts

Bernstein analysts project a US gas supercycle through 2030, driven by robust demand and constrained supply. They raised their long-term Henry Hub gas price forecast to $5/mcf, citing it as a conservative estimate.

In response, the firm upgraded EQT Corp and Devon Energy to "Outperform." EQT, a leading Appalachia gas producer, received a price target boost to $73, representing a 44% upside. Analysts emphasized EQT’s leverage to mid-cycle gas price increases. Devon Energy, tied closely to domestic gas pricing, saw its target rise to $45, a 21% upside.

Bernstein anticipates US gas demand to climb from 120 bcfd in 2024 to 150 bcfd by 2030. LNG exports are projected to add 10 bcfd, with approved projects fueling growth. Power demand, particularly from data centers, is expected to increase by 12 bcfd, with Appalachia gas positioned as a key supplier. Analysts highlighted Appalachia's low-cost dry gas and extensive inventory, noting its potential to supply a significant portion of rising power demand.

On the supply side, the Haynesville and Midcontinent (Midcon) regions are identified as critical price-responsive sources. Haynesville, known for low costs and strategic location, faces challenges in achieving a 9% annual growth rate through 2030. Midcon, covering Oklahoma and surrounding areas, is forecasted to grow private activity, with production potentially increasing by 20% annually at prices above $4/mcf.

Despite projected supply growth, Bernstein suggests prices could exceed $10/mcf without adjustments to demand elasticity. The firm’s model conservatively estimates long-term gas prices at $5/mcf, highlighting the US’s competitive hydrocarbon costs while acknowledging potential price surges.

This bullish outlook underscores opportunities for investors amid evolving market dynamics.