Nissa Darbonne: Hi, thanks for joining us. I’m Nissa Darbonne, executive editor-at-large for Hart Energy. We’re visiting with Josh Viets, chief operating officer for Chesapeake Energy. Josh, thank you.
Josh Viets: Well, thanks. Thank you for having me here today. It’s great to be at the conference and appreciate you guys hosting another great event.
ND: Thank you. I understand that in Chesapeake’s combination with Southwestern, you’re 25 days into the 30 day window for whether the FTC [Federal Trade Commission] wants any additional information, and then otherwise, if not, you can go ahead and proceed to bring it to shareholder vote. Is that the current status?
JV: Yeah, so we do remain within our initial review period. We had provided the FTC with some additional time to provide a review of our filing, but at this point in time, we have not received a second request. And as you mentioned, we are getting close to that initial 30 day time period expiring. And so that will take us into sometime next week [week of April 1]. And at that point in time, if we haven’t received that second request, we will start to move forward to closing, which we were still hoping that we’ll be able to close the transaction in the second quarter of this year. But I’d also just note that our integration planning efforts are well underway. We’re working with the Southwestern team right now and starting to talk about things like organizational design and work practices and processes and data infrastructure for things like applications that engineers and geoscientists are using. So all of that activity is continuing to proceed forward as we wait for the regulatory approvals to come through.
ND: And that combination will make Chesapeake America’s largest natural gas producer. Again, it was at one time did some divesting and portfolio reshuffling, but it is poised to become the largest again, 7.3 Bcf a day net, more than 12 Bcf a day gross. Meanwhile, though, you are curtailing production, natural gas prices are quite low at the time the curtailments. Do these consist of delaying TILs and DUCing wells? Are you actually shutting anything in?
JV: Right. So I mean, first of all, the markets are materially oversupplied, of course. We’ve seen production come into this year at record levels over 105 Bcf a day. Winter didn’t help us out this year with one of the warmest winters on record. And so that did have us relook at our business plans for the year. And the plan that we’ve put in place is really one that is centered around reshaping our production curve. What the market’s telling us today, again with gas well below $2, is it doesn’t need any more gas. So really the easiest lever that we had was to simply stop turning-in-line new wells. So we’ll drill them, we’ll complete them, and then we’ll sit on them effectively for a period of time. And over the next several quarters, as we get into the end of this year, we’ll have built up 80 wells of productive capacity. And what that allows us to do is to quickly respond when the market says it needs the gas to be able to feed that into the market and meet the needs of our consumers. So that is really what is driving our plans is the deferment of new turn-in-lines. It doesn’t necessarily involve the active shut-in of base production.
ND: And then on the demand side, we’re aware that there’s more LNG export capacity under construction, and there’s plenty more projects that have approval from FERC [Federal Energy Regulatory Commission] already that are proceeding to fit. Altogether, just those two would be another more than 30 Bcf a day. I believe that would take U.S. exports to more than 50 Bcf a day in LNG and pipe to Mexico as well. So there’s that demand. We’re already expecting additional demand. We’re already expecting also to the electricity demand as a result of all of the EVs that the White House would like to see on the road. I think the new date is 2032 and such, but there’s this extraordinary new natural gas fired power demand coming from the use of AI chips, which are extraordinarily more energy intensive than a regular CPU chip. You’ve done a lot of analysis in this. Tell everyone how you expect that to affect the natural gas market.
JV: Well, sure. I mean, first I would just say we fundamentally believe that natural gas is the right answer to help support the energy additions that we’re going to find within our society. You’ve highlighted one that is getting a lot of press time right now, and it’s a market that I think is evolving and that we’re paying pretty close attention to. And so one of the reports that’s been published here recently by Wells Fargo, it indicated that they would anticipate as a base case in incremental 7 Bcf a day of natural gas required to meet the power…
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