You’re seeing a lot of that demand come back now, but it’s a reminder that demand is going to be volatile when we have exposure to LNG the way that we do. And you need a flexible business plan, and one that’s strong enough financially to handle that. And you probably ought to have a hedging policy that protects how you think about your capital program that you have at risk at any point in time. So when we think about the macro trends here more broadly, I do think that that decline that you are seeing is ultimately real. I think it has been accelerated with curtailments. But I think given the fact that we have a rig count today in Haynesville that is half of what it was that led to the peak production that we saw in the fall of 2023, we know that decline will show up, and we think Haynesville production settles in at a much lower level than it has been and stays there until you see a pretty significant change in rig count going the other direction.
So I think all of that is quite encouraging. And we’re also still very encouraged by what we see in the way of demand growth, certainly through LNG exports, which we all talk about quite a bit, but also through consumer and industrial as well as power gen.
Zach Parham: Thank you.
Operator: Your next question will come from Charles Meade with Johnson Rice. Please go ahead.
Charles Meade: Good morning, Nick and Josh and the rest of the team there. Nick, I’m wondering if you can, if you’d offer some thoughts that maybe characterize what your engagement with the FTC has been like so far?
Nick Dell’Osso: Look, I mean, we’ve been engaged with the FTC. Obviously, we’re in the second request phase of this process. It will take some time, as you would expect to reply. We’re eager to work with the FTC and get all of their questions answered. We feel good about the underlying merits of the transaction and look forward to getting through this process and getting it closed, but really hard to predict exactly how long that will take and so that’s why we gave a forecast of just second half of the year.
Charles Meade: Got it. Thank you for that. And, Josh, I wonder if I could ask about your TILs and DUCs, and I wonder if you could kind of characterize for us the, what’s different that you’re doing now, maybe setting up these wells to be off for three months, four months, maybe six months, maybe longer. Are you doing something different to kind of put these wells in cold storage, so to speak, versus what you would do regularly? And have you learned anything so far from this effort that you wouldn’t have expected at the beginning?
Josh Viets: Yes. Good morning, Charles. Thanks for the question. As far as the DUCs go, I would say there’s really not anything different that we do. This is a pretty common practice. The wellbore is in a state that could sit there for an extended period of time. So I would say that’s just pretty typical run of the mill business. With the deferred TILs, we do have to be a little bit more thoughtful about how we manage those in terms of our wellbore preparation and preservation, primarily from a corrosion standpoint. But probably most importantly, we do have to stay on top of them and specifically, it’s around just monitoring the pressure. So we do have pressure transducers that we install in the wells, and we have it tied back into our remote operating center here in Oklahoma City where we can monitor any potential production decline.
And that production decline would be as a result of offsetting wells that could come online and start potentially pulling on those reserves. And those are the instances that we want to protect against. And of course, when there are own wells, we’re managing that by keeping wells shut in. But if there are other operators, we want to be on top of that. That’s not something we’ve dealt with yet, but we do recognize it’s a threat and we actively manage that to ensure we’re not impacting the investments that we’ve made on those particular wells.
Charles Meade: Josh, so you mean you’re managing the shutting pressure to see if there’s also…
Josh Viets: Yes, that’s correct.
Charles Meade: Got it. Thank you. I appreciate it.
Operator: Your next question will come from Josh Silverstein with UBS. Please go ahead.
Josh Silverstein: Yes, thanks. Good morning, guys. So I just wanted to follow-up on the production outlook for the year just based on where 1Q volumes were, the 2Q guide and the outlook. It suggests that Chesapeake may not get down to that 2122 bcf day range in the fourth quarter, but you’ll still have the 1 bcf a day of capacity. So I want to see if that was right and just kind of see what the cadence would be for the back half of the year. Thanks.
Josh Viets: Yes, Josh we are managing production to the level of around the 2.7 bcf a day. So again, just to reaffirm that, the guide is unchanged at this point. We did have some overproduction in the first quarter of the year. Some of that was attributed to a non-operated accounting adjustment that rolled through into the quarter, so that did push those volumes just a little bit higher. But we are still on track, even as we talked earlier about the curtailment, which is pulling down the Q2 number, but that 400 million that we take out of Q2 starts to settle in into the Q3 and Q4 numbers. So, in effect, we are flattening the back half of the production curve. So we still feel really good about delivering the number that we offered back in February. But again, just to remind everybody, we are absolutely flexible, and we’ll continue to monitor market conditions and adjust production according to what the market needs.
Josh Silverstein: Got it. Thanks for that.
Nick Dell’Osso: Let me just reiterate on that point. I mean, I think it’s really important, as you think about that question, it’s really important to note that there’s a forecast from, with eight months left to go in the year, and we’ve been pretty clear that we’re going to stay really focused on the economics of our underlying business and do what makes sense. So if market conditions don’t play out the way we expect them to, we’ll adjust, whether that means producing more or producing less. I think the setup feels pretty good today, but we have a lot of flexibility in how we respond.
Josh Silverstein: Yes. Thanks Nick. Well, the follow-up was kind of along those lines we’re six to eight months away from winter pricing and gas going back over $3. How do you think about bringing the capacity back on? What’s the process of it? Is it TILs and DUCs, the new rigs, or what’s the timeline for that? Thanks.
