Right Risk, High Return: Aethon Jumps on Elevated NatGas Prices
This interview with Gordon Huddleston, president and partner at Aethon Energy Management, is the first in a series that examine how private producers are navigating an uncertain market with cautious optimism.
Deon Daugherty: How does the macro market uncertainty impact Aethon's plans for growth?
Gordon Huddleston: We remain bullish on natural gas considering the broader macroeconomic factors driving demand growth, but we also see the potential for volatility and risk increasing. LNG and AI datacenters are supportive of demand and pricing, but without corresponding storage growth, price volatility is likely to increase in parallel.
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DD: At the beginning of the year, Aethon was planning to drill new western Haynesville wells in 2025. Is that still the plan, and if so, how is it progressing?
GH: We're very optimistic about the Western Haynesville wells we've brought online. We've seen significant improvements in our economics as we continue to better understand the geology and iterate our well designs.
It's certainly an area we'll continue to focus on in the coming years, especially as demand and infrastructure improves in bringing that gas to market.
We've drilled 500 wells in the Haynesville since 2018, so we have a lot of experience drilling hotter and deeper wells, and that experience prepared us for the challenges of the Western Haynesville.
We try to be very measured in our approach from a development perspective—but higher pricing allows us to try things that we wouldn't necessarily be able to in a lower-price environment. Ideally, we're always spending some capital on areas like the Western Haynesville that are less understood but have the right risk/return profile as they will be important to meet future natural gas demand growth.
DD: How do you differentiate Aethon from other private producers?
GH: In addition to our scale, Aethon's vertically integrated upstream and midstream assets set us apart from other private producers and many public operators. Our owned midstream is a competitive advantage, providing additional uplift and pricing support along with our low-cost operations. Together, this vertical integration along with our extensive marketing activity and a unique approach to boxing in risk allow us to drive peer-leading margins through volatile market conditions.
DD: What are your activity plans for the second half of this year and into 2026?
GH: Aethon has evolved from a phase of rapid growth to another where we are focused on prioritizing investor returns while maintaining production volumes. Capital efficiency and optimization across our mature integrated upstream, midstream and marketing activities are the key factors driving our development plan today.
That said, we've been consistent in saying that around $5/Mcf is where more overall growth of natural gas production could materialize. We are currently running five rigs and have the flexibility to add a rig or more if longer-term pricing signals justify it. We are also always looking for opportunities to acquire great assets that typically have the potential to be integrated into our existing midstream infrastructure.
DD: What is the opportunity set presented by U.S. LNG exports? How will AI factor into Aethon's strategy?
GH: LNG is the big story and is driving unprecedented demand growth for U.S. natural gas, and predominantly from the Haynesville. We're fortunate that Aethon is best positioned to meet this demand given our scale, proximity to the Gulf and peer-leading emissions profile.
AI and data center demand represents an exciting tailwind, but it's dwarfed by new LNG offtake that we have greater certainty in realizing with each new train that comes online. However, there are still exciting opportunities we're discussing with datacenter developers and others—especially if you look at the regions best suited for these sites and how they align with gas producing basins.
DD: What is Aethon's outlook on E&P consolidation? What are challenges, if any, with access to capital?
GH: We expect to see additional consolidation, but there aren't many large pieces left on the board, especially in the Haynesville. Natural gas pricing has been trending favorably for deals and capital raising, creating the best financial environment we've seen for gas-focused businesses in quite a while.
Fundamentally, there is an increasing flight to quality that prioritizes scale and risk mitigation. We believe investors will continue to value producers with higher margins, advantaged pricing exposure and high-quality inventory.
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