Henry Hub

So that's before we've even added on those additional kind of ETS charges or fixed cost.

Now, to put that in context a little bit, Argus also does an estimate for the cost of production for your average US Gulf ammonia producer, which over the last week, based on the Henry Hub gas cost, was averaging around $175 per ton.

So that's a huge difference.

We have already seen producers in France have reduced run rates by around 15%.

So we have a upward view on gas.

We also think that the basis or the discount of Marcellus and Haynesville gas relative to Henry Hub could improve.

whether that's getting that down for LNG export or taking some of that gas and then using it for in-basin power distribution for these power plants.

Plus the company has a unique ability to assemble more and more of these royalties because they're really the only natural scale buyer as people look to monetize royalties.

And the reason for that is we have an oversupply situation of natural gas in the United States, and particularly in West Texas.

You mentioned the Waha hub, and in fact, for most of this year, um, Waha prices have been trading, you know, at a steep discount to Henry Hub, which is the benchmark price for natural gas in the US, which is in the Louisiana coast.

And that's just because in West Texas, there's a lot of associated natural gas that's produced in conjunction with the oil, or as a by-product of the oil, and they don't have anywhere to, to put it, so they, you know, don't have enough pipeline takeaway capacity.

They're, they're quickly building more capacity, and the forecast is for that new capacity to start to come online over the next year or two.

And then once that's all in place, then you should see a much narrower spread between the Waha hub and Henry Hub, and that means that for royalty owners in West Texas, you would actually get paid a positive value for your natural gas.

Many folks may have noticed that their royalty checks, their natural gas prices are negative.

You know, they're actually...

And there are things like natural gas futures in Stock Doctor, which is graphable.

But they basically refer to a thing called the Henry Hub price.

So gas prices tend to go through a market, which is generally around where there's a concentration of gas passing through pipes.

And Henry Hub is a US market.

In terms of where the commodity price is better to look at for this company, it's in Australia and it's called the Wallumbilla price.

And it's the Wallumbilla Hub, somewhere in Queensland.

Ongoing tensions and disruptions in the Middle East, particularly around key LNG shipping routes, remain a wildcard that could further tighten global gas supplies and support U.S. prices.

Most forecasts point to Henry Hub prices reaching the upper $3 to low $4 per mbtu range by 2030, with some projections running above $5 per mbtu if LNG exports expand faster than expected.

While short-term price swings will remain part of the story, the longer-term fundamentals suggest a steadily growth environment for natural gas producers, midstream operators, and the compression equipment suppliers that support them.

LNG remains one of the most visible drivers of demand growth.

Drilling in the Haynesville formation, which at 10,500 feet to 13,500 feet deep is one of the deepest in the U.S. lower 48 states, has higher development costs associated with drilling deeper wells.

Unlike Permian operators who drill mostly for oil, Haynesville operators drill mostly for natural gas.

So, Hainesville production is driven by the natural gas benchmark Henry Hub price.

The EIA expects the Henry Hub spot price to fall by 2%, or 8 cents, to average $3.44 per MMBTU in 2026.