Hedge fund Citadel is quickly making a splash as an E&P operator. The company has ramped up drilling in the Haynesville play just two months after acquiring Paloma Natural Gas, suggesting gains ahead for several midstream assets.
Citadel’s Commodities group earned $4B in 2024, fueled by natural gas trading, and the hedge fund has entered the physical market through the $1.2B acquisition of Paloma. While the long-term strategy behind the deal is a mystery, the near-term focus is clear: increase Haynesville drilling.
Paloma ran no rigs for most of last year, but the operator has launched an aggressive program in 2025. Before the Citadel deal, Paloma had added back 2 rigs in Jan ‘25. Under new management, Paloma’s rigs have climbed to 5 as of April 17, pushing the total Louisiana rig count to 18 several months ahead of East Daley Analytics’ forecast in the Macro Supply & Demand Report.
Paloma operates on the Louisiana side of the Haynesville and produced ~350 MMcf/d at YE24. The E&P delivers most of its volumes to Kinder Morgan’s (KMI) KinderHawk and Williams’ (WMB) Louisiana Magnolia systems.
Clients can track rigs by operator or G&P system in East Daley’s Energy Data Studio. Our allocations show Paloma has added 2 rigs to the WMB system since February, offsetting reduced activity from producers like Expand Energy (EXE) and Comstock Resources (CRK). Energy Transfer’s (ET) Enable Haynesville system also has picked up a rig from Paloma (see figure).
We expect newly drilled wells to start producing later in 2025 in response to higher demand from the Plaquemines LNG project, along with increased egress capacity via WMB’s Louisiana Energy Gateway (LEG) and Momentum’s New Gas Gathering (NG3) pipelines. LEG (1.8 Bcf/d capacity; ISD 3Q25) and NG3 will connect Haynesville supply to new LNG demand at Gillis.
The growing queue of wells on WMB’s Louisiana Magnolia system is significant. Management reports 3 Bcf/d of initial production behind its Marcellus and Haynesville assets. EDA forecasts WMB’s Haynesville G&P volumes to increase by ~659 MMcf/d (20%) from 2024-25 (exit to exit). The rig adds by Paloma will support an aggressive ramp in WMB gathering volumes and associated earnings in 2H25.
East Daley has been calling for production growth out of the Haynesville in order to balance incremental LNG demand on the Gulf Coast from the Plaquemines and Golden Pass projects. Plaquemines LNG is already taking in over 2 Bcf/d, well ahead of schedule, and Golden Pass LNG expects to begin ramping in early 2026. Our latest production forecast calls for 53 total Haynesville rigs exiting 2025, while residue gas needs to exceed 17 Bcf/d, relying mostly on deferred production to do so. – Zach Krause and Oren Pilant Tickers: CRK, ET, EXE, KMI, WMB.
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