Drumbeat: May 4, 2012

theoildrum.com 04 May '12, 1pm

Drumbeat: May 4, 2012

The heart of Chesapeake's projection to return to financial health is the expectation on NG prices to double in the next year and a half or so. Someone needs to explain the "logic" of the following: "But while other producers have started to curtail production to ease the glut of gas on the market, Chesapeake increased production 18% in the first quarter even as the price as plummeted. That’s consistent with a massive bet that McClendon has engineered for Chesapeake that natural gas prices will go up". So instead of cutting their wells back, as we've just done to preserve our NG reserve base, and waiting for prices to rise CHK is increasing their NG deliveries to the market. Given the 50% to 90% decline rate their wells suffer, a well drilled during 1Q 2012 will significantly decline by 2014 when NG prices will double according to McClendon's expectation. I wonder if those...

Full article: http://www.theoildrum.com/node/9164

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