The NG producers need to reduce capital expenditures. They have been spending more money drilling wells than they have received for the ng produced.
Now the ng producers are receiving more for ng. A perfect time to reduce drilling (capital expenditures) while income increases due to higher prices for ng.
NG production will remain relatively stable as long as drilled but unconnected wells are put into operation. However, sooner or later they will run out of drilled but unconnected wells. When that happens look for for ng production to fall.
Whats more, it will take an immense increase in drilling to stop the fall in ng production. Something that is unlikely to happen until ng is priced much higher.
BH NG rig count has dropped from 811 on 1/12 to about 439 1/13 YOY. A 46% drop. While depletion in these wells dropped 50%. We need to double the wells to keep NG production Stable. NG prices are going UP!!!
I agree. Chris Nelder has written many articles on Natural gas production,depletion rates, and breakeneven costs. Just Google : "Nelder Natural Gas Production". BTW, Nelder is coming from a
"green" perspective. Not to say his data is wrong.