Natural gas stocks fall after report on shale gas

Natural gas stocks fall after New York Times report questions shale gas prospects

Associated Press

Shares of several natural gas producers fell Monday while broader trading indexes climbed in the first trading day after a New York Times report raised questions about the potential of extracting gas from underground shale formations.The Times article, which ran Saturday, said energy executives, lawyers, state geologists and market analysts are skeptical about industry forecasts and question "whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves."The newspaper cited industry e-mails, internal documents and a well data analysis. It said data show many wells are not performing like the industry expected, and it cited emails that suggest "questions about the shale gas industry exist in many corners."The Times noted that investments could falter and consumers may see higher utility bills if natural gas proves harder to pull from the ground than has been predicted.Chesapeake Energy Corp. one of the companies mentioned in the story, said in a statement Monday that the story was inaccurate and misleading and "obviously motivated by an anti-natural gas agenda." It noted that Chesapeake, based in Oklahoma City, and other shale gas producers routinely beat natural gas production forecasts."By analyzing our own and industry peer well performance, we know that the initial productivity of a majority of the industry's shale gas wells have been steadily improving, both in initial production rates and the expected ultimate recoveries of natural gas," Chesapeake CEO Aubrey K. McClendon said in the statement.McClendon said they expect most of these wells to be productive for 30 to 50 years or more.Shares of Chesapeake fell 17 cents to $27.84 in afternoon trading while broader indexes rose less than a percent. Shares of another Oklahoma City-based company, Devon Energy Corp., fell 18 cents to $76.43.The stock price for two Houston companies also dropped. EOG Resources Inc. fell 9 cents to $98.18, and Newfield Exploration Co. dropped 53 cents to $64.29.

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