hanson001

Wall Street Breakfast: Must-Know News

"Parallel Petroleum Corp. (PLLL) will turn over half its interest in a natural gas field rather than pay to drill wells, underscoring how falling oil and gas prices have left smaller energy producers desperate for cash."

Chesapeake was paying some landowners in Louisiana (the Haynesville Shale) last year up to 22K per acre bonus and agreeing to 1/4 interest. This was when NG was trading around $14 per million Btu. Now it's under $5 and the little players might be good shorts. Heck, Parallel just gave their field away. That's some pain.

I hear the shale in Dallas can supply 6% of our nation's NG demand. The shale in Louisiana is four times that size and they are choking down the wells down here. And there are many other shales such as the Mercellus that could hold more gas than the Hanynesville Shale.

Chesapeake has a great deal of production hedged as does XTO. But I think unless a great deal of producers go out of business, NG prices will stay under $5 for longer than people think. Chesapeake's CEO stated months ago that the smaller and underfunded should start having real problems in the shales at the $5.50 price level.