The second leading natural gas producer in the United States, Chesapeake Energy Corp. (CHK), hastened an industry attempt to decrease gas drilling to minimise prices, which depicted that the gas prices cut down to a record of 10-year at the end of January 2012. The company has planned to inactive 24 natural-gas rigs by the second quarter to follow a 69% reduction from 2011.
Michael Hall, an analyst with Robert W. Baird & Co., said that the attempt might be for a short period, but this will promote many producers to maintain output. Hall said: “Excess supply, even after curtailments in production and activity, is likely to return quickly to the market in the event of a price recovery.”
Chesapeake pointed out that this initiative will minimise gas wells’ expenses to $900 million in 2012 compared to $3.1 billion in 2011.
On 23rd January 2012, gas prices for February delivery soared 18.2 cents to settle at $2.525 per million British thermal units. However, the gas prices have drastically fallen 50 % for the next-month delivery in the 12 months ending on 20th January 2012.