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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: CommanderCricket who wrote (72135)9/27/2006 3:15:04 PM
From: Keith J  Read Replies (1) of 206085
 
RE: CHK shutting in production. A couple things, first is they may see the writing on the wall that forced shut-ins may be needed over the next 30-45 days, and went ahead and bit the bullet by opting to voluntarily shut some of their production in, perhaps in areas with the greatest likelihood of forced shut-ins. Over a month, CHK's shut-ins only represent about 3 bcf - certainly not anywhere near what is needed to alleviate the current surplus situation. And CHK can certainly afford to make this move due to their optimistic hedging over the past year (although they need to scale back their aggressive drilling program a tad too).

Now the question is, what other producers will follow CHK's lead in reducing production temporarily? Certainly some others like XTO that have also hedged a lot could do so, and in my opinion, should do so. Getting 2 bcf/day off the market in October certainly would be helpful, though it is hard to imagine getting that level of voluntary reductions. Time will tell.

KJ
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