What others are thinking ... The following just popped up on a blog which I follow (The Wall Street Bear). These are conservative investors who short a lot.
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https://www.businessinsider.com/north-america-is-poised-for-huge-natural-gas-shock-2012-6
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and this posting:
"Interestingly, just yesterday, I talked to my friend who works for a small producer. It's name is Orbis, I believe it's a private company and they are mostly producing in the Austin Chalk still. They made money flipping their leases to CHK and others who wanted a play in the wet gas area.
He says that they have shut wells in and are paying shut in royalties now because putting dry gas in the pipeline is a money losing proposition.
There are a lot of wells that have been drilled, produced and proven but aren't producing because of a lack of infrastructure. Pipelines are an additional part of the cost of any new field and they are over and above the drilling costs. Pipelines are not a cost generally borne by the producers, that is why pipeline companies exist.
This STUPID, STUPID, STUPID, yapping on and on and on about what is in reserve is being used to force prices down so that someone can buy up the assets on the cheap. Pipeline companies make money on the gas flowing through their lines and they require that product stay in the lines in order to maintain system pressure and low prices are a loss to them as well. Low prices are also a losing proposition to the storage operators as well. There are reserves being booked that don't exist. I believe and my friend confirmed that it's very likely that reserves are booked against an entire field and not individual wells. So if you own say 10,000 acres and you have two wells drilled on it that comprise 1300 acres and they produce X, you book 8 times whatever X amounts to in reserves. The other issue is that many wells are run for 24 hours, show fantastic production rates and are then turned off in order to establish a high reserve number for the field they are in. Just another aspect of the game. Those wells will never sustain that 24 hour initial production rate. I am pretty sure a lot of these fake reserves are being used to back gas that has been sold forward through futures contracts on the NYMEX.
If you ask me, the game being played here is one where someone is trying to corner a very valuable asset to buy it cheaply. I SMELL A SWINDLER IN A SUIT BEHIND ALL OF THIS.......................
A really strong hurricane that shuts gulf production down for a month or so, similar to Rita, would really do wonders for the price. It's what is needed to make the SWINDLERS IN SUITS pay back what they have stolen."
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