RE:RealityActually the reality is price of oil vs price of natural gas (6x in the US before basis, 10x in Canada).
It's simply too easy to add natural gas production whether associated or dry.
So many examples, the latest being Coterra's Appalachian asset (acquired from Cabot) essentially maintained production even though drilling and completing were cut in half.
And in October the desperately needed Matterhorn pipeline with a capacity of 2.5 BCFpd is coming on line. The Matterhorn takes natural gas from the Permian to Houston area. This will raise WAHA hub prices (often negative) and lower other hubs IMO. It will probably raise natgas (and oil) production as well.
The shrewd CEO's - Mike Rose and SDE CEO (Peyto too but they did it regardless) perhaps others - hedged. Most of the others didn't.
What it means is two fold:@ current natgas prices, a lot of assets are stranded, not generating enough cashflow (Kelt other, Kelt Pouce Coupe West which is half the reserves in this play, and Oak) to make it worthwhile drilling unless you're on D&C spray and pray (unhedged) autopilot. And secondly, when prices recover, you hedge NG (at least 50%) in preparation for the next natgas downturn.
Don't get me wrong: natural gas is an extremely important commodity going forward. It's just not very profitable for small producers without LNG access and a very strong marketing and hedging dept.