There's no way that natural gas can stay down here when Devon Energy (DVN), EOG Resources (EOG) and Chesapeake Energy (CHK) are simply throwing in the towel on new drilling, and Ultra Petroleum (UPL), which is all nat gas, is cutting its budget in half. Southwestern Energy (SWN) has also indicated it will do the same.
That's pretty much everybody who matters. It's as if there is a driller's strike, as it is all going the way of oil now, given the sky-high price of crude.
This development is what's causing Chesapeake to go higher today. That, alone, is saying bottom in nat gas.
If this is indeed the floor, then you have to be thinking that Chesapeake, which is so, so heavily shorted, might be a decent bet, but once again, I come back to Devon being a terrific play, and EOG, which is down today after running up gigantically these last few days, as a close second.
I think that the cessation in drilling is going to put a floor on nat gas, but I don't think it can run too much because there is still so much of it. I would bet that it might not get above $3 and change anytime soon. But it comes at an important time. As good as oil is, it can't make up for the heavy declines in the price of natural gas if they keep heading lower.
Let's just say it is good news for all of the natural-gas-dependent independents, and it would be a nice kicker to their 2013 earnings estimates, which are all hanging in the balance if natural gas keeps going lower.
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