Chesapeake Growth Stunted by Sinking Prices | Green Arkansas

Friday, October 10, 2008

Chesapeake Growth Stunted by Sinking Prices

Posted By on Fri, Oct 10, 2008 at 10:57 AM

The WSJ reports that the credit crunch and falling gas prices are affecting the growth Chesapeake Energy.  Natural gas prices fell to $6.83 per million BTUs yesterday.  From my understanding, that needs to be somewhere around $8 for gas drilling to be profitable.

The Oklahoma City company has spent aggressively and borrowed heavily to fuel its climb this year to become the largest U.S. natural-gas producer. Its efforts were supported by natural-gas prices that leaped to a high of $13.577 per million British thermal units in July before fears of a supply glut sent prices plunging. Natural gas settled at $6.825 Thursday on the New York Mercantile Exchange.

Now Chesapeake is dramatically cutting back the costly land-leasing program that defined the company's rocketing growth....

Chesapeake's shares hit a high of $69.40 on July 2, up 77% from the start of the year. Its shares closed at $17.97 Thursday on the New York Stock Exchange.

Tough times indeed...

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