New Prediction for NatGas!
As you know, hot weather is the key to natgas demand and prices in the summer injection season. If we inject less gas into storage, there's a damned good chance that we could enter the winter heating season (November 1, 2016) with a shortage of gas, especially if we get a bitter cold winter.
Bottomline is that we are betting on three things. How much natgas can CHK pump out of the ground, how hot will the summer be, and how cold will it be this winter.
CHK is now leasing 10 tier 1 rigs that can drill 10,000-foot long lateral holes in the layer of shale rock. They frac this shale and the oil and gas pours out under great pressure. Each rig can drill one well about every two weeks and cost about $500 per foot. It takes about 2 months to get a well drilled and fraced so by the end of August, CHK will have an additional 10 deep lateral wells spewing out oil and gas. They are also busy repairing older wells, cleaning them out and etc. And, they are busy fracing some of the DUCs they have on hand. Production should jump sky high by the end of September.
The weather report looks humid and HOT AS HELL for the US for the first 2 weeks in July. Because gas production is not running excessively, this heat will lower the amount being injected into storage and probably set a new all time low record for at least 2 weeks in a row. So, if I am right, natgas will jump past $3/mmBtu to at least $3.25/mmBtu. It is at $2.98 right now!
Then what you will see is that everyone will start taking about a severe shortage of natgas by March 2017 if winter is a bit cold. In other words, we are headed into the PERFECT STORM for natgas. Chesapeake will be selling for $10 by the middle of January 2017 as I been predicting for many months at the same time old Wisecrack has been making fun of me!
He who laughs last wins!
