“Harold Korell, the CEO of the Fayetteville’s leading operator, Houston-based Southwestern Energy, chuckled when questioned about the impact of low natural gas prices. “Seven dollars is low?” he said. “Not in our time.”

The article actually talks a bit more about how the credit crunch may cause companies to operate with “more discipline,” but actually might keep smaller, newer players out of the market.

In a world where cash flow is king, companies that generate a lot of cash flow (oil and gas among them) are not really in that bad shape. If oil and gas prices do collapse, though, all bets are off.

The word “certainly” should have been “immediately”.

Astounding, I know, but this is how money used to be made in USAia.

Chesapeake has locked in gas sales contracts at attractive prices for the vast majority of its production next year, so it certainly won’t be cutting back on drilling. But the company is facing a future of exploding shale gas development: upwards of 25% of current Lower 48 gas supply in some cases.

In just two years gas analysts have gone from hand wringing about a supply collapse to hand wringing about an enormous oversupply. Peak Oil has nothing on the potential gas bubble coming up: projects to export gas to Europe from North America are now finding traction.

McClendon is partly responsible for this enormous supply bubble. So now he says, “Don’t worry about all that gas. It will never show up, because prices will collapse and rigs will stop drilling. Won’t affect me, because I’ve locked in at $12/MMBTU. Have another beer! Buy my stock!”

Not to belabor this point, but CHK and its ilk are definitely feeling the effects of the crunch – gas prices nonwithstanding.

Aside from the fact that the CEO said word for word, the credit crunch isn’t helping, they just did an equity offering in July for $1.6bn, yet gas prices were in the $13-$14 range. They did another billion in march. Gas prices were ~$10 then. Given high gas prices, if credit were so easy, why dilute sharholders by 20%?

I don't want to focus on individual companies, because we're missing the forest for the trees, but the majority of CHK's and other independent E&P's existence as going concerns have been when nat gas was below $8.

I'm not sure if everyone's collective frame has shifted in the past few years because of higher hydrocarbon prices (i wouldn't be suprised if this was the case), but $8 gas isn't exactly killing these guys…but the banks are definitely not helping.

IMO we cannot borrow what we need – so far the fiscal deficit will go up 4x – at low interest rates. If this is true and interest rates climb, the dollar will be strong. Further, high interest rates mean that many leveraged companies will go bk, and high rates plus rising unemployment will push previously sound companies over the edge, too. This means recession and deflation. High interest rates/falling gdp will be terrible for equities/precious metals/exports but good for the dollar.
High rates, high unemployment… does anybody remember the ‘misery index’?
Oh, and peak oil…