Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
So what: As the second-largest domestic gas producer, Chesapeake's cuts should boost prices throughout the industry. Gas-futures contracts saw gains of nearly 10% on the news that Chesapeake would idle drilling rigs and reduce spending in gas fields.
Now what: Along with its rivals, which include EXCO, Chesapeake has been challenged by record-low prices recently as production has soared. Recent developments in hydraulic fracturing technology have enabled higher production, putting downward pressure on prices. Although UBS analyst William Featherston cautioned that any upside may be limited, since "weak gas market fundamentals" in the medium term could cap any near-term gains.
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At the time thisarticle was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio.Motley Fool newsletter serviceshave recommended buying shares of Chesapeake Energy. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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