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.
What: Shares of Goodrich Petroleum (NYS: GDP) jumped 12% today after a competitor said it was lowering natural gas production.
So what:Chesapeake Energy (NYS: CHK) said it was cutting back natural gas production by 500 million cubic feet per day and would reduce investments in gas fields by 70% this year. Natural gas futures jumped 10% on the news, and natural gas investors breathed a sigh of relief.
Now what: The price of natural gas has been hitting record lows, and it was only a matter of time before someone blinked. Since Chesapeake is one of the biggest producers in the country, this is at least a positive sign in the short-term for smaller natural gas producers. To put this production cut into perspective, Goodrich produced an average of 116.2 million cubic feet per day, so this is a big reduction for the industry.
The glut of natural gas will likely continue, though, and I'm not sure this will lead to an extended rally for the industry, but only time will tell.
Interested in more info on Goodrich Petroleum? Add it to your watchlist byclicking here.
At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Motley Fool newsletter services have recommended buying shares of Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.