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: Chesapeake's move was made in response to natural gas prices recently reaching 10-year lows, and the company also said it would cut spending on gas wells if prices failed to recover. Chesapeake CEO Aubrey McClendon said current levels are not "economically attractive for developing dry gas plays in the U.S."
Now what: The production cut shows that natural gas players, including Southwestern, are keenly aware of plunging prices lately and may also take similar actions to prop up the market. Chesapeake has been one of the leaders of the recent shale fracking boom that, coupled with a relatively mild winter, has contributed to oversupply within the industry. Overall, analysts remain unconvinced that this move will be more than a near-term reaction.
Interested in more info on Southwestern Energy? Add it to your Watchlist by clicking here.
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.Motley Fool newsletter serviceshave recommended writing puts in Southwestern 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.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.