Here's How Energy Firms Are Dealing With Falling Natural Gas Prices

A glut of natural gas from areas like the Permian Basin is driving down prices and forcing producers to rethink their drilling plans.Prices fell to $2.15 per million British thermal units Friday, down almost 17% from three months ago.“The industry is clearly in the middle of challenging times with natural gas ... ,” Fort-Worth based Range Resources chief executive Jeffrey Ventura said on a Friday conference call. Traditionally, summer and winter have proved profitable for energy firms as Americans turn up the air conditioning or heat in their homes. But even an extended heat wave across the eastern United States this summer hasn't eaten up the supply of natural gas.Seasonal guarantees have shifted in recent years as oversupply of natural gas has become normal, said Kraig Grahamann, head of Haynes and Boone’s energy finance practice group. High supply levels are made worse by companies, largely in the Permian Basin, that bring up natural gas along with their more profitable target — oil. “They’re having to dump it in the market at any price and sometimes at negative prices,” Grahmann said.Firms operating in the Permian Basin and Appalachia are suffering acutely. The regions lead the nation in natural gas production, according to the U.S. Energy Information Administration. Range Resources Corp. is one of the largest players in the Marcellus Formation, a key shale in the Appalachian region. Its shares have fallen about 25% in the past month.  Continue reading...

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