Chesapeake Energy is planning to reduce the company's natural gas rig count across the U.S. and shut in natural gas production in response to low prices. The operated, dry gas, rig count will decrease by 50 rigs to 24 in 2012 from 75 in 2011. The company is also shutting in production of 0.5 Bcfd. That's a little less than 1% of U.S. supply, but it's a good start in helping remedy $2 natural gas prices. The rigs will be moved to liquids-rich areas that are supported by more valuable oil, condensate, and NGL production. The Eagle Ford is a likely beneficiary. While the change shouldn't be substantial, don't discount the value of the play's liquids production in times of low gas prices. Chesapeake is likely one of many that will make similar moves.

This reallocation will result in increased expenditures in certain of Chesapeake’s liquids-rich plays, including the Eagle Ford Shale, Utica Shale, Mississippi Lime, Granite Wash, Cleveland, Tonkawa, Niobrara, Bone Spring, Avalon, Wolfcamp, and Wolfberry. The company estimates that approximately 85% of its 2012 total net operated drilling capital expenditures will be invested in its liquids-rich plays.

The Barnett Shale and the Haynesville Shale are the two plays that will be affected the most by the changes. Chesapeake will only run six rigs in the Haynesville and six in the Barnett. The company will keep 12 rigs active in the dry gas portion of the Marcellus Shale

Read the entire news release at chk.com