Natural gas, which hit a 10-year low this morning, spiked nearly 10% after Chesapeake Energy, the second largest U.S. natural gas producer, said it would cut production and idle rigs.
The energy company said it would immediately end about 0.5 billion cubic feet of production per day, or 8% of its daily output. Chesapeake plans on curtailing capital expenditures by 70% in 2012, to below $1 billion.
Natural gas prices plummeted during the second half of 2011 and early 2012 as warm weather hampered demand.
“If conditions warrant, the company is prepared to double this production curtailment to as much as 1.0 bcf per day,” Chesapeake said in a statement. “In addition, wherever possible, Chesapeake plans to defer completions of dry gas wells that have been drilled but not yet completed, and also plans to defer pipeline connections of dry gas wells that have already been completed.”
Prices began a rampant ascent higher after news hit the wires at 7:01 a.m. this morning. Below, the day’s trading history.
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February natural gas contracts are currently up some 7.3% to $2.516 per million British thermal units. Shares in Chesapeake Energy were 5.8% higher in afternoon trading, to $22.17.