By OGJ editors
HOUSTON, Aug. 10 -- US gas production during the second quarter showed a 3.8% decline compared with second quarter of last year, according to Raymond James & Associates Inc. based on a survey of 47 publicly traded US oil and natural gas exploration and production companies.
The St. Petersburg, Fla.-based analyst said that US gas production has reached a "similar crossroads" to that of declines seen in US oil production during the 1970s. This decline occurred "regardless of how many rigs were drilling," RJA said.
This decline is expected to continue, RJA noted, "despite continued growth in drilling activity."
The analyst forecast, "Given the inherent rate of decline in US gas wells today, combined with what is still a muted response to drilling activity, we expect domestic gas production levels to continue trending south for the next several quarters."
Even when considering private E&P firms, RJA noted, ". . .it is clear that growth in gas rigs among companies outside our survey has substantially lagged the independents included in the survey over the past 12 months."
Regarding gas prices, RJA said that, "While short-term gas prices and oil-gas price ratios should continue to be volatile, if oil prices remain near the $40/bbl level, that would imply fair value for gas above $7/Mcf."