JANUARY 23, 2012, 3:49 P.M. ET
("US GAS: Chesapeake Output Cut Boosts Futures," at 3:41 p.m. EST, misstated the 2012 price decline in the second paragraph. The correct version follows:)
--Futures surge after Chesapeake cuts production
--Cut of 0.5-bcf/day could double "if conditions warrant"
--Futures still down 52% from a year ago
By Dan Strumpf Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Natural gas futures surged Monday after Chesapeake Energy Corp. (CHK) announced it was curtailing production in response to low gas prices.
Market participants took the announcement as a sign that producers are starting to respond to the selloff that has gripped the gas market all winter. Mild temperatures coupled with relentless shale gas production have battered the market, with prices still off 15.5% in 2012 despite Monday's rally.
"An exceptionally mild winter to date has pressured U.S. natural gas prices to levels below our prior expectations and below levels that are economically attractive for developing dry gas plays in the U.S.," Chesapeake CEO Aubrey K. McClendon said in a statement.
Natural gas for February delivery settled up 18.2 cents, or 7.8%, at $2.525 a million British thermal units on the New York Mercantile Exchange. That's the highest settlement in more than a week.
Chesapeake said it will immediately curtail 0.5 billion cubic feet a day of gas production, reflecting about 8% of its total output. The company said it could cut production by another 0.5 bcf a day "if conditions warrant."