Analyst: Natural Gas Prices Are Too Low to Support Production

From Seeking Alpha:
Since the price of natural gas has descended into territories not seen since the 2012 dip, it warrants an examination of how producers reacted to that move. In fact, despite the apparent steady rise in production, many of the regional drillers responded strongly to the low prices in late 2011 and 2012. Here are the six major natural gas producing regions by volume since 2009:
In particular, the Haynesville region severely pulled back in its natural gas drilling operations. Once the top producer in the United States, it now produces roughly two thirds of its peak production. In fact, in 2008 over 80% of rigs in the Haynesville region were drilling for natural gas, today less than 20% are drilling natural gas, most having switched over to oil. 
To understand why extraction in Haynesville, Barnett and Fayetteville dropped off when prices fell one needs to examine the cost of extraction. According toMorningstar's Energy Observer Haynesville and Barnett have a regional breakeven rate of $5 to $6 per Mcf to extract, making them some of the more expensive in the nation. Marcellus and Eagle Ford are among the cheapest, with some areas having a breakeven price of $3 per Mcf. Other areas with higher transportation costs and less access to pipeline infrastructure have a breakeven price over $7 per Mcf. Throughout the Marcellus shale it is estimated to have an average breakeven price between $4 and $5 per Mcf. 
As Henry Hub prices descend into lows not seen since 2012 and Nymex futures below $3 per MMbtu until July 2015 it is likely we see another pullback in production similar to what happened following 2012.
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