As you can see in the live chart below, natural gas prices bottomed out in April 2012 to just $1.90/mmbtu, however, the future prices for natural gas are expected to exceed $4 in 2013, and possibly hit $5. A few factors affecting this price include the 20-27% colder winter predicted by the NOAA, continued utilities switching to natural gas due to the EPA and other legislation, and the tighter supply caused by lower rig count.
Dry gas is largely uneconomical at the current prices, and producers have concentrated their operations on areas with proven or anticipated shale oil and shale gas liquids which have been outputting near record highs – including areas in western PA near the Ohio boarder, like Lawrence and Mercer Counties and possibly Crawford County. As the gas prices increase into and above the $4 range we expect interest in our other groups (i.e. Cambria, Clarion, 4-County) in dry gas rich counties to increase once again and rig count to increase to meet industry demand.
In short, with dry gas prices where they are currently, many of our groups need to be patient as the natural gas market rebounds back to the $4/mcf range. We are currently using this time to build the acreage so we are ready to present an attractive group to oil and gas companies to generate interest when the gas market does rebound.