Gas producers face leasing and drilling slowdown

Between rising concerns that the swelling U.S. natural gas supply is outstripping demand and the uncertainty of the ongoing credit crunch, the natural gas industry faces a slowdown in its frantic pace of leasing, drilling and development.

For example, Range Resources President John Pinkerton said that although the credit market is worrisome, falling oil and gas prices are the bigger driver of the changes.

"Natural gas prices have dropped 50 percent in four months. Cash flows are lower, so people brought down their capital expenditures," Pinkerton said this week. "The financial crisis is the icing on the cake," he said, and with rising concerns about a recession and lower energy demand, "the feeling is to live within your cash flow."

Fort Worth-based Quicksilver Resources on Wednesday became the latest to trim its spending plans. Quicksilver said it would pare $100 million from its budget for the rest of the year, putting it at $1.1 billion, and it expects to spend $850 million in 2009.

The cuts include reducing the number of drilling rigs in the Barnett Shale from 14 to nine starting next month, the company said.

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