Haynesville Shale - Natural Gas Prices - Boone Pickens 9/03/08

Natural Gas prices have plummeted over the past few months going from $14 to the mid $7's. The question is, is the Haynesville Shale still economical to drill if Natural Gas falls even further?

Yesterday, Boone Pickens came on CNBC and stated he thinks there is a huge amount of supply in natural gas which the demand is not as strong as the supply. Boone Pickens says he thinks Nat Gas could even fall back to $6 in the coming months.

With $6 natural gas, how will small companies like Goodrich Petroleum ( GDP ) and Petrohawk Energy ( HK ) be able to drill the haynesville shale? The answer is simple, these companies could stop drilling the Haynesville Shale and drill the formations above it such as the cotton valley formation. If their stock prices get to low, you could see a Devon Energy, Chesapeake Energy, or XTO Energy swoop and and buy these companies out.

With low natural gas prices, you will see a decline in drilling, but this decline will cause supplies to fall and in the long term will stable the price for natural gas out.

The Haynesville Shale is here to stay!