$4 a MMBTU (million metric, or one million, BTU)  is the Break even point for fracking for Natural Gas.

 

In the last two weeks, prices of natural gas have lost nearly 12%, off just under 50 cents in December futures. On the lows today, my objective at $3.50 was achieved.

November 5, 2012

http://seekingalpha.com/article/979011-commodity-chart-of-the-day-natural-gas

I find it interesting that Stock Market investors are making money betting against higher Natural Gas Prices. I find it very interesting that all the talking heads on the business channels were confident last year that natural gas producers would cut production for natural gas and therefore prices would go up.

No industry can make a profit if prices are below the break even point.

Never mind that a record melting of the Arctic Ice cap this year might mean another warm winter and that would cut demand for natural gas prices again.

Long term prospects for the industry are horrible everyone is fracking now and liquid natural gas prices for export will likely drop like a stone for decades.

 

On Wednesday Exxon Chief Executive Rex Tillerson broke from the previous company line that it wasn’t being hurt by natural gas prices, admitting that the Irving, Texas-based firm is among those hurting from the price slump.

“We are all losing our shirts today.” Mr. Tillerson said in a talk before the Council on Foreign Relations in New York. “We’re making no money. It’s all in the red.”

His comments mark a departure from remarks made earlier this year on how lower natural-gas prices hadn’t yet hurt the company because of its operational efficiency and low production costs. June 27, 2012,

http://online.wsj.com/article/SB10001424052702303561504577492501026260464.html

 And the hope for higher Natural Gas prices gets worse!

Shale gas in China is an energy resource yet untapped, but is seen as having large potential.[1] China has set its companies a target of producing 30 billion cubic meters a year from shale, equivalent to almost half the country’s gas consumption in 2008

http://en.wikipedia.org/wiki/Shale_gas_in_China

In January last year, the US Energy Information Administration estimated that India held 38 trillion cubic feet of proven natural gas reserves.

That was good enough for the needs of the nation for 29 years

http://www.dnaindia.com/money/report_india-holds-527-tcf-of-shale-gas-reserves_1685334

Poland will produce “several” billion cubic meters of gas from shale rock by 2020, Treasury Minister Mikolaj Budzanowski said in July. The country’s recoverable shale-gas reserves amount to as much as 768 billion cubic meters, the Polish Geological Institute said in March.

http://www.bloomberg.com/news/2012-10-12/total-to-push-ahead-with-shale-gas-drilling-in-poland-ceo-says.html

Ukraine is heating up as well. TNK-BP Holding, a joint venture of BPBP.LN -0.90%PLC and a group of Russian investors, plans to invest $1.8 billion in shale projects at a half-dozen sites around Ukraine. In June, Italy’s Eni SpA E -1.21% paid an undisclosed amount for a stake in Ukraine-based LLC Westgasinvest, which holds about 1,500 square miles of land with potential shale-gas reserves. And ChevronCorp., CVX +0.74% which has acquired more than 6,250 square miles of potential shale gas leases in Central Europe since 2009, says it is working with Ukraine to negotiate a production-sharing agreement.

http://online.wsj.com/article/SB10000872396390443866404577565244220252020.html

 

Our geological estimates show that Lithuania can hold 480 billion cubic meters (bcm) of shale gas reserves, with recoverable reserves at 120 bcm,” he added.

Business daily Verslo Zinios reported that Chevron Global Energy had bought 50 percent of Lithuania-registered oil company LL Investicijos, which holds a license to prospect for oil and gas at the 2,400 square kilometer Rietavas field.

http://www.reuters.com/article/2012/10/25/us-chevron-lithuania-idUSBRE89O0NG20121025

All of these countries can beat American labor costs to extract natural gas. That means that Exon Mobile’s investment in shale gas in America is loosing money and will likely loose even more money in the future .

 

Shale gas development, an activity that scarcely existed 10 years ago, is a U.S. success story that supports more than one million American jobs and generates billions of dollars in government revenues, 09/20/2012|

http://www.4-traders.com/EXXON-MOBIL-CORPORATION-4822/news/Exxon-Mobil-Corporation-Shale-Gas-Development-is-an-American-Success-Story-says-XTO-President-15218258/

However any industry as we have seen from the bank bailout that supports 1 million jobs and brings the government revenue is not likely to be allowed to fail even if it is loosing money.

Talk about exports of Liquid Natural Gas making Shale Gas wells more profitable in the future  are a dream given all of the shale gas expected to be drilled internationally.

Japan now has 2 nuclear plants going and is building huge wind mills to provide more power Japan’s Nuclear plants being offline was the reason why Liquid Natural Gas prices were so high this year as Japan gets more power online from Nuclear and Wind sources demand for liquid  Natural Gas should drop short term. Another warm winter will make Natural Gas Prices short term.

The Wall Street Journal reported that Chesapeake has raised $6.4 billion since 2007 by signing oil and gas production deals with a number of banks. Those deals are essentially debts that Chesapeake must repay with oil and natural gas. The Journal said the full cost of meeting those obligations over the next 10 years wasn’t disclosed.

http://www.wfmj.com/story/18368749/chesapeake-energy-receives-3-billion-loan

 

Exxon’s $26 billion acquisition of XTO Energy

http://online.wsj.com/article/SB10001424052702303561504577492501026260464.html

Exxon, Chesapeake and the banks loaning Chesapeake will need a bailout. Even Exxon can’t buy a company for $26 Billion then lose money on it for years.