Interesting... If CHK knew they could get $7.30 or $5.78 (dec and nov 06 as examples) on their natural gas, why would they shut it in? I propose they see much further downside on ALL unhedged production many months out if they don't. Is this a bearish or bullish signal for the nat gas market? Immediate impulse says bearish, but a little more thought makes it a difficult question to answer. If the majors are willing to sacrifice some current sales for the benefit of long term price support, this is a good thing for the bullish view. This seems pre-emptive, but perhaps those in the know may not see it that way.
By the way, I've put a little more thought into this. I think its a bearish signal for nat. gas at current price levels. Obviously, 100-125mmcf/day is nothing in the face of the nat gas market - unlike an OPEC production cut, which would offer support to an oil market, this cut isn't enough to make a difference to supply and only alerts the market to the increased relative potential for continued lower prices. So bullish for offering support, but not anywhere close to the levels we are at. I think CHK is hoping the other majors will follow suit. Pretty bold move on their part ... many mixed signals. I think 100mmcf/day in the face of 60bcf (forget the actual number) total American production is relatively meaningless to the big picture. It basically amounts to a cold day of winter.