The larger, aggressive independents moved earlier before gas prices fell to the $2/Mcf level to secure stable sources of capital in the form of joint ventures with major integrated oil companies seeking reserves, production and technological knowledge, and national oil companies seeking financial returns and shale intelligence. Some of the small, aggressive operators elected to sell out to these larger oil and gas companies. With gas prices at distressingly low prices, companies of all sizes began sorting out their asset bases and selling less desirables properties. Today, we are in the midst of a major restructuring of the domestic E&P industry as shale technology leaders, but saddled with a high cost of capital and large debt burdens are being absorbed by larger oil and gas companies with low costs of capital, large research and development budgets to fund further improvements in drilling and extraction technology and the financial staying power to withstand the time until natural gas prices rise to support the shale gas economics.

While we haven't seen the Barnett Shale study (its results are being presented in five papers submitted for peer review), we doubt it will end the debate over the shale revolution and its future. In fact, we suspect the report may actually heighten the debate as it points out the economics of shale gas, especially because a new model for forecasting well EURs has been developed, pointing out that shale formations are not uniform – either within or between formations. The Bureau of Economic Geology is engaged in studies of the Haynesville, Marcellus and Fayetteville shale formation to be completed by the end of the year. Those studies will add fuel to the debate. We believe the results of the Barnett Shale study will be used aggressively to debunk those who are critical of the economics of shale and to support an expansion of the role natural gas will play in the future U.S. energy picture.

Eoin Treacy's view Natural gas doubled last year from below $2 to test $4 by November. It has since pulled back to find support in the region of the 200-day MA and a sustained move below $3 would be required to question potential for some additional higher to lateral ranging. A sustained move above $4 will be required to confirm a return to medium-term demand dominance.