Chevron 10 Billion write down for Assets, Is Nat Gas Market finally dead?
Chevron wrote down its Nat Gas assets 10 billion dollars due to low NG pricing, and outlook that it won’t correct.
Is this a sign of things to come? We are definitely in a bust cycle in the NG market, but when will the supply/demand curve correct itself and find more equilibrium to the positive to get back to the “boom”.
Will supply come off from poor well economics , lowering production? Or will demand continue to respond to cheap pricing with coal to gas switching , industrial growth (chemical feedstock, process load), or even LNG exports.
My outlook is slightly negative, but curious on others opinions on the market from physical / financial traders, and O&G IB.
Just one of many that are writing down assets (I work for one on the list). Doesn't make sense to keep assets and long term t-port on the books that were entered into 10+ years ago that no longer (and probably never will, although never say never) make money again. Many of these assets and capacity made a lot of a money in the past and it's times to retire them, just part of the business. Marcellus/Utica shale gas flipped the Gulf to M3 market on its head. Lot of producers had (have) very long term t-port into Lower Manhattan that is so far out of the money it's time to write it off. Same with anyone that took out capacity on Cove Point thinking there would be a need for LNG cargoes to come into the NE market for years to come, again no longer in the money and the flow has now reversed. Just to shed some light on couple of areas behind the write offs. NG is here to stay and will play a large role in the future energy shift for the foreseeable future there's just a lot more of it flowing around out there now. I'll let someone with more knowledge talk about future prices and supply/demand.
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