Encana, the second largest natural gas producer in North America, indicated this week that it may reduce its 2012 capital program due to persistently low natural gas prices. This is despite the company having roughly half of its targeted average natural gas volumes hedged from now through the end of 2012 at prices averaging more than $5.75/mcf.
Is this a sign that North American natural gas producers are finally responding to sustained low natural gas prices? We think it’s still a bit premature to tell, however, the answer may be just around the corner. Natural gas prices typically bottom in the spring and fall months according to a recent seasonal study conducted by the Signal Financial Group.