Another Nat Gas Company Moving Towards Oil
As Nat Gas prices continue to plunge due to strong supplies from shale plays and low demand from industry, nat gas producers like Chesapeake (CHK) and now SandRidge Energy (SD) make bigger moves into oil drilling. To a major extent they are victims of their own success. The major success in shale drilling by the founders of CHK which now include the CEO of SD has led to much higher gas production even as demand lagged in 2009. Today SD announced the purchase of Arena Resources (ARD) which mainly focuses on oil production in the Permian Basin in Texas for $1.6B. This marks a major shift for SD into oil that the CEO claimed at a conference a few months back was '10x more profitable to drill for then gas'. Guess that should've signaled to the markets that SD was going to make such a move. Recently CHK announced that they were moving more drilling resources towards oil and away from nat gas. The April Investors Presentation shows a goal of 20% oil production and a probable dro...