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Low Natural Gas Prices Result in Drastic Cut in Drilling Programs

Chesapeake Energy has joined other major natural gas producers in announcing that it will slash its budget for drilling new wells due to low gas prices. Many producers entered into long term day-rate contracts for drilling rigs and now find themselves with no need for the rigs. Look for increased litigation over the meaning of the early cancellation provisions of the standard IADC day-rate contract. Read more about Chesapeake’s decision here.