I trust from the comments made by Chuck Yeagar that the deal he...

I trust from the comments made by Chuck Yeagar that the deal he aims to conclude is a pure gas play.

Supply of natural gas has overwhelmed demand as the great fraccing boom produced a combination of natural gas, gas oil and oil. The money was in the oil flush that decreased by 90% over 2 years or so but those two years were good money. The natural gas was a freebie and the price mattered little as long as it could be disposed from the operations.

Fraccing is a perpetual motion machine where new wells must be drilled to maintain production as older wells quickly fall way. This keeps up the need for new capital as in the last quarter capital spend was $US1.30 for each $US1.00 of production revenue at an average WTI of $US91 per barrel.

If the oil price stays down lenders will worry about the money they have already have committed rather than new lending. Moreover, the cost of capital will increase as the risk profile worsens.

If oil fraccing slows natural gas production will also fall. There is no risk of LNG imports unless the natural gas price trebles so the US is not import sensitive for natural gas as with oil.

Seems a sweet spot to buy depressed natural gas assets for a medium term play.