We're way past cautionary cuts at this point, but Chesapeake is definitely doing the right thing by further reining in production.
Natural gas is priced at roughly $4 at Henry Hub (the Louisiana location that sets the national reference point), which sounds bad enough, but that benchmark masks some brutal regional differentials. The region including Chesapeake's own backyard of Oklahoma is one example, with CEO Aubrey McClendon pointing to March wellhead prices of $2.70.
Rockies gas may be even worse off, but that's an area Chesapeake has deliberately avoided, and a problem left to folks like Anadarko Petroleum
Perhaps more interesting was Chesapeake's second announcement today. Haynesville Shale partner Plains Exploration & Production
However, I don't see the introduction of this option as a point of real concern for Chesapeake investors.
It is hard to see Plains abandoning this enviable leasehold position short of some extraordinary financial distress. But anything is possible, and we've already seen one of Chesapeake's partners take a painful exit. Plains should have more liquidity levers to pull than that smaller outfit, however.
In a worst-case scenario, I would imagine that Chesapeake would be able to persuade an even better-funded international oil major like Total SA