Warm Winter Pushes Exxon Toward Natural Gas Liquids

The unseasonably warm winter may be good for consumers’ wallets, but it’s bad news for Exxon Mobil and other major natural gas producers. The lack of demand has pushed gas prices down, forcing many natural gas companies to move toward liquids-rich shale-gas resources.

In the past year, Exxon doubled the number of rigs allocated to liquids-rich natural gas plays, said David Rosenthal, the company’s vice president of investor relations. Rosenthal discussed the company's fourth-quarter earnings during a conference call with investors today.

The company is operating the same number of rigs, approximately 65 to 70, across the natural gas space. Rosenthal says he doesn’t expect that figure to change this year. But the company could continue to transfer more resources to liquids over the course of the year.

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Rosenthal:

“I think it would be reasonable to expect that we would continue to expand the focus on that drilling on the liquids and liquids-rich plays, particularly in some of the areas where we are having good initial success, and we look forward to bringing on some more wells there.”

Exxon isn’t the only major natural gas player in the United States transitioning toward liquids. Chesapeake Energy announced last week it would cut dry-gas drilling operations by 50% and reallocate the capital savings to liquids-rich plays.