A recurring nightmare for energy companies again is a common theme during earnings season.
Even as producers are benefiting from newfound oil and natural gas throughout the country and are recovering more crude than they have seen over the past two decades, stubbornly low natural gas prices are weighing on their results.
Oklahoma City-based Devon Energy Corp. and Chesapeake Energy Corp. this week both boasted strong production increases, lower costs and other figures that usually signal higher profits.
But both companies reported net losses in 2012, largely because of write-downs as low natural gas prices have devalued their vast natural gas properties.
Energy companies throughout the country are reporting a similar pattern.
Despite several rounds of winter storms, the natural gas price remains suppressed, relatively unchanged throughout the winter.
The price of natural gas slipped 4 cents Thursday to close at $3.24 per thousand cubic feet, up from a low of $1.90 in April, but still below comfortable levels for producers.
The price is up from $2.60 one year ago, but well below the recent high of $4.92 in July 2011.
Most producers have worked hard over the past two years to switch from a focus on natural gas to an emphasis on oil as commodity prices have moved in opposite directions.
Yet most companies are reluctant to move away from natural gas altogether, in part because of a belief that prices eventually will rebound.
Chesapeake has long said it expects natural gas prices to soon climb. But after getting burned on much lower prices last spring, the company said Thursday it has locked in half its 2013 natural gas production at an average price of $3.62 per thousand cubic feet.
“We believe these incremental hedges go a long way toward de-risking our 2013 and 2014 cash flow expectations, despite the fact that we are somewhat bullish on gas markets from this point forward,” Chief Financial Officer Nick Dell'Osso said.
Dell'Osso said the company still expects prices to climb over the next several years.
“To be short-term protected while still being long-term bullish I think makes sense,” he said.