Chesapeake Energy Among Drillers Readjusting Drilling Strategy

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From Seeking Alpha:
It did not take long after the bottom in the price of oil was reached in early 2016 for drilling to increase in the shale patch. Chesapeake (NYSE:CHK) is no exception in this regard, even though its approach was always comparatively more conservative. In the third quarter of 2016 it was operating 11 rigs, while in the last quarter it had 17 rigs drilling. It is actually a decline compared with the second quarter of this year, when it was employing 19 rigs. Evidently, the rising price of oil has not been enough of a stimulant to keep to the drilling pace that the company tried to have in the spring. 
It is, in many ways, difficult to understand what exactly determined Chesapeake as well as other shale producers to increase rig counts beyond what many of them, and apparently their shareholders, seem to be comfortable with at current oil & gas prices. Perhaps it was the expectation that the price of oil will increase more than it actually did. But in the case of Chesapeake, it is not as helpful as it is for many other companies. Given that it produces significantly more natural gas than crude oil, even though the company has been making an effort to shift production to more oil, it will be a long time before it will reach the point where natural gas will account for less than oil in terms of its revenue stream. Natural gas prices did see a more significant rebound in 2016 compared with oil, from the lows that were reached at the beginning of that year. Perhaps Chesapeake expected to see a continuation of the trend. Perhaps it should have waited for more confirmation of the trend, because as things stand right now, it seems the company may have harmed its chances of reporting some more positive quarters in terms of profitability.
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