Exxon Mobil Corporation (XOM): What Does It Think About This?

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Companies that are drilling for gas are doing so within the confines of cash flow instead of the previous aggressive pursuit of production growth. For example, Ultra Petroleum Corp. (NYSE:UPL) has reduced its capital expenses so that the company is investing within its cash flow. That’s had a dramatic effect on its capital budget which has gone from $1.56 billion in 2011 to just $415 million this year.

The bottom line is that even though the price of natural gas is off its record lows, drillers aren’t ready to start investing to grow production just yet. Instead, most are focused on growing oil and liquids production, while those still focused on natural gas are being prudent and only investing within the confines of cash flow. That could change as the 2014 budget cycle rolls around, but right now drillers aren’t ready to buy into the increase in the price of natural gas.

The article ExxonMobil’s Thoughts on Natural Gas in the U.S. originally appeared on Fool.com.

Motley Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Ultra Petroleum Corp. (NYSE:UPL). The Motley Fool owns shares of Devon Energy Corporation (NYSE:DVN) and Ultra Petroleum and has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy Corporation (NYSE:CHK), Long Jan 2014 $30 Calls on Chesapeake Energy, Short Jan 2014 $15 Puts on Chesapeake Energy Corporation (NYSE:CHK), Long Jan 2014 $30 Calls on Ultra Petroleum Corp. (NYSE:UPL), Long Jan 2014 $40 Calls on Ultra Petroleum, and Long Jan 2014 $50 Calls on Ultra Petroleum.

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