Kodiak Oil & Gas Corp (USA) (KOG), Chesapeake Energy Corporation (CHK): The Surprising Paradox of Record U.S. Natural Gas Production

Others have achieved tremendous success through pad drilling, which allows operators to efficiently drill multiple wells from a single pad. For instance, Whiting Petroleum Corp (NYSE:WLL) said pad drilling allowed it to drill the same number of wells with fewer rigs, which helped bring down drilling expenses substantially.

Final thoughts
As you can see, the nature of oil and gas wells means that large quantities of gas are extracted as a byproduct of drilling for oil, while drastic improvements in drilling efficiency have allowed operators to produce more gas with the same or fewer number of rigs.

Another less important reason that helps explain why natural gas production has remained at record levels despite plunging rig counts has to do with the legal technicalities of oil and gas land leases. Leasehold owners are often required to maintain a given level of activity in gas plays to avoid losing their lease, which means that many end up drilling for gas despite incurring sizable losses on their production.

The article The Surprising Paradox of Record U.S. Natural Gas Production originally appeared on Fool.com.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool has options on Chesapeake Energy Corporation (NYSE:CHK).

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