Natural Gas feedback in the fields

When the street talks of a 24 month burn off at current prices to allow pricing to return to the natural gas market, our contacts are telling us it looks more like 48 months. A variety of factors from so much new capacity to lower demand. But so much of the capacity now is tied to leases that have to be drilled. To be able to keep leases drillers must move ahead with some drilling even at a loss. There is an issue in next 60-90 days where mark to market rules and loan covenants for reserve valuations and present values (PV10 is present value minus 10%) the haircut at this point will be daunting. High cost reserves are going to force loan covenant resets and the question is does this just affect smaller players or do some of the larger players suffer? Even when wells get shut in they still need to produce at some lower rate. These operate at money losing rates so IRR in whole industry suffers. So much gas has been identified and leased in last few years. if pricing wont change soon the ripple effect as production and reserves cant be turned off eventually has to have iompact on oil prices.