Unless we have an incredibly hot summer, and I want to remind you that last summer was 22% hotter than normal, it’s likely that sometime in the late summer, we will begin seeing much higher line pressures, the in mandatory curtailments, followed by rotating shut-ins of fields all over the country. EnerVest and EVEP have been exceeding – have been – I’m sorry – have been expecting this set of events since February when it was apparent that we were experiencing the warmest winter in recorded history.
Approximately 90% of EVEP’s expected production is this year and 80% next year, and I want to elaborate on that slightly in that really, 100% of our current production is hedged as well as our PDP for next year; it’s just that we continue to drill wells instead of some of those – the results from those PUDs are not hedged at this point. There’s no question, however, that all companies in the US with natural gas production will fall short of forecasts in the third and fourth quarters.
On a more optimistic note, and this is going to sound strange when you hear the title here, I’m giving a speech next week at Bentek’s BENPOSIUM titled, Why $1 Gas Prices Are Good For Our Industry. And I’ve spent a lot of time analyzing supply and demand in our industry and for the first time since 2007, I’m optimistic that natural gas supply and demand will start coming into balance in 2014 and beyond for a period. My work would suggest $5 gas prices in 2015 based upon demand strength and some supply constraints.
Turning back to EVEP, Ron will talk about the details of our operations, but I specifically want to address the Utica formation at the 10,000-foot level. The core of the wet-gas window is significantly de-risked and pad drilling has commenced or has been conducted by four wells on four pads now. Drilling and completion costs, on average have declined on Chesapeake-operated wells by over 30% this year. The condensate and NGL yields have noticeably improved and stabilized at higher levels from wells in which the frac water has dissipated into the formation.
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