NEW YORK ( Trefis) -- Chesapeake's ( CHK) natural gas production volume has historically seen a steep increase, largely to support the growing demand for natural gas.
However, due to the economic downturn, demand and price of natural gas declined in 2009, causing a decline in gas production as well. We expect production volumes to remain suppressed in the short term but increase in the future. Improvements in drilling technology and growing adoption of natural gas as a cleaner source of energy are the prime factors that will contribute to growth in Chesapeake's natural gas production. Chesapeake competes with Anadarko ( APC), ExxonMobil ( XOM), ConocoPhillips ( COP), BP ( BP), Chevron ( CVX) and Massey ( MEE) in the natural gas industry. Chesapeake's stock is highly sensitive to natural gas production since the natural gas business accounts for more than three-fourths of the company's stock price. While we expect Chesapeake's natural gas production will cross 0.9 billion cubic feet (bcf) by the end of our forecast period, Trefis members predict the volumes will reach 1 bcf. The member estimates represent a significant upside of around 30% to our price estimate for CHK stock. We currently have a Trefis price estimate of $25.01 for Chesapeake's stock, about 10% below the current market price of $27.89.