Mr. Horowitz: When you look at the supply/demand fundamentals of the domestic natural gas market, there are several variables that we consider. First, natural gas storage levels are now above 3.8 Tcf, approximately 20% above the normal level for this time. As we have witnessed, the marginal cost of production has decreased across the board, with the most pronounced impact being experienced in the prolific shale plays - Haynesville, Eagleford, etc. That said, when we consider improved capital market access and how much of that capital is being spent through the drill bit in these and other nonconventional areas, it certainly argues for a sustainably higher productive environment for the foreseeable future. Most importantly, we really haven't experienced the significant natural gas production rollover that the market was previously forecasting. As a matter of fact, when reviewing the sequential production figures, it suggests supply is only fading modestly. Furthermore, we've stacked up quite an inventory of wells that have been drilled but not yet completed or hooked up to gathering lines. That said, should the slope of the forward natural gas curve improve in the near term, the associated productive response from those wells being completed/hooked up could be material. Secondly, we can't forget about the potential impact of incremental LNG entering the Gulf Coast. While it's difficult to quantify, additional cargoes entering the domestic market this winter could further compound an already oversupplied market. The offsetting mechanism to this supply issue, obviously, is going to price-sensitive demand. To that point, we've only seen a minimal increase in industrial/commercial demand recently, and we're concerned that the magnitude of change could be offset by gas-to-coal switching in the coming months, which would mark a trend reversal from earlier this year. Absent any colder-than-normal spells this winter, an oversupplied market may continue well into FY10. Creating a perpetuating overhang may act to keep a lid on pricing in the 5 to 6/Mcf range.
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