What's ahead in the New Year?There are many questions to ponder, including whether natural gas prices are poised to revive (we think not), and will US production continue upward while costs go down (we say yes).Here are some of the key themes we see emerging for 2014.

Oil prices seem shaky.The million-dollar question is, where do oil prices go from here?US production is approaching 7.5 million barrels per day, with several pundits predicting this will reduce oil prices eventually.Raymond James & Associates has a below-consensus call of $83 per barrel for West Texas Intermediate oil in 2014.Global Hunter Securities thinks $95 is a pivot point.Oppenheimer thinks oil would be $80 if it were not inflated due to the Middle East mess.

Speaking of which, a consultant friend emailed from the Middle East at press time, saying that he is “getting an earful” from allies there.

He writes: “There are four civil wars raging around here: Syria, Iraq, Libya, Yemen; and two low-level ones (ie major unrest—very combustible that could explode) in Lebanon and Egypt.To say the Gulf Arabs are disappointed by Obama and US foreign policy would be an understatement.They are actually just disgusted and angry.I have lived in the region, and I have been coming here now for 23 years.I have never seen this attitude before.And it is not good.There was always respect for the US No more.”

He says oil is hovering around $100 on average due to the “uncertainty” premium, and if there was some form of stability, the price might fall by $20 to $30.“But in an irony of ironies, that in itself would disrupt the social balance here, as budgets would be cut, and that would cause problems.But they will worry about that later.”

Production will continue upward.Whatever the geopolitics, companies here have to keep on track, so that leads to a key theme: drilling efficiencies.These are rippling throughout the industry, helping E&P firms to improve their profit margins.More capital is being focused laser-like on the best-return plays.

Spending will go up.Barclays Research says preliminary indications are that E&P spending will go up in the US by a double-digit percentage in 2014, and that's mostly to chase proven oil plays.

Natural gas production is expected to rise again in 2014.The latest EIA-914 production data, released late in October, showed that Lower 48 output as of August had increased by nearly 2.3 billion cubic feet per day over 2012 levels.

Raymond James noted that new gas from the Marcellus and Eagle Ford shales continues to offset declines in northern Louisiana and the Gulf of Mexico.“Our model suggests that gas production will average … close to another 2-plus Bcf a day next year, on easing infrastructure constraints.”

Better well performance is boosting Marcellus production, and there's an estimated 1.4 Bcf equivalent a day that's restricted because of pipeline and processing bottlenecks.Still, despite a lower rig count in the region, Wood Mackenzie analysts estimate production will rise throughout 2014, reaching 13 Bcf a day by 2015.

“Production is now over 10 Bcf per day, and with more than 80,000 possible remaining well locations in the play.”

Portfolio restructuring's the thing.Locations are like candy to Wall Street, so restructuring to get more, and throw more money at them, will continue in 2014.Majors and independents alike are slogging through a big reorientation, from reworking their production balance from natural gas to more liquids; to adopting the complicated “shrink-to-grow” model.That should bring more producing properties onto the A&D market, and more capital to be deployed on those locations.

Analyst Paul Sankey at Deutsche Bank looks for continuing improvement from companies that are doing so.He likes Conoco the best, but thinks Exxon is getting the memo too.

“We could discuss the subject of Marathon's financial performance here, but the fact remains that they have a choice: root-and-branch restructuring such as has currently been undertaken at Hess and Oxy, or the 'international mini-major' model, like Murphy Oil, despite the atrocious 10-year-plus track record of this 'mature-asset plus high-risk exploration' model … .We firmly believe that at this point in the cycle, 'shrink-to-grow' is the only way forward.”

That theme is reverberating across the entire E&P spectrum: rework the asset base, sell off the noncore assets, grow margins.Think of the dramatic portfolio changes announced lately by Consol, Chesapeake, Encana, Apache, Devon, Talisman, SM Energy, Forest Oil.

Hart Energy's portfolio is full and growing, and so, we are gearing up for the 2014 series of DUG conferences, where we enjoy seeing all of you and learning much more about the key plays that are shaking up our world.Mark your calendars then, to join us in Pittsburgh for the annual Marcellus-Utica Midstream Conference on January 29 and 30, and for DUG Midcontinent in Tulsa on March 3 and 4.