The industry and investor backlash against low natural gas prices has set in and will continue through the summer, no doubt. I find it a bit curious, though. After all, when we attend investor conferences, CEOs still insist that most of the U.S. shale plays remain economic with gas prices as low as $3.50 per thousand cubic feet (Mcf), and certainly at $4.50. The charts in sell-side analysts' lengthy reports reflect a similar view.

So, the speed with which E&P companies are adopting a more oily stance is giving us whiplash. Companies of all sizes are rolling out their new oil-focused strategies. Sell those assets. Redeploy that drilling budget. Buy into new basins and plays. Tone down the gassy PowerPoint in favor of more oily slides.

At our own recent conference, Developing Unconventional Gas (DUG), held in Fort Worth, some 1,500 people heard from speakers that the "best" shales—the Haynesville core, Barnett core, Eagle Ford, Marcellus—work at a price of $5 and below.But, industry mentality seems to have changed in a matter of weeks. At the Howard Weil energy

conference in New Orleans and the Oil and Gas Investment Symposium (OGIS) in New York, held by the Independent Petroleum Association of America, oil was the key word in the search box.

We've witnessed this kind of rapid change in strategy before. Suddenly, everyone claims they are the lowest-cost producer. The following year, everyone insists they will show 15% production growth. The following year, it is return on capital. The year after that, it is living within cash flow and yes, my bank redetermination went well, thank you very much.

I also find this backlash more than a bit ironic. Weren't they all touting how great natural was just a month ago? It still is. Wasn't the industry spending millions to reassure Congress, the public and power generators that there is more than enough gas supply, and that the U.S. should use more of it, not less? That's still true.

But meanwhile, and for a while, crude oil and liquids-rich gas are where it's at. In the first quarter of the year, oil's average price rose for the fourth straight quarter, says Barclays Capital, which forecast an average price of $85 per barrel for the full year.

The oily Permian Basin and the liquids-rich Eagle Ford and Marcellus are the hot plays as far as drilling, asset acquisitions or joint ventures go.

In the Rockies, the Niobrara shale is the hot ticket for leasing. A landman friend called from the courthouse in Laramie County, southern Wyoming, to say there are so many landmen trying to work title searches there, the women who run the place have a new system: you get one hour on the books and must wear latex gloves to protect the pages, and then you have to go to the back of the line again.

Also in line are drilling rigs to test the Niobrara. While searching our Unconventional Gas Center, UGcenter.com, I came upon a list of the 75 or so drilling permits filed for Wyoming and northern Colorado, seeking Niobrara pay.
Throughout the U.S., the oil-directed rig count was up about 70% year-over-year at the end of March, with the oil-development rig count at a 17-month high, also according to Barclays.

We saw this coming last August when the editors sat down to plan the editorial path for 2010. That's why we started off the year with our January cover story on oil-prone shales: the Monterey, Bakken, Niobrara, Mowry. That's why we have organized a new event, Developing Unconventional Oil (DUO), to be held in Denver on May 18.

The dash for oily assets also is affecting capital markets for small and midcap producers, according to Adam Connors, director of corporate finance for C.K. Cooper & Co. The average market cap of the companies that he follows, that issued equity in fourth-quarter 2009, was $266 million, yet the average market cap for this peer group in first-quarter 2010 had risen to $715 million.

"We attribute this to the increase in oil prices and the return of investors to the space, creating an overall increase of market capitalization for value-driven E&Ps."

If interest rates rise later this year, which seems possible, capital will cost more for most companies.

"For oil-based producers, we believe this will still be more than offset by the increase in crude oil prices…while natural gas producers will continue to suffer as supplies remain high," he says.

We have some wonderful surprises ready for you at this year's Energy Capital Week, from in-depth sessions on public and private capital access, how to start an E&P company, and CFO issues, to keynoters Robert Bryce and Rudy Guiliani. A bonus for attendees: we are announcing, and hearing from, our annual Excellence Awards winners, including Executive of the Year. Go to energycapitalweek.com for details.