The industry continues to lower natural-gas supply costs from major supply basins burgeoning with activity, research by Morgan Stanley & Co. Inc. suggests. However, the firm cautions that cost inflation "remains a key risk to E&Ps as increased activity levels in unconventional resource plays is contributing to acute service tightness."

According to an Aug. 16 research note, the firm has revised its survey of per-well economics across major supply basins, also affirming that an overhang of weaker gas prices and a negative outlook for the commodity due to abundant supplies ...