U.S. natural gas and gas liquids producers struggling with a cashflow squeeze are unlikely to find White Knights to rescue them as investors see little value in companies without oil output.
Facing a severe natural gas glut, many companies diverted investment to raise production of more profitable natural gas liquids (NGLs) such as ethane, propane and butane.
But all they managed to do was to spread the glut to NGLs, slashing prices with supply seen outstripping demand until some planned new plants start production in 2015.
Ethane prices have halved in 2012, while propane and butane have fallen nearly a third -- offering little respite from gas prices that hit a decade low earlier this year.
With no respite in sight, investors are shaking their heads and looking away.
"It's going to be a long road for these guys that are waiting for natural gas prices to rebound," said Sandy Villere, co-manager of investment firm Villere & Co, which had more than $1.4 billion under management as of June 30.
"I think even if prices go up in the short run, they are going to be down in the long run. This is going to be a tough strategy."
Quicksilver Resources Inc KWK.N, 96 percent of whose second-quarter production revenue came from gas and NGLs, has been unsuccessfully looking for a joint venture partner since the start of the year to fund a move to invest in oil production from its West Texas fields.
"We're definitely vested to get oil in the product mix and diversify out of natural gas as soon as we can," said David Erdman, a spokesperson for Quicksilver.
Both industry and private equity firms are staying away from the sector, which is also facing a squeeze in bank lending.
Private equity firms are unwilling to invest in a sector that does not offer good returns within one-to-two years and there is no sign of the gas glut easing.
Asian companies such as CNOOC Ltd (0883.HK) are interested more in big oil reserves or LNG export projects, while India's Reliance Industries Ltd (RELI.NS) has shied away from buying more after three shale JVs over the past two years.
Reliance, which has invested $4.1 billion in the shale JVs with Carrizo Oil & Gas Inc (CRZO.O), Pioneer Natural Resources Co (PXD.N) and Chevron Corp (CVX.N), said in July it planned to cut gas-focused activities and that cost pressures have peaked.
U.S. gas companies that have oil acreage, such as Bill Barrett Corp (BBG.N), are able to invest in that but others have little choice but to hunker down, wait and watch.
Exco Resources Inc (XCO.N) CEO Doug Miller said the company was prepared to remove all its five rigs in the Haynesville shale field in Texas and Louisiana.
Pioneer Natural would similarly cut drilling if NGL prices fall further, Chief Operating Officer Timothy Dove told Reuters.
The company is looking for a JV to help fund its oil drilling in the Wolfcamp shale field in Texas.
There are few other options. Free cash flow -- operating cash flow minus tax and expenditure on maintenance of assets -- is negative for these companies, Thomson Reuters data shows.
Gas and gas liquid prices are higher outside North America, but it will take time to develop those markets.
"NGL prices are a concern until additional processing infrastructure is built or the ability to export is achieved, which is still a couple of years out in our view," said Wells Fargo Securities analyst David Tameron.
A healthy NGL price would be about 55 percent of U.S. crude oil prices, Pioneer Natural's Dove said. In the trading hub of Mont Belvieu, Texas, NGL was priced at about 40 percent of crude, which was at $93 per barrel last week.
Some analysts expect NGL prices to trade at about 42 percent of crude in the second half of the year, offering no respite unless, like SandRidge Energy Inc SD.N, you have oil coming out of your wells alongside gas.
"Our returns on what we are investing in drilling have not changed much at all because of NGL prices," said Kevin White, a vice president at SandRidge.
(Additional reporting by Joe Silha in New York; Editing by Rodney Joyce)