Chesapeake Energy's CEO is encouraging other companies to cut gas production

According to Nick Dell'Osso, chief executive officer of Chesapeake Energy Corp., the "very clear signal" from low prices in the U.S. gas sector makes it obvious that production needs to be cut.

In an interview on Wednesday, Dell'Osso said that gas supply growth is not needed in the short term. According to his associates, the industry should recognize this and the need to cut production in the near future.

Chesapeake decided to sell some assets in South Texas to WildFire Energy for $1.43 billion, Dell'Osso's comments came hours after. The divestment of these assets aims to increase Chesapeake's focus on gas production in the Haynesville and Marcellus areas.

Last year, gas production increased rapidly while domestic demand growth was slow. After an accident at the key Freeport fuel-export complex on the Texas coast in June, the complex shut down. That caused gas prices in the U.S. to drop by 23%.

EQT Corp., the largest U.S. gas producer, said that supply growth will slow due to falling prices.