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  • Cabot Oil & Gas: How To Escape The Gas-On-Gas Competition? [View article]
    A Farmer,

    What is your definition of "meat?"
    Jul 28, 2015. 10:53 AM | Likes Like |Link to Comment
  • Cabot Oil & Gas: How To Escape The Gas-On-Gas Competition? [View article]
    A Farmer,

    I agree, this back-of-the-envelope approach should work everywhere. We just need to use quality estimates and check against reported data.

    To use your SD analysis as example, what is SD's capex this year? How many wells will it have completed? What is the production trajectory?
    Jul 28, 2015. 10:35 AM | Likes Like |Link to Comment
  • Cabot Oil & Gas: How To Escape The Gas-On-Gas Competition? [View article]
    A Farmer,

    Let's do the following math.

    At 2 Bcf/d gross, Cabot is producing out ~0.73 Tcf of reserves per year. How many wells does one need to fully replace the produced reserves?

    At 10 Bcf per well (EUR), that would be 73 wells. At 20 Bcf per well, it would be 36.5 wells.

    Let's use capex of $7 million per well ($6 million D&C and $1 million production facilities).

    Using 73 wells, total capex would be $500 million, give or take. Using 36.5 wells, total capex is $250 million.

    In other words, in the long run, PDP reserves can be sustained at a constant level within the $250-$500 million annual capex range.

    To sustain production flat, one needs to run a more complex model, but I think $400 would be sufficient currently and will drift lower over time.

    Again, Susquehanna is different from many other areas. In the Haynesville, it takes $8 million to drill an 8 Bcf well and facilities, for example (in the best areas). Doing quick math, it would take ~$720 million in capex to replace produced volumes in the Haynesvill, assuming an average of 2 Bcf/d gross.

    Sussquehanna Marcellus would be an incredible cash machine if not the price realization situation that I discussed in the article. And the reason why Marcellus North has gotten itself in this pricing dead end is that it's so productive.
    Jul 28, 2015. 08:52 AM | 2 Likes Like |Link to Comment
  • EQT Corp.: The Dry Gas Utica Is A Diamond - No Longer In The Rough And, As It Turns Out, As Big As The Ritz [View article]
    Phaedrus1952,

    Thank you for the data points on Sportsman's, most helpful. Indeed looks a bit steep for a well that one would expect to be pressure-managed. Let's see what RRC is going to say on their conf call.

    Susquehanna Utica - interesting. Thank you for the color.
    Jul 27, 2015. 04:08 PM | Likes Like |Link to Comment
  • EQT Corp.: The Dry Gas Utica Is A Diamond - No Longer In The Rough And, As It Turns Out, As Big As The Ritz [View article]
    Phaedrus1952,

    The reason Devonian plays are on the back burner and therefore are not getting much attention is they often cannot compete with more prolific Marcellus wells. Lease retention considerations may also play a role.

    Indeed, there is a lot of gas in those formations and at a certain price they can be commercial. The most economic locations will be developed first, however.
    Jul 27, 2015. 12:59 PM | 2 Likes Like |Link to Comment
  • EQT Corp.: The Dry Gas Utica Is A Diamond - No Longer In The Rough And, As It Turns Out, As Big As The Ritz [View article]
    Stag15,

    I am not sure I agree with "The permeability of these reservoirs falls off exponentially as depth increases." It is really reservoir-specific.

    I agree on cost, but it should be taken in the context of the payout period.

    With regard to Range, the well has been on a managed pressure program, in my understanding. I have not heard that it has declined. Have you? Would appreciate any insight.
    Jul 27, 2015. 10:30 AM | Likes Like |Link to Comment
  • EQT Corp.: The Dry Gas Utica Is A Diamond - No Longer In The Rough And, As It Turns Out, As Big As The Ritz [View article]
    Stag15,

    All very fair points. However, I would refer you to Rice's Bigfoot #9H to give an idea of what the high end of expectation might be here.

    Obviously, one needs to see what the rate of pressure drawdown is going to be in the deep Utica. But the starting point is much higher than it is in Belmont County. So if one could drill scaled-up versions of the Bigfoot on a consistent basis for $12-$15 million a well, you've got yourself a play. A Superplay, in fact.

    The Deep Utica is a "decade into the future" type asset. Let's not forget that the Marcellus will leave very big shoes for others to fill once its sweet spots begin maturing. There will be a lot of takeaway capacity in place at that point. Once capacity utilization begins to decline, transportation will reprice and the economics for a play like the Deep Utica will look very differently.

    The really interesting question, in my mind, is how far east does the play extend and can be realistically produced. Graphs show some nice porosities going downdip.
    Jul 26, 2015. 12:40 PM | 2 Likes Like |Link to Comment
  • Exxon Mobil: It's All About Free Cash Flow [View article]
    giofls,

    No need to wait for 50 years :) - I would actually disagree with:

    "The long-term theoretical economics tell us that the minimum sustainable price for oil is the cost + reasonable ROI for the last marginal producer needed to meet demand."

    Nothing suggests that marginal producers have to receive reasonable ROI. In the market environment, marginal producers are collateral in the battle called competition. Marginal producers may or may not receive positive ROI.
    Jul 25, 2015. 07:14 PM | 3 Likes Like |Link to Comment
  • EQT Corp.: The Dry Gas Utica Is A Diamond - No Longer In The Rough And, As It Turns Out, As Big As The Ritz [View article]
    Pablomike,

    Certainly not the most expensive - there have been many expensive wells out there.

    I like Fracjob's "pressurized bomb" analogy. Not easy to execute smoothly.

    But once there is one that works, there should be more. I can see costs coming down.
    Jul 25, 2015. 06:30 PM | Likes Like |Link to Comment
  • Exxon Mobil: It's All About Free Cash Flow [View article]
    Fracjob,

    Thank you for quoting. I feel very rewarded.
    Jul 25, 2015. 06:26 PM | 1 Like Like |Link to Comment
  • Exxon Mobil: It's All About Free Cash Flow [View article]
    CombatcorpsmanVN,

    This is a very fair observation. Please note that the U.S. is a highly diversified economy. One can imagine the devastation that is taking place in national budgets that heavily depend on oil revenues.
    Jul 25, 2015. 03:33 PM | 2 Likes Like |Link to Comment
  • Exxon Mobil: It's All About Free Cash Flow [View article]
    Fracjob,

    No, I don't. Times have change, I believe. But I cannot rule out a protracted downcycle of few more years with $50-$60 being a persistent environment.
    Jul 25, 2015. 03:30 PM | 2 Likes Like |Link to Comment
  • Exxon Mobil: It's All About Free Cash Flow [View article]
    Blackmolly,

    The questions remain, however, how long the medicine would need to be taken and what should one consider a "healthy" price. An $40 per barrel was considered a relief not all that long ago.
    Jul 25, 2015. 01:34 PM | 1 Like Like |Link to Comment
  • EQT Corp.: The Dry Gas Utica Is A Diamond - No Longer In The Rough And, As It Turns Out, As Big As The Ritz [View article]
    99profit-seeker99,

    Thank you for mentioning, I certainly noticed.

    For COG specifically, Utica may be a remote priority. It still remains to be seen if Utica is competitive in Susquehanna (I need to see if there is any additoinal well performance data from Shell). In West Virginia, I can see COG waiting for others to delineated the play's boundaries. But the discussion shows that this story is still on Chapter 2 and we do not know yet how thick the book is.
    Jul 25, 2015. 10:49 AM | Likes Like |Link to Comment
  • EQT Corp.: The Dry Gas Utica Is A Diamond - No Longer In The Rough And, As It Turns Out, As Big As The Ritz [View article]
    Hi Netwall,

    I certainly cannot speak for every investor (or any investor, for that matter), but in my experience the E&P-focused community traditionally looks at valuations on a cash flow basis. So the impairment should be "old news" as valuations are sort of marked to market on a daily basis in investors' minds.
    Jul 25, 2015. 10:02 AM | Likes Like |Link to Comment
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