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Mark Anthony, is an IT professional and who had a scientific research background before joining the information revolution. Visit his blog: Stockology (http://stockology.blogspot.com/)
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  • The Fracking Tale Of Consol Energy 4 comments
    Oct 26, 2012 1:41 PM | about stocks: CNX, UNG, CHK, SWN, QEP, ECA, COG, SD

    Consol Energy (NYSE:CNX) told another fracking tale to investors during their recent Q3-2012 earnings conference call. The CNX president said that:

    On the drilling complete costs, let's go there first. Right now, and again, this varies quite a bit across our Marcellus field because it's a very large field, so I'm generalizing with an average view, and the actuals will be variations off of that on the high and low end, but the drilling complete cost is going to be somewhere around, I'll call it, $6.5 million per well, and that should get us on average somewhere around 8.5 Bcf per well. So when you do the funding and development math, it should be around $0.75, give or take, on our average type curve.

    The claim of EUR of 8.5 BCF per well is a fracking tale.

    (click to enlarge)

    The above chart summarizes the 19 shale wells that CNX operates in Pennsylvania Marcellus.

    The highest cumulative production is No 129-28363, which produced 1.310391 BCF in 457 days.

    The average of 19 wells, is an accumulative production of 0.53 BCF per well in 235 days.

    So the CNX president's claim that they achieved an average EUR of 8.5 BCF, is a long stretched fairy tale. The actual productions are far below that number.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: CNX, UNG, CHK, SWN, QEP, ECA, COG, SD
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Comments (4)
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  • dieuwer
    , contributor
    Comments (2931) | Send Message
     
    Fairy tales or lies?
    26 Oct 2012, 02:00 PM Reply Like
  • Mark Anthony
    , contributor
    Comments (3595) | Send Message
     
    Author’s reply » Dieuwer:

     

    Look up the numbers at official PA DEB web site:

     

    http://bit.ly/RmCcRO

     

    The NG industry keeps telling fairy tales. CNX is not alone. But I feel they are getting very bold and very desperate in telling more and more outragerous number. The CNX's entire adventure in the Marcellus produced only an accumulative 10 BCF so far. How dare they claim that their average EUR per well is 8.5 BCF?
    26 Oct 2012, 03:53 PM Reply Like
  • scoot157
    , contributor
    Comments (14) | Send Message
     
    Mark, I noticed the same thing in the CNX release. I find it amazing that they can project an 8.5 BCF eur per well that does not go challenged by the analysts during the earnings conf call.

     

    In lieu of CNX's $.75 per mcf development figure, what do you think the real number is?
    27 Oct 2012, 10:45 PM Reply Like
  • Mark Anthony
    , contributor
    Comments (3595) | Send Message
     
    Author’s reply » Scoot157:

     

    Based on CNX's most productive well so far, 129-28363. It produced 245.420 MMCF in H1-2011 when it started to produce. In H2-2011 the production was 708.920 MMCF. Then in H1-2012 the production dropped to 356.051 MMCF.

     

    So that's losing 50% of production rate in just half a year. I would put the EUR of that well at 1.75 BCF, contrary to CNX's claim of 8.5 BCF. So proportionally, the cost should be adjusted from $0.75/mmBtu to $0.75 * 8.5/1.75 = $3.65/mmBtu.
    27 Oct 2012, 11:58 PM Reply Like
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