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Natural Gas Injection Season: See You Next Fall
Thank you for your recent articles, I found them most informative.
I would first point out that there is no need to turn this spirited informative discourse in a contentious direction.
I would also add that while there are valid points for both sides, the data as yet supports few conclusions, and as always it is more incomplete than complete.
Anyone who thinks they have all the answers need only look at a chart of the HH Spot for the last 25 years. (notice the spikes) They usually happen when those that trade futures think prices are going to stay within a "range". Price spikes have a way of happening suddenly, and with very little or no forcast. They've also happenned 4 times in the last 12 years. And, perhaps most important, those "spikes" occurred when the majority of the Gas supply was from old style conventional wells with better decline curves.
I live in E Texas, have a law degree, a geology degree, and, have spent the last 27 years heavily involved in drilling NG in Texas and NW La. and representing Operators, Mineral Owners, and Service Companies.
For what it's worth, I agree with Mark, his sources and conclusions are more realistic from a Producers perspective.
He is on point regarding Texas production, of all the producing states Texas, La. and Ok do the best job of keeping up with production, they have been doing it longer.
In addittion to the Tx RRC, check out the La DNR North Louisiana monthly production numbers, N La. produced 2.5 Tcf in 2011, but, peaked in January. When the Gas Rig Count was still over 900. The Hanesville is in decline.
Remember, EIA numbers are only "estimates", and, most of the data regarding EUR's on shale wells is still hypothetical, as are all reserve reports. The oldest wells in the Barnett are less than half way through thier "theoretical" life. The oldest in the Haynesville barely 4 years. And, some have evidenced declines that are more straight lines than curves.
We can talk about individual wells, and isolated areas, but, we don't yet know enough about the production characteristics of shale wells to draw braod conclusions with any certainty.
I would also say that Mr. Berman has been analyzing NG wells for a very very long time, and he's been right more often than wrong.
In regard to "Sweet Spots", the number of PUD's which fall into that category is, that this point, also hypothetical, and will be difficult to quantify for at least several years.
I also would'nt count on an increase in Gas Rigs anytime soon, those that actually make the decision to drill wells tend to be a little skittish, and even a stable $4.00 is not going to cause a celebration. Outside of the Marcellus breakeven is closer to $6.00, and thats just breakeven.
One other thing, don't confuse HH Spot with actual wellhead price, gathering, compression, and transportation fees can take all the fun out of producing NG. Payout is afterall a "net" number.
Thanks again for the information.
Oct 11 05:46 PM
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