1) I'd have to go back and check the numbers, but back in the 1970s the electric grid consumed a much higher amount of oil than nowadays.
2) Also, our cars were heavy and fuel inefficient back then.
3) And our houses were not as well insulated (especially the windows).
So when the oil-embargo crisis hit, inflation indexes were poised to skyrocket. Plus, we had to transform our electric grid, auto fleet, and home heating efficiency -- all of which took a LONG period of time -- while continuing to consume higher priced oil, until the efficiencies were in place.
Is that a simplified explanation for why inflation then doesn't compare to today? Or does that kind of adjustment not really matter?
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
> "normal" 19% decrease in actual production
Production from typical wells looks like a ski slope (the steep "black" runs, not the gentler "green" runs) -- declining perhaps 70% over the first two years, before they flatten out and go on producing for years and years (and that would be unconstrained, and these wells were not always unconstrained).
So in this case, with 66 wells drilled and completed at different times, it is hard to know what "normal" should look like -- without seeing the production rates for each well individually.
Also, there is basically no need to revise the P90 reserve estimates for most of the wells during those first two years -- until they get past the knee-bend of production.
Sadly, the SEC standard P90 estimates are almost useless anyway, just read the section called "Nondiminishing Uncertainty" in that SPE paper that I linked above.
Fed Policy Risks, Hedge Funds And Brad DeLong's Whale Of A Tale [View article]
> the primary benefits of monetary stimulus
The problem with the alternative, which I guess is a version of austerity, is that it seems reasonably credible that the US gov't cannot EVER pay back it's debts.
That (I think reasonable) conclusion is: given our current demographics, the world's demographics, and the way our political system works, and perhaps that a decade down the road the global oil output will have noticeably dropped (whilst the US still imports more than 40% of our consumption).
So if I conclude that the US gov't cannot pay back its debts, then I must conclude (with those "givens" above) that money-printing will not stop and/or cannot be stopped.
It doesn't really matter whether Brad DeLong thinks it's a great idea or a terrible idea.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
> estimates are super conservative
To your point, there were no net reserve estimate increases even as the PUD wells were developed and became additional developed producing wells (PDP wells).
That seems remarkably conservative, but the reserve engineering firm, Ryder Scott, has a Society of Petroleum Engineers paper (SPE-63202) that says:
"A common but, in our opinion, unacceptable trend in reserve evaluations has been to rely on probabilistic evaluations to boost reserve values if they cannot be supported by deterministic methods."
Other authors in other papers:
(from SPE-138843, regarding one well) "...provides Case 1... an estimated ultimate recovery (EUR) of 5.2 Bcf for a 3,000-ft-lateral/10-stage well, which is in line with typical well performance in the Marcellus shale."
(from SPE-140463, where "Area 1" is Greene County, PA, the same location as the ECT wells) "Wells in Area 1 have an average estimated ultimate recovery (EUR) per well of 4.5 Bcfe"
How To Take Advantage Of The Great (Sector) Rotation [View article]
With asset allocation gurus having already shifted to as high an allocation to equities as they'd probably ever contemplated, the only thing left to do is to shift around within the next level of importance, which is sector rotation.
I'd be very interested in the thoughts of asset allocators who are rotating to CASH -- assuming that there are any.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
> conversation
But there is only one more step to understanding!
Each of those values comes from a line drawn through the exact same log-normal distribution curve representing the reserve. There is only one curve that produces all 3 numbers -- all the numbers are embedded in the same graph *simultaneously*.
And the SEC could very well have defined "proven" as the P95 number taken from the distribution, or the P87 number taken from the distribution, or the P80 number, or whatever.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
> potential with ECT's proved reserves
I was just looking at a reserve report that showed a P50 value that is almost 4 times the P90 value, and I've seen plenty that are 3 times the P90 value. What kind of ratios have you seen?
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
Whah? I am not a reserve engineer. I was just suggesting that you could learn a lot from the information at the Netherland Sewell website on SEC compliant reports.
What do you mean by "volumes are not [known]" and "volumes have disappointed"?
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
> question is whether or not you are overpaying for that optionality
Certainly. How much more gas? What will prices do? But investors with experience in owning another trust (NGT) willingly bought 1.288m shares at $16.56 ($21m worth).
Here is a nice short article by the company that actually did the reserve report (Ryder Scott). Reading over those 6 pages will give insight into the uncertainties involved. And notice the "P90" reference toward the end.
The End Of The Consumer? What The Long-Term Decline Of Consumption Means For Investors [View article]
> the long-term outlook for the US consumer
The outlook is so poor that it seems likely there will be increasing reliance on converting stock market equity into consumption -- not just stock dividend income, but SELLING ASSETS to support consumption.
A Long Term Look At Inflation [View article]
2) Also, our cars were heavy and fuel inefficient back then.
3) And our houses were not as well insulated (especially the windows).
So when the oil-embargo crisis hit, inflation indexes were poised to skyrocket. Plus, we had to transform our electric grid, auto fleet, and home heating efficiency -- all of which took a LONG period of time -- while continuing to consume higher priced oil, until the efficiencies were in place.
Is that a simplified explanation for why inflation then doesn't compare to today? Or does that kind of adjustment not really matter?
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
Production from typical wells looks like a ski slope (the steep "black" runs, not the gentler "green" runs) -- declining perhaps 70% over the first two years, before they flatten out and go on producing for years and years (and that would be unconstrained, and these wells were not always unconstrained).
So in this case, with 66 wells drilled and completed at different times, it is hard to know what "normal" should look like -- without seeing the production rates for each well individually.
Also, there is basically no need to revise the P90 reserve estimates for most of the wells during those first two years -- until they get past the knee-bend of production.
Sadly, the SEC standard P90 estimates are almost useless anyway, just read the section called "Nondiminishing Uncertainty" in that SPE paper that I linked above.
Fed Policy Risks, Hedge Funds And Brad DeLong's Whale Of A Tale [View article]
The problem with the alternative, which I guess is a version of austerity, is that it seems reasonably credible that the US gov't cannot EVER pay back it's debts.
That (I think reasonable) conclusion is: given our current demographics, the world's demographics, and the way our political system works, and perhaps that a decade down the road the global oil output will have noticeably dropped (whilst the US still imports more than 40% of our consumption).
So if I conclude that the US gov't cannot pay back its debts, then I must conclude (with those "givens" above) that money-printing will not stop and/or cannot be stopped.
It doesn't really matter whether Brad DeLong thinks it's a great idea or a terrible idea.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
To your point, there were no net reserve estimate increases even as the PUD wells were developed and became additional developed producing wells (PDP wells).
That seems remarkably conservative, but the reserve engineering firm, Ryder Scott, has a Society of Petroleum Engineers paper (SPE-63202) that says:
"A common but, in our opinion, unacceptable trend in reserve evaluations has been to rely on probabilistic evaluations to boost reserve values if they cannot be supported by deterministic methods."
Other authors in other papers:
(from SPE-138843, regarding one well) "...provides Case 1... an estimated ultimate recovery (EUR) of 5.2 Bcf for a 3,000-ft-lateral/10-stage well, which is in line with typical well performance in the Marcellus shale."
(from SPE-140463, where "Area 1" is Greene County, PA, the same location as the ECT wells) "Wells in Area 1 have an average estimated ultimate recovery (EUR) per well of 4.5 Bcfe"
Energy Storage: Q4 2012 Winners And Losers [View article]
What might look like 40% being short could effectively be nearly 100% short.
How To Take Advantage Of The Great (Sector) Rotation [View article]
I'd be very interested in the thoughts of asset allocators who are rotating to CASH -- assuming that there are any.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
http://bit.ly/11yQZCi
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
But there is only one more step to understanding!
Each of those values comes from a line drawn through the exact same log-normal distribution curve representing the reserve. There is only one curve that produces all 3 numbers -- all the numbers are embedded in the same graph *simultaneously*.
And the SEC could very well have defined "proven" as the P95 number taken from the distribution, or the P87 number taken from the distribution, or the P80 number, or whatever.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
> now i see where you where confused
Each of the numbers P90, P50, and P10 are estimates. Agree or not?
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
I was just looking at a reserve report that showed a P50 value that is almost 4 times the P90 value, and I've seen plenty that are 3 times the P90 value. What kind of ratios have you seen?
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
What do you mean by "volumes are not [known]" and "volumes have disappointed"?
Maybe you could quote some sell-side notes here.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
That Ryder Scott article is basically an admonition against improper calculations and lack of conservatism.
> NGT unitholders are not experienced investors
I was merely stating that those buyers had actually experienced holding a natural gas trust and desired to continue to do so.
> technical reasons
Netherland Sewell appears to be a great place to learn technical reasons.
> underperforming expectations
The only under-performance that I see was with respect to the price of natural gas.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
No thanks, under $11 was a good entry for me considering that there are technical reasons why these wells are probably above average ones.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
Certainly. How much more gas? What will prices do? But investors with experience in owning another trust (NGT) willingly bought 1.288m shares at $16.56 ($21m worth).
Here is a nice short article by the company that actually did the reserve report (Ryder Scott). Reading over those 6 pages will give insight into the uncertainties involved. And notice the "P90" reference toward the end.
http://bit.ly/179EZYM
The End Of The Consumer? What The Long-Term Decline Of Consumption Means For Investors [View article]
The outlook is so poor that it seems likely there will be increasing reliance on converting stock market equity into consumption -- not just stock dividend income, but SELLING ASSETS to support consumption.