Augustus

Shale Gas Companies: All Talk, No Walk?

The decline rates on some of these shale wells has been very, very dramatic. First year declines on the order of 75% are not uncommon. Some production can continue for a long time, but the volumes are no where near the IP numbers. These folks may have really screwed up the deal when they paid the monsterous prices for the leases. I expect the drilling and development costs are returned fairly soon, particularly at the projected $10 gas sale price. Outrageous land investments are going to kill the companies for a long time. How much cash does it take to develop all of that lease inventory?