Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on September 23, 2008 at 3:49

Thanks, Grice. That's the first comprehensive time line projection on "connection to market" that I have heard of. Previous mid-stream reports seemed to indicate that completion of some major "takeaway" infrastructure would be complete in the last quarter of '08 and the first half of '09. The report seems to indicate that much more capacity will be required to keep up with anticipated production. I hope the 18 month projection is more accurate than the 36 month. And I hope the capital markets can accommodate the significant expenditures that will be required.

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Permalink Reply by Les Bamburg on September 23, 2008 at 4:01

Skip, there is 1.0 - 1.5 Bcfd of unused takeaway capacity available in completed or under construction gas pipelines. Additional long haul capacity will be required and built by end 2010 or early 2011.

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Permalink Reply by Skip Peel - Mineral Consultant on September 23, 2008 at 4:03

Thanks, Les. Do you have any idea how much of that capacity is "under contract" and how much remains available?

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Permalink Reply by Skip Peel - Mineral Consultant on September 23, 2008 at 4:18

Jim and Les. Do you think that those operators who have "subscribed" for a guaranteed portion of the new capacity soon to come on line will be more aggressive to produce and that those who will have to wait on future capacity will delay or slow production? It would be nice to know how each of the shale players are positioned in this regard.

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Permalink Reply by Les Bamburg on September 23, 2008 at 4:43

Jim, sorry it is not really first come first served. It is the parties that have firm long term capacity contracts that control access. Others can access unused capacity on an interruptible basis.

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Permalink Reply by Les Bamburg on September 23, 2008 at 4:40

Skip, see my comment above. Companies such as Chesapeake, XTO, Encana, Devon & EOG control capacity. Some of the capacity is also held by others and may offer an opportunity for companies such as Petrohawk to gain access.

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Permalink Reply by Les Bamburg on September 23, 2008 at 8:15

Jim, the four new pipelines built (and being built) across North Louisiana were primarily under written by producers rather than marketers or consumers.

Permalink Reply by Les Bamburg on September 23, 2008 at 4:34

Skip, the capacity is generally fully contracted but many of the parties holding the capacity are active in the Haynesville Shale. These parties will determine if they use the contracted capacity for Barnett Shale, East Texas or Haynesville Shale production.

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Permalink Reply by Skip Peel - Mineral Consultant on September 23, 2008 at 5:16

I do not wish to derail this discussion although it may be nearing its logical end but this just in. Think XTO is taking a shot at Aubrey? Their report sounds aggressive. I will post a link to it in its entirety on my next post.

With deal-making now set to take a break, XTO’s focus is on maximizing the potential of the resources acquired. It is one thing to talk about the potential and another to produce. However, given the exceptional record of the company, we believe production will respond and reserves will in fact rise considerably over the course of the next 12 to 18 months.

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Permalink Reply by Skip Peel - Mineral Consultant on September 23, 2008 at 5:18

"XTO Energy expands acreage in core shale play".

http://www.stockhouse.com/Columnists/2008/September/23/XTO-Energy-e...

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Permalink Reply by Grice on September 23, 2008 at 4:09

For anyone wanting to listen the the conference call, an archive has been posted at

http://biz.yahoo.com/cc/9/96979.html

I am sure a transcript will be published soon, for those who do not have the time to listen to the entire call.

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Permalink Reply by William Rice on October 5, 2008 at 12:36

I think that CHK will stick to their plan. They are looking down the road and know that they need to control sufficient resources to remain a top player. HS is proven and profitable. I am far from an expert in these matters but I think the move to gas is inevitable. Also, does having a pipeline infrastructure in the area contribute to the develop potential for HS?

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