52 Billion CF per Square Mile

In yesterday's earning conference, Chesapeake said that it expects to recover 52 billion cf of gas per square mile in the Haynesville. That figure seems incompatible with Chesapeake's earlier statements that there will be a 73% falloff in production in the second year.

Attached is a spreadsheet that shows one way to get to 52 billion cf over 40 years of production. It says present value of a 25% royalty is $76,000/acre.

Any comments welcome please?

Tags: Royalties, valuation

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Permalink Reply by David Smith on August 3, 2008 at 11:50
It's not gonna fizzle. They also say they're gonna recover 52 billion cf per section, which means each acre should pay $3,000 or $4,000 for lots of years. Revised spreadsheet uploaded.
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Permalink Reply by Snake Stewart on August 3, 2008 at 14:26
Uncle Floyd said on one of his broadcasts that some would produce 150bcf per section. Those are the same sections that he would be leasing in 2 to 3 years for $40,000 to $50,000 per acre , that by that time would have to be fringes. Makes you wonder.
Permalink Reply by Johnson on August 7, 2008 at 9:03
Who is Uncle Floyd?
Permalink Reply by Johnson on August 3, 2008 at 14:19
This is a very informative thread.....please keep the good info coming.

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