Replies to This Discussion

Permalink Reply by SharonB T18N R15W S8 on August 14, 2008 at 8:13

Read the Shale to Shining Shale report - a link is in the thread with 50,000? in the title. I think the price was 4.25 or 4.50

• ▶ Reply

Permalink Reply by SharonB T18N R15W S8 on August 14, 2008 at 8:15

correction - $50,000/Acre? is in the title of the thread.

• ▶ Reply

Permalink Reply by po boy on August 14, 2008 at 9:56

The statements made to the stockholders of Enron were glowing and optimistic til the bitter end. Collectors are paying as much as a dollar for Enron Stock Certificates. About 100 times what the stock is worth.

• ▶ Reply

Permalink Reply by po boy on August 14, 2008 at 8:15

That is the million dollar question.
Avg between the optimistic $5 and the pessimistic $4. Figure thrown around the most is $4.74.

• ▶ Reply

Permalink Reply by Lerret on August 14, 2008 at 10:05

It has been a moving target so far. When Mitchell started drilling shale in the early 1990s in the Barnett, folks would drive by, cluck their tongue and say, "There goes poor ole George....drilling shale for $2 gas." But at the time a well could be drilled for a fraction today's cost. By the time the Fayetteville play kicked off, Katrina spiked prices to unheard of levels not seen since the Deep Anadarko play of 1980s. And the estimates were that for a $1 million dollar hole, you needed to get $4 - 5 per MCF. As the fracs became more complex, the drilling cost in the Fayetteville was up to $2, then $3 million per well. The last I heard McClendon say Chesapeake needed about $6 gas to do OK. I am no fan of Chesapeake for years but I must admit they are excellent at hedging gas prices and get top dollar for their gas (not so sure they always get top dollar for the Royalty owner but that's a different issue.)

Chesapeake's McClendon says there is lots of gas in the US and a recent study, financed by them of course, suggests we have oodles of the stuff...well, ok. But he is promoting NG as the energy of the future because oil is simply running out. I cannot argue that. I had a propane vehicle once and liked propane far more than gasoline. Idles smooth as silk. No pinging. A little less power maybe. Ditto, natural gas is a great fuel and I would love to have a NG car if I can just find places to refill. That is the issue, to upgrade the 10,000's of stations to be able to fill NG safely.

The real issue seems to be that some top shelf analysts are now saying they suspect gas prices could peak as production increases and if so, there will be downward pressure on price...a drop to $5 gas is not a good thing for any play...though the high gas pressures in the Haynesville might make it a better play than the low pressure plays where gas compression becomes an issue.

BTW, there are lots of places where well identified gassy formations exist and where lease offers remain below $100 per acre. I just saw a $35 per acre with 1/8th lease from Colorado and I know that there is a thick shale in the subsurface within that area that will yield gas because when I was a mudlogger eons ago working out of Grand Junction, we could actually see the gas bubbles pop up on pieces of shale as we drilled and our gas detectors were "saturated"...maxed out on gas.

• ▶ Reply

Permalink Reply by Alamo on August 14, 2008 at 11:57

Lerret,
Excellent commentary. As I read your post I was trying to jog my memory as to who it was that said essentially, "We can make money at $6.00--lots of money" and now I believe it was Aubrey McClendon the CHK CEO.

Incidentally the best read I have come across in all the 4-5,000 pages I've read on the Jurassic (Haynesville Shale) is a Tristone Capital Co. analyst's report on the play. The report is by: Joseph Magner and John Wren and although is 51 pages is a top summary and well worth the time spent reading and digesting it.

One important thing I think the authors overlooked--or over stated --was the successful well ratio to the wells drilled which they pegged at "50 %".
with the 3-D and 4-d seismic surveys that ratio ought to be 96% or better. By the time the OGs decide to drill they very well know they will complete that well. I heard McClendon say they had drilled around 1750-1900 wells and their 1000 managed wells hit 99% success rates while their non-managed wells had a 95% success ratio--but its much higher than the 50% the writers had it.

• ▶ Reply