Replies to This Discussion

Permalink Reply by Martin on September 28, 2009 at 12:52

Pardon my ignorance -- but do you mean the difference between the NYMEX Henry HUB vs Henry HUB SPOT?

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Permalink Reply by Skip Peel - Mineral Consultant on September 28, 2009 at 13:03

Changes < 2% are not significant.

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Permalink Reply by David on September 28, 2009 at 13:31

Skip, I was referring to the Henry Hub and the Hub Spot. They are usually within pennies of one another. What I belatedly thought of is that this month's pricing is closed and the higher HH number reflects the Nov. numbers.

Is that remotely accurate?

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Permalink Reply by Skip Peel - Mineral Consultant on September 28, 2009 at 13:37

David. I think that the Henry Hub Future and the Henry Hub Spot regularly exhibit significant divergence. Particularly from a summer "spot" to a fall "future". I don't check on the future price that often so you might wish to ask Les or The Baron. I just didn't notice any significance in the "percentage change".

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Permalink Reply by w.r. frank on September 28, 2009 at 14:13

Futures change to November on Tuesday, plus spot reflects current oversupply/injection/almost full storage.

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Permalink Reply by adubu on September 29, 2009 at 16:31

this is due to the present contango spread in future markets. The spread is high as compared to history. Sad that royalty owners will receive payment based on the spot price at the delivery point in this area being the Henry Hub price ~ 3.53per mcf ( most contracts are based on the HH) not the Nov Nymex future price. If spot price doesnot increase 20% next 3-4 weeks the Nov future will slowly drop to the spot Henry Hub price by 4th Monday in Oct.09 So when everyone talks about NG prices they are usually talking about the Henry Hub price that is what O&G operators sell their gas at that price or variable they negoitated base on that price. If large companies like CHK hedge their gas in the future market they take the gain or loss and not the royalty owners since we are paid based on that months avg per contract operator negoitated to receive

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Permalink Reply by The_Baron on September 30, 2009 at 2:59

Spot is todays price.
Future is the price at a later date. It is normal for prices to rise into the future as winter (demand months) approach. Somtime mid-Nov we will stop injecting and start withdrawing, prices will rise as supply drops (hopefully).

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Permalink Reply by The_Baron on September 30, 2009 at 3:01

Notice today that the NYMEX futurs on TV is over $4, we have stope3d trading october gas, and are now trading Nov futures, this is the price you now see on TV. IT really has no impact at the wellhead untill the end of the month when the Nov, price is set, the "strike date"

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Permalink Reply by Spring Branch,mineral owner on September 30, 2009 at 4:47

Keith has not updated the Nat Gas price on the home page to account for October dropping off and November being added. His is a bad quote.

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Permalink Reply by Mac Davis on September 30, 2009 at 13:53

FYI - here's a site with both prices.

Bloomberg

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Permalink Reply by Bacon on September 30, 2009 at 14:19

Ok, so Henry Hub future is for November delivery? Henry Hub Spot is what a landowner could expect on a royalty check? I'm clueless so....

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Permalink Reply by The_Baron on October 1, 2009 at 6:31

Royalty owners are paid on the price at the wellhead, usually less than Henry Hub.

Futures are just that, traders are betting on what the price will be. The price is set at the end of the month for the following month. Expect prices to drop as the month goes on esp after todays storage report.

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