Replies to This Discussion

Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on October 5, 2009 at 17:16

Berman Exposed. LOL! Thanks, D. Gaar. That is just too bizarre. Reminds me of astro-turf lobbying.

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Permalink Reply by RBH on October 6, 2009 at 5:45

Houston Chronicle article 10-6-2009 says breakeven for Haynesville Shale well $4.49/MMBTU

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landownerPermalink Reply by w.r. frank on October 6, 2009 at 7:07

What does Chronicle know? Do you have a link?

XCO Analyst Day slides indicate a $9.5MM well cost and 20 mmcfd IP produces a 20% rate of return at $3.50 NG. Using $9.5MM cost and 15 mmcfd. IP, you get a 20% rate of return at $4 NG. Most other operators are in same ball park, although not all are in XCO class with 16 out of 16 DeSoto wells all >20 mmcfd. and average of 24 mmcfd.

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Permalink Reply by RBH on October 7, 2009 at 3:05

The $4.99/MMBTU in not the Nymex price for break even but at the well head..correct? which is considerably lower now.

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landownerPermalink Reply by w.r. frank on October 7, 2009 at 5:42

Hi RBH.

The landowner gets the wellhead price less whatever the lease allows the operator to deduct. In NLA to wellhead price is generally close to the Henry Hub spot price, but it can vary by operator. Check your royalty stubs if you have multiple operators.

For the operator, it depends on whether he hedges or not. Comstock generally does not hedge. Most other operators generally hedge 70+% of future production, depending on their view of the market. For example, in the summer low price envioroment, many operators sold some of their hedges at huge profits, counting on replacing them at a higher price this winter.

For a hedger, the HH spot price or the NYMEX price (forward month future) is generally not material. For example, this am, an operator could buy a 2010 12-month NG strip at an average price of $6.85/mmbtu. Not bad if your break even (with a 10% return) is $3.62.

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landownerPermalink Reply by w.r. frank on October 7, 2009 at 5:31

I read the article which did not give a source for the breakeven data. If Barnett is cheaper, why have rigs gone from 200+ to 60?

There are obviously lots of variables to the projected economics of a well. I don't understand why members of this site seem to rely on some reporter with the Chronicle or other news source, who don't know bats..t about the industry and yet ignore the presentations from the industry operators who are putting their money where there mouth is--Billions of $. Over $800MM this year from HK, over $1B from CHK/PXP, over $500MM from Encana.

I have posted above the info from EXCO. Just yestereday, Comstock updated its presentation and indicated that at $3.62 NG, it gets a 10% rate of return.

There are serious securities act liabilities for lying. There are none for a dumbass reporter putting out bad info from unknown sources.

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Permalink Reply by RBH on October 7, 2009 at 6:12

Clearly the big issue is gas price..let's all pray for a COLD winter and improvement in the economy for ALL

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Permalink Reply by RBH on October 6, 2009 at 7:10

to w.r. frank--just reporting info...I don't know the final answer--time has a way of giving the answers; When we get lots of performance curves, I guess we will know.

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landownerPermalink Reply by w.r. frank on October 6, 2009 at 7:36

Agree!! Future is hard to predict.

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