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Permalink Reply by Skip Peel - Mineral Consultant on December 17, 2010 at 3:31

 

 

Fort Worth-based Range Resources is doing a double-take in the big Marcellus Shale play in the Appalachian region of the eastern U.S.

The company said Wednesday that it has already topped its year-end goal of producing the equivalent of 200 million to 210 million cubic feet of natural gas daily in the Marcellus, which underlies parts of Pennsylvania, West Virginia, New York and Ohio.

Range's net daily Marcellus production has averaged the equivalent of more than 212 million cubic feet for the first two weeks in December, more than double its year-end 2009 output of 100 million. But the company, which has a 290-employee Marcellus operating team based in Pennsylvania, isn't taking a celebratory siesta.

It's going after a new goal of again doubling its Marcellus production, to 400 million to 420 million cubic feet per day by the end of 2011.

Read more: http://www.star-telegram.com/2010/12/15/2707809/range-resources-aim...

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Permalink Reply by Parkdota on December 23, 2010 at 13:22

Natgas barely above $4 although oil hits $90 and storage is 1.6% below last year's yet roughly 30% below last year prices......what gives?

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Permalink Reply by ALongview on December 23, 2010 at 13:30

Add better economic news to the list and more industrial use for that matter.  I have to admit that I have been wondering which numbers are right.  The companies drilling the Haynesville/Bossier claim 10% returns at $4 gas yet I have read many times from journalists and economists that $6 gas is the number needed to attain a 10% return.  Where are they getting their intel?  With Wall Street being such an important player you can't ever tell who's telling the truth as there is no incentive for a publicly traded e&p to state that "despite a robust drilling schedule we are achieving a net loss of 30% on every well drilled" ?????.  I would love to hear some opinions on this one though.

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Permalink Reply by Parkdota on December 23, 2010 at 13:35

I just don't get it.....I guess we'll wait to see if the xmas snow storms crossing the country will help.  Just above $4 at this time of year blows my mind. 

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Permalink Reply by ken hatcher on December 23, 2010 at 16:27

There was a gentleman on CNBC predicting $140 oil by labor day 2011.

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Permalink Reply by Les Bamburg on December 23, 2010 at 19:15

AL, the marginal gas price varies significantly by play.  The $6/MMBtu gas price would be close to the level required to maintain current production capacity for the US.  Many of the shale gas plays (Fayetteville, Marcellus, Haynesville, etc) will provide a 10% ROR at a gas price close to $4/MMBtu. 

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Permalink Reply by Les Bamburg on December 23, 2010 at 19:07

Parkdota, storage is still well above the 5-year average level.  The withdrawals for the last couple of weeks are not that great considering the unseasonably cold weather over much of the country.  This indicates production levels are still high even with the reduced rig count resulting in continued downward pressure on the forward gas price strip. 

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Permalink Reply by Parkdota on December 23, 2010 at 19:33

Les, I just figured that since storage is lower than last year's we'd see similar or slightly better pricing.  A 30% difference is what is so concerning to me.  The numbers don't correlate and that puzzles me.  Not only do they not correlate but they are so far off.  If it weren't for Santa coming in a few days I don't know what I'd do lol.

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Permalink Reply by Les Bamburg on December 24, 2010 at 7:11

Parkdota, NYMEX pricing is not solely a function of storage levels and is probably more driven by the weekly gas injection report since that is a prime indicator of the current gas supply/demand balance.  That is the reason you saw a fall-off in the January NYMEX contract about 7 days ago.  The weather adjusted analysis of the gas withdrawal value indicated we are still in an oversupply situation.  The market is concerned that the US has not yet balanced and that has pushed the January contract down to near the $4.00/MMBtu level.  Note that the December NYMEX was only 5% below December 2009. 

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Permalink Reply by Parkdota on December 29, 2010 at 6:04

Les, has the January contract been set yet on natgas price(s)?

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Permalink Reply by Scott on December 29, 2010 at 7:27

Nope. Today the January contract expires today so today's closing price should give you a good indicator on what mineral owners should be paid less deductions for their January royalty checks.

Permalink Reply by Les Bamburg on December 29, 2010 at 8:24

Parkdota, the January contract expired yesterday ($4.216) due to a short week.

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