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Permalink Reply by ALongview on July 24, 2012 at 17:40

What are the reasons given for the downward pressure?

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Permalink Reply by Les Bamburg on July 26, 2012 at 16:54

AL, the view is the current NYMEX prices are not sustainable.  If natural gas prices remain at this level some of the coal displacement in the power market will be eroded once we move beyond the summer months.

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Permalink Reply by Clyde T. Williams on July 26, 2012 at 12:11

NGs are now over $3 now but averaging over $3.50 for all of 2013 sounds more like hope than forecasts:

Taking too long to get LNG terminals on line

Too many competitors in LNG suppliers going after fracked NG elsewhere and long term contracts

Few places to store the cheap NG for this winter and later use

Few new fleets of CNG powered vehicles

As soon as $3.50 is reached (unless oil >$90/bbl) drillers/operators will start drilling and dumping shut-in NG and we will go thru the same boom/bust

Tom

Take a look at the EIA's Dry Gas chart (inclding Haynesville) towards the bottom of the page

http://www.eia.gov/naturalgas/weekly/

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Permalink Reply by Roy Austin Smith on August 4, 2012 at 9:24

where is gas now $3.00?

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Permalink Reply by Les Bamburg on August 5, 2012 at 5:41

Roy, the August NYMEX closed at $3.010 per MMBtu.  The next relevant data point will not occur until end of August when the September NYMEX contract will expire.

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Permalink Reply by Roy Austin Smith on August 5, 2012 at 6:53

Does not matter what nymex closed at. Chesapeake does not go by that or anything near it.

I have personally ask them about it. was told that they do not use nymex., but would not tell me how they priced it.

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Permalink Reply by Clyde T. Williams on August 5, 2012 at 7:04

Try the Henry Hub Platts has a free trial at http://www.platts.com/Products/gasdaily?WT.srch=1&gclid=CP2-5-G...  But no one will tell you what they use, and with computer systems these days they would have to tell you only after they had placed/taken an order...remember there are alot of hands between their incoming check and your royalty checks and then there is a world of hedging your contracts and prices....I always thought geology was complex enough but the world of commodity prices is yet another...I think I own my surface rights but don't know who owns the gas/oil rights   I watch the 2 seconds report by NPR-TV for NG and Oil...  OBTW has anyone heard of or have contacts.with the "Louisiana Blowout" over a Salt Dome gas storage"??

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Permalink Reply by Les Bamburg on August 5, 2012 at 12:22

Roy, NYMEX is the only publicly available gas price information that gives some indication of the month-to-month trend.  Most baseload natural gas in the eastern half of the US is bought and sold at a basis to NYMEX with the results published as various indices.  The regional market price for NW Louisiana is ~ 12.5 cents per MMBtu below NYMEX. 

 

Operators may take additional deductions in calculating the value used for royalty payments and has been documented on this board some operator's such as Chesapeake appear to abuse this practice.  

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Permalink Reply by Roy Austin Smith on August 5, 2012 at 12:41

Cheasapeake does not go by it. they pay way under the nymex. They told me on the phone that they did not go by it. She said a lot of factors come in for them to price their gas. At times , without looking at my records, which i have, they were proably two to three dollars und nymex. I could never get an answer to just how they priced it, but they definetely told me they did go by nymex or any other index. I emailed them so many times about a year ago , that they quit answering.  then later my email would email not found. call them on the phone and get a bunch of rude rambliong. no direct answers. they are abusing everyone except those that have political power in Desoto parish. they more than likely have given these, the city, etc over a million dollars worth of equipment and help, but to hell with the small landowners.My check for one well for two months was for march and april 2012--$75.00==@$1.59 and $1.24. my check recieve on 8/2/2012--$1.31-1.42-1.39=1.44 . lLast month, just offhand, i got about $1.15 to $1.18 . Production down. gas prices down. I know a while back one of my friends with land about two or three miles from mine and a different company was getting $2.50. they are abusing the small landowners no question about it . the Ceo is getting rich while the company is almost bankrupt.  They are now selling off pieces of the company here and their. to them the Nymex is a joke.

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Permalink Reply by Nolan H. on July 30, 2012 at 6:10

What's going to happen to supply when the sleeping giant below the Eagle Ford, the Pearsall Shale, comes into play in the next couple of years? Most of the Pearsall shale acreage is held by Eagle Ford Shale leases, so Pearsall shale drilling will be an option, not a "have to" to hold leases. Drilling to hold leases is drying up, and so are the wells that were done for that purpose only. This has got to cause a fall - off in supply, one would think, but new Eagle Ford shale wells drilled for liquids also come with a lot of gas. It's going to be interesting to see what happens.

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Permalink Reply by Clyde T. Williams on July 31, 2012 at 7:12

The Ans

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Permalink Reply by Clyde T. Williams on August 1, 2012 at 8:21

Sorry about this The Ans - was truncated BUT The Answer to $8/MMbtu and future plays beneath or beyond existing one is the Freeport LNG terminal which the Japanese signed contracts for - but watch out for the details of their contract...but the only way to get above $4 is to ship out virtually all the NG and NGLs out of the US  - we just don't have the demand  now and for the next 3-5 years...we are starting to talk about CNG and LNG train locomotives and long-haul trucks but that will take 5+ years

If you are a day trader next 3 years will be wild/profitable but I just don't see getting much above $4 or even $3.50 - there is just so many shut-ins that if the price goes over $3.50 everyone will just open the valves and flood the market- so a trading range of $3 - $4 may be around for 3-5 years...before we can get the NG into export.

Tom

 

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