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Permalink Reply by Grillin' - MmmMmm on February 7, 2009 at 11:58

Is that $4.50 gas as published in the paper (NYMEX or Henry Hub)? If so, you need to subtract $0.50 to get it back to HS prices. Then you also have to subtract $1-2 for operating costs. So that nets you $2-3 per MCF. Assume the well cost $9MM, then it would take 3-4.5 BCF to pay it off. Now assume the well averages 6 MMCF/day (as most are choked back due to pipeline restrictions) and that gets you to roughly 1.3 to 2 years to payout. Assuming the prices and costs stay the same and the rate stays that high. Probably all of those assumptions are going to change!

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