Well costs, Gas prices, MATH

Would appreciate comments from the Forum on Math & Cost associated with the drilling of Haynesville wells at current prices.

 

With well cost averaging $10M and current spot market gas prices fixed at $2.09 (reaching lower every day & with no end in sight), why would companies be drilling alternate unit wells in this enviornment?  Encana's $5 hedging disappears at the end of this year; CHK has no gas hedged & I'm guessing EXCO, Shell, BHP, etc.'s position can't be much better.  For the benefit of discussion, let's say $4 hedge price is engaged - the average Haynesville well of 3 - 4 BCF, after royalty is paid, makes little or no profit for the operators. 

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Permalink Reply by adubu on June 19, 2012 at 9:51pm

LesB-- YEP Your rig count tells it all-- trend is for sure down down down---  :(

Permalink Reply by Checkmateking on June 20, 2012 at 11:53am

The only reason any company would be drilling alt. unit wells are for financial spreadsheet purposes. It's all about accounting.

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