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.