Current standard 3000' horizontal drilling costs in the Fort Worth Basis Barnett range from $1.9 to $2.4 MM, depending on depth. This is down 40% from the highs of last year.
Wellhead takes for Barnett dry gas are Nymex minus 40% , a trend that has been increasing since 2000 when the takes were Nymex minus 5-10%. This is probably due in part to gatherers forcing a Waha index on Barnett producers over the last year along with contracts with percentage and fixed cost components like "Waha minus 5% minus 85 cents", that exacerbate the pain in low wellhead price environments. Tough Sh** for operators, royalty owners, and the State of Texas who collect their piece of flesh on production at the wellhead from severance taxes.
Thanks to Ramona Hovey, Jason Simmons, and Allen Gilmer at DI-ESP for the pricing info.
Wow…I did not realize the wellhead prices were that bad. NYMX is bad enough, but NYMX minus 40%?? I have been reading some financials of some big shale operators, and it seems like operating expenses are running around $1.25 per mcf, when G&A is rolled in. After taxes and royalty, there is nothing left. Although drilling costs have come down 40%, gas prices have come down 80%. I can not see any way to make money in shale plays when using NYMX future prices in a forward looking economic model. The only exception would be one of the monster Haynesville wells.
Am I missing something?
Posted by: Royal Enfield | September 03, 2009 at 11:18 AM
Choke, Here is an interesting article on Haynesville EUR's
http://petroleumtruthreport.blogspot.com/
Posted by: Royal Enfield | September 03, 2009 at 08:26 PM