Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Sharp_End_Of_Drill who wrote (76552)	10/17/2000 5:56:28 PM
From: jim_p	Read Replies (7) of 95453

When investors start to say NG is never going back to the $2.50 days, it's time to sell out. Simmons has some very good comments about depletion, but there is one thing no one seems to want to talk about and that is FLUSH production. When a new well is drilled and put on production, the largest percentage of the wells reserves are produced in the first year. Production declines of 30 to 60% are not unusual in the first year of production, depending on the reservoir being produced. After the first year, the depletion rate will flatted out over a period of many years. On horizontal wells, as much as 90% of the reserves are produced in the first year. As a general rule, flush production is higher in NG wells than oil wells. This is know in the industry as flush production. There is no doubt that we will have gas spikes this winter, but there is also no doubt that flush production from new wells drilled over the last year will cause an over supply on NG as soon as next spring with prices below $2.00 per Mcfe. Thats right below $2.00 per Mcfe. This business always goes to extremes on both the up side and the down side and nothing has changed in the business. Jim

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