'Who Has The Cheapest Gas?' In Dec 2000, Barrons published an article regarding the 30 companies with the cheapest natural gas. Since then I have watched those companies because my favorite E&P is on the list. Today the fifth one, HSE, was bought. Also, in Post 919 I referenced an AGA report on the 30 companies that produce 50% of the NG (and got some excellent responses from jim_p).
Over the past couple of weeks I have looked at the Barrons Article Firm's (Also-rans) reserve replacement excluding purchases. I can absolutely guarantee that my data is wrong, maybe even more wrong than the data in the original Barrons article. But maybe since we are dealing in percentages, it isn't so far wrong that it doesn't provide some idea of direction.
The companies were NMC(sold), PXD, EVG, BELW, BKP.T(sold), EEX, COG, HSE(sold), EGN, CPE, ABP, OEI, BOG, POG, NBL, SWN, PPP, ECA(sold), XTO, BRR(sold), CHK, CRK, LD, TMR, AXL.T(no data avail), CID, MARY, SFY, THX, and TMBR. I omitted NMC, BKP.T, ECA, BRR, and AXL.T from my totals due to unavailable or questionable data.
I guessed, averaged, swaged, stole data, and fumbled around to get the following totals for these 25 Also-ran NG producers (some not really E&P's even).
Their total 1999 Reserves were 22,250 Bcfe. They increased Reserves by the drill bit, improved recovery, revisions, or any means other than acquisition by 2,837 Bcfe. Note in all cases my totals include liquids or crude, and in some cases they include offshore. Therefore, even if you assume the percentages are relatively constant, you can only use percentages.
According to the AGA Report, the 30 largest increased reserves by 2,900 Bcf on a base of 79,299 Bcf or 3.7%. My 25 Also-rans increased reserves by 2,837 Bcfe on a base of 22,250 Bcfe of 12.8%. If you assume the percentages for the Also-rans hold for NG Bcf, assume that two-thirds of their increase is US/Can NG (swag), and take the weighted average you get a optimistic 5.1% increase in NG reserves in 2000.
Of course that percentage includes net revisions, improved recovery, adjustment due to NG recoverability due to higher prices, and any other method management could use to confuse the issue. I did note (not surprisingly) that those who did well with the drill bit said so, and those who did not were usually reticent about the data.
If anyone wants to review the data and point out my numerous mistakes let me know. As far as my uninformed opinion on what I learned; 1) I trust reserve data over production numbers for what are real gains in forward production, 2) somewhere between a 3 and 4% production increase now sounds plausible to me for 2001, 3) grandma won't freeze next winter, 4) NG will seek a level between $3.50 and $6, 5) the drillers are going to make a ton of money getting all those reserves to market, and 5) the under-valued E&P I hold will do fine if he can actually increases his reserves as much as he claims he can.
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