The more correct historical ratio used WAS 10:1. $20.00/bb/ oil & $2.00/MCF gas for example from the early '90's, but decisions were & today even more so, made on individuaL WELL ECONOMICS. Operators were putting together their 2013 budgets in October & November of 2012. Once approve on ~ 1 January, the work began, in most passes permits were in hand because permits require lead time via the State Agencies or the Feds. With a 2013 budget, site work began, roads, drill sites, pits, all of which require land owner aproval and usually County (Parish) level approvals. Rigs hand to be permitted & here I will reference the Haynesville Gas play. Not necessarily on this MB, but on IV, posters thought the world was ending as Encana announced plans to employ up to six rigs in N. LA. Not a betting type, but I would wager my $1.00 that Encana was offsetting wells with documented high EUR's & possible drilling one or two develocats based on 3D anomalies tied directly to one or more horizontal wells with high EUR's. This is how Exploitation is done in 2000 & >.
My point, EXPECTED well economics must fly internally before a Operator commits $'s to drill Oil or Gas wells & even more the sought after NG wells with moderate to high liquid yields-none Haynesville in this case.
Good investing to all. The recent drop in NG drilling wells, now another new low (but not historical low) is no surprise, even a $4.00/MCF strip can not make a <4BCF EUR to the 8/8's fly when an Operator nets <3 BCF & spends $8-10 MM. |
