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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Ken Robbins who wrote (49298)	8/13/1999 10:20:00 AM
From: Aggie	Read Replies (4) \| Respond to of 95453

Ken, Good Morning, Yes, I would have to agree - the profitability depends almost entirely on the production rate. And +/- 20 mmcfd is what I would expect to see on a clearly profitable well, with a well at 10-15 mmcfd being marginal. These are rules of thumb, the kind I employ to cull the likely candidates from the rest of the mullets. But from what I can see from Miller's operating reports, it would appear that 1-3 mmcfd/well (or less) is closer to the norm - and I cannot see, based on my experience with drilling costs and knowledge of G&G costs, how they can show significant profitability. If these gas wells are similar to the ones drilled in East Texas ( in the same Cotton Valley / Hosston formations), the productive life is fairly long. These reservoirs are characterized by tight, low-permeability, tightly cemented red sandstone formations (hence the frac jobs). But, as I said: This may be a profitable stock play for other reasons. Regards and Good Luck to All, Aggie