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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: kollmhn who wrote (6844)	2/21/2002 9:46:05 AM
From: Tommaso	Read Replies (2) \| Respond to of 206118

My impression is that no one is collecting production figures for natural gas that are really reliable. Here's an opportunity for someone to make a name as a really thorough analyst of the situation, though it would mean being on the phone all day every day trying to extract estimates from hundreds of companies. It was clear to me last year, from the quarterly reports of about 20 small producers that I was following, that they had been able to make big increases in production at the same time that some of the larger producers were flat or slightly declining. I did not have much luck in convincing anyone else that this was happening, but the aggregate increases of these US and Canadian producers overcame the deficit and refilled storage much faster than anyone expected. But I expect that even now there are people who will read this message and violently disagree with it--why, I do not understand. What remains to be seen is whether these new levels of production can or will be maintained. For example, Mitchell (before it was acquired) was doing a lot of infill drilling at shallow depths and adding gas very fast. Don't know if that is still going on.

To: kollmhn who wrote (6844)	2/21/2002 10:23:01 AM
From: jim_p	Read Replies (1) \| Respond to of 206118

kollmhn, I think Morgan is correct, but there timing is off. Flush production lasts about 9-12 months. There is also a lag time from when wells are drilled to when production commences. I suspect we will continue to see larger drop offs in production from a decline in flush production than Morgan is estimating. The biggest increase in production comes from flush production when the drilling cycle commences at the start of a new cycle which creates a surplus a lot faster than most estimate. The biggest decline in production at the end of a cycle is also a result of production drops when flush production is produced from prior drilling which is also compounded from less new flush production resulting from a slow down in new drilling. This results in production declines a lot deeper than most predict and a new crisis is started. The joys of flush production, which help the cycles have more dramatic swings. When I used to drill new NG wells on the gulf coast, my goal was to get 35-50% of the production in the first year which would hopefully pay out the cost of the well. The profit, if any, would come over the next 5+ years. Jim