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

To: jim_p who wrote (23865)	6/17/2003 9:23:18 AM
From: Ed Ajootian	Read Replies (1) \| Respond to of 206209

Thanks Jim, that graph helps a lot. If you now overlay this graph of finding costs herold.com on that one, it becomes clear that wellhead prices have tracked finding costs over the long term, which is what one would expect. I guess back in the early 80's we had found all the easy targets using 2D seismic and it took 3D (and other technological advances) to improve the hit rates enough to drive down finding costs, which allowed gas to sell for so cheap. But those days are over buddy, unless somebody invents some new technology just as revolutionary as 3D seismic was.

To: jim_p who wrote (23865)	6/17/2003 10:11:41 AM
From: Tommaso	Read Replies (1) \| Respond to of 206209

In the left margin of that chart it says "1999 dollars." That means that the chart is not in dollar prices current at that time. The peak wellhead price of about $4.00 in about 1984 was, according to that chart, a current dollar price of about $2.66 in 1984, which has been increased on the chart to $4.00 to adjust for the 1984-1999 inflation, or loss of purchasing power of the dollar. The wellhead price is a pretty good estimate of the spot and hub prices current at that time. I am not saying that SOMEWHERE, SOME prices were much higher. I am saying that the chart you supplied indicates that the earlier peak (in currently quoted dollars) was about $2.66, and even in 1999 dollars (there has not been much inflation since then), the peak wellhead price shown on your chart is only $4.00. Therefore, the spikes of up to $10 in the last two years have been truly extraordinary. In discussions of natural gas prices and the effect of that on NG stocks, we very seldom use the final cost to residential consumers to judge the value of the stocks. infoplease.com Please realize that I am not questioning your information, but I certainly am pointing out that the chart does not support that information.