LE questions (if not rhetorical) should be asked and answered by Jack. Hopefully someone will post a blow by blow response from the meeting. Any takers? I think this is important information.
In the mean time, I would like to take this time to remind all that MTEI is a coal, OIL & GAS company. For comparison purposes, the following are selected portions of Petroleum Development Corporation's (a WV producer) recent 10K. While PETD has other facets of the industry - Gas Marketing, Contract Drilling, Interstate Transport, I tried to select the pertinent information on its production operations. I found it very enlightening:
"The majority of the wells operated by the Company are located in the
West Virginia and Pennsylvania portions of the Appalachian Basin. The
Appalachian Basin is characterized by shallow developmental wells, which generally have provided highly predictable drilling success rates. In addition, because wells drilled in the Appalachian Basin are closer to the large demand centers for natural gas in the northeastern United States, natural gas from this area typically has commanded a price premium relative to natural gas produced in areas such as the Gulf Coast and Mid-Continent regions of the United States. "
-----AND-----
"As local supplies of natural gas are inadequate to meet demand, the
West Coast and the Northeast import natural gas from producing areas via interstate natural gas pipelines. The cost of transporting natural gas from the major producing areas to markets creates a price advantage for production located closer to the consuming region. Appalachian Basin natural gas production enjoys two advantageous factors affecting price. First, the Appalachian Basin is characterized by shallow development gas wells that generally have provided highly predictable drilling success rates of 90% to 92%, which permits a more basic approach to drilling based on the geology unique to the area. Also, the natural gas industry in the Appalachian Basin benefits from its proximity to the northeastern United States."
----AND------
"Production
The following table shows the Company's net production in Bbls of
crude oil and in Mcf of natural gas and the costs and weighted average
selling prices thereof, for the last five years.
Year Ended December 31,
1997 1996 1995 1994 1993
Production(1):
Oil(MBbls) 9 7 11 11 10
Natural Gas (MMcf) 1,810 1,495 1,336 1,195 965
Equivalent MMcfs(2) 1,864 1,537 1,402 1,261 1,025
Average sales price:
Oil (per Bbl) $16.10 $16.35 $15.80 $14,.41 $16.62
Natural gas (per Mcf) $2.88 $3.04 $1.75 $2.01 $2.24
Average production cost
(lifting cost) per
equivalent Mcf(3) $0.65 $0.63 $0.53 $0.58 $0.57"
---AND---
"(15) Results of Operations for Oil and Gas Producing Activities
The results of operations for oil and gas producing activities (excluding
marketing) are presented below:
Years Ended December 31,
1997 1996 1995
Revenue:
Oil and gas sales $5,363,600 4,674,900 2,534,000
Expenses:
Production costs 1,206,000 963,600 596,000
Depreciation, depletion
and amortization 1,629,900 1,248,200 1,000,700
2,835,900 2,211,800 1,596,700
Results of operations for
oil and gas producing
activities before provision
for income taxes 2,527,700 2,463,100 937,300
Provision for income taxes 567,800 519,600 137,800
Results of operations for oil
and gas producing activities
(excluding corporate over-
head and interest costs) $1,959,900 1,943,500 799,500"
Note the margins on oil & gas - Post tax and before G&A 36% on oil & gas production. Note as well how much gas and how little oil.
FWIW,
Eric |
