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EXCO Resources Inc. Message Board

  • joelm_shapiro joelm_shapiro Mar 28, 2012 5:59 AM Flag

    300 dry rigs keeps production flat

    if you assume each rig can drill 10 shale wells in a year and each shale well produces 1.2 BCF in its initial year, it only takes 300 gas rigs to keep production flat assuming an annual 18% decline in production (3000 wells X 1.2 BCF per well in the first year). The current gas rig count is 600, but a lot of those rigs are wet gas. The associated gas from other shale drilling probably reduces the number to 200 dry rigs. I hadn't fully realized how few dry rigs you need to keep production flat.

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    • truce - can u explain what you are getting at? It seems that this company has to go into hibernation mode and that what you are saying?

      • 1 Reply to quantuon
      • I'm saying that current demand is met with very few dry gas rigs, some number between 200-300. But I think we're already there. So I'm saying that the market is in balance once you get past the current glut. Bringing on more than 200-300 rigs is unnecessary at current demand.

        I find it interesting that the market is pricing in the future supply but not the future demand. At some point, the demand for gas will grow and there will be a need for more gas supply. Supply creates its own demand. Listerine was just antiseptic leftover from the Civil War until some enterprising businessman created halitosis and men started running to their pharmacist for Listerine.

    • As the percentage of shale wells increase, the decline rate will increase because of the nature of the shale gas decline curve and more drilling will be needed to keep production flat, but we're a few years away.

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