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Alpha Natural Resources, Inc. Message Board

  • benstevens75 benstevens75 Mar 6, 2013 12:45 PM Flag

    Those that know Natural gas.

    Old ben has been looking at production rates in the Marcellus shale . I have to reverse engineer numbers. This is what I am seeing.

    A NG well starts off at 5.ommcf/day and ends the year at 1.1 mmcf/day. At 4 dollar NG this is what I get.

    Decay rate 78% year one. Revenue $2,628,000. Royalties at 12.5% $328,500
    Decay rate 28% year two. Revenue $ 1,314,000. Royalties at 12.5% $164,250
    Decay rate 22% year three. Revenue $1,022,000. Royalties at 12.5 % $127.750
    Decay rate 17 % year four. Revenue $861,400 . Royalties at 12.5 % $107,675
    Decay rate 8% year five. Revenue $744,600. Royalties at 12.5 % $93,075
    Decay rate 11% year six. Revenue $686,200. Royalties at 12.5 % $85,775.

    Now if it takes $5 million to drill a well and the first three years are so important why would you sell below cost? Now here is what old Ben thinks. First they should not. Second I have the answer to decay rate. A well drilled on 640 acres has a reserve of between 50 and 60 billion CF . We can`t get it all out. We let the NG industry and oil industry pay to build pipes from our coal fire plants. We reverse the flow on those old wells after year 6 and pump them full of CO2 while at the same time the new wells in the six years are still producing .

    We must measure pressure in new wells and match it back with pressure of CO2. When that has happen we reverse flow and get new NG like a new well. The CO2 can then be put back in other wells or be used to make methanol.

    Folks the answer for america is commonsense and it must be done using all energy that God has given us. Coal use should be increased in the US not decreased but it must be done in a clean way not because it causes global warming which is a fairy tale but because the by products of burning coal can make America independent on any foreign source.

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    • Now CNX just had a contract with the airport. If ANR can have 100 sites on 18000 acres CNX should have 50 on 9000. If and I say if NG was selling at $4 per MMCF that would mean each well had revenue of $7.2562 million x 50 = $362,810,000 for 6 years. CNX paid them $50 million up front. Their royalties are at $15 percent. If NG stayed flat at $4 mmcf they will pay the airport $54,421,500 in royalties.

      Now think about all that. If it`s oil the royalties would be more . Now let`s use fix cost of $5 million per well. That is $250 million from the $362,810,000 or $112,810,000. Take away $54,421,500 in royalties and you get $58,388,500 and then you have taxes.

      Now I am no NG man but it looks like to me they are counting on NG to double. IF NG is $8 per mmcf the revenue from the 50 wells would be $262,800,000 in the first year and royalties would be $39,420,000. So the answer for NG is to drill and cap and let coal be king again . Obama`s war on coal will only lead to a hole in your wallet from future NG price shock.

      • 1 Reply to benstevens75
      • Very creative thought process . Something that is alien to anyone in government. With that said your idea; We let the NG industry and oil industry pay to build pipes from our coal fire plants.
        What would be the cost to build pipes To coal fire plants as opposed to building coal fired plants at the site?
        On another subject, nat gas for transportation fuel, the rails are already experimenting with nat gas engines. Everyone know about the T Boone Plan. . Nat gas up, coal up.
        Only problem is; The Gov is in the way. Barry loves Solar, and hates Coal.

 
ANR
4.40+0.06(+1.38%)Apr 17 4:00 PMEDT

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