Oil and gas rigs in the U.S. fell for a third straight week to the lowest level since January after producers moved equipment out of gas plays.
The gas count declined by 13 to 407, the fewest since May 1999, data posted on Baker Hughes Inc. (BHI)’s website show. Oil rigs gained for a second week, adding eight to 1,341, a 12-week high, the field-services company based in Houston said.
Natural gas from oil plays until recently, amounted to only 2-3% of total NG production.. Now natural gas from oil plays has increased slightly to 3-4% of total NG production. NG as a byproduct of oil plays is miniscule and one of the reasons is that the Bakken fields are notoriously sparse in NG.
Also. NG from shale plays only amounts to 30-40% of total NG produced. The vast majority of NG is still being obtained from conventional plays, although NG from conventional plays has been steadil;y declining for the past 20-30 years
The sad fact is, due to the 70+% annual decline rate from NG shale plays, an astonishing number of NG shale wells need to be drilled to keep shale NG production stable. But to keep total NG productuion stable, NG productuion from shale plays needs to increase to compensate for the declining NG production from conventional plays. Right now, that is not happening.
Don't expect an increase in NG shale wells when NG rises to $5 or $6. NG companies are now drilling to maintain some cash flow- even though they lose money on each well they drill. When NG is $5 or $6 the NG companies will have increased cash flow and the last thing they will want to do is pour money into new drilling which will decrease their cash reserves as well as decrease cash flow by lowering the price of NG.
, the United States is the only country that has jumped full force into fracking. Europe has largely outlawed it and most other countries are luke warm to fracking. The reason for this lack of enthusiasm for fracking is because fracking is the end of the road for NG. Fracking has been around for 100 years. It always played second fiddle to conventional wells which are more profitable. Now conventional wells are harder to find and everyone is jumping on the fracking bandwagon. Nobody would have jumped on the fracking bandwagon if conventional wells were still viable. And pretty soon we are going to find out that NG fracking is not viable.
Mrbone when you see what CNX is paying up front for over 9263 acres ($50 million plus $450 million over 20 years for royalties you say there must be some sweet oil holes in those shale deposits. I did the reverse on one of my post and the payoff was over $2 billion and yes that is with a B.
Now the reason I did that post is the more I dig the more I find that that western Pennsylvania is the place to be. To bad Alpha has 38 wells in Greene county. Wait that would be Greene county in western Pennsylvania. Same for all our land on the western side of WV. Yes Alpha trades for pennies on the dollar while it sits on billions in oil.
It's an interesting thesis you have there but obviously market is discounting it for whatever reason. However, I like the fact we have those assets flying under the radar. Thanks for your on-going informative posts. gltal
ben, thanks for your knowledgeable detailed posts, including weather updates!
do you think the major short pushdown of our share price by over $2.00 SINCE the CC is like a bottom capitulation, and that our share price misfortunes may soon be behind us?
best in breed met coal, which is alpha, has to be rewarded soon, don't you think?