If you look at an absolute worst case scenario, the units are probably only worth $6.00 or $7.00 a unit, or maybe as little #$%$00 a unit if you discount the cash flow of proven reserves at 10% and gas stays under $4.00, but then again, I have seen some gas and oil fields that were supposed to be played out long ago producing more gas and oil than they did 30 years ago. The technology has so improved over the years that they can get to gas and oil that was thought worthless when the wells were first drilled. All that really can be said is that one has to chose his side and make his bets!
Well, in any case, tomorrow should prove interesting! Good luck and good trading to all!
it is correct our interest is in these specific, completed wells-- not a mineral interest in the field. The residual value of the wells is still a function of how much gas is economically available in March, 2030. My understanding is that ECA is not oblidged, and therefore won't be investing any more dollars in additional completion technology.
My family has owned mineral interests in downstate Illinois basin oil wells for 80 years. My grandmother was assured that the 1960's water flood was the last hurrah. Still geting those royalty checks nearly 50 years later.
Point being, how will this residual value be determined? On the last months production or an engineering evaluation of economic reserves still accesable through these wells with completion and recovery technology available 17 years from now.
Secondly, ECA has a 50% interest in the development wells and 10% in the first group of producing wells. Are they likely to leave large quantities of accesible gas in the ground for 17 years if they think that further recovery work will benefit their interest? If ECA does elect to employ enhance recovery methods to increase production from these wells how does that cost get spread to the trust?