I believe they still owned 50% of the outstanding interest in the trust at that time. They shot themselves in the financial foot. If they had spread the wells out they would have had more time and made more money off of the liquidation.
BTW I have absolutely no idea what will happen to these wells or their production. The only people that have enough information to make an informed decision (if anybody does) is ECA and they are running for the hills at $10.00, so they must not think too much about these wells. Under $4.00 for NYMEX gas it is a moot point as it isn't worth stimulating the wells.
Again, have a good day!
What are the rework and maintenance provisions? Refracs are maintenance. I done believe you even need a permit for a refract. I may be wrong about the permit but it is definitely a maintenance operation. Check it out in the paperwork and let us know what they say about rework and maintenance.
Unfortunately I cannot tell you how much gas will be pumping in 5 or 10 years. Nobody can, but I can tell you that you want to get your money out of these things upfront before the time value of money eats up you profits. I am in a very cold corn field in central Illinois right now so I don't have my financial calculator with me but I can tell you a dollar earned in twenty years at 10% discount is only worth about 13 cents today. The discount rate will eat you alive on ANY wasting asset. You want to get your money out fast. Read that thesis paper and think NPV. It doesn't matter the timing of a return if everything is discounted to present value. You are in effect comparing everything using the same yardstick.
Have a good day!
For the spreadsheet freaks amongst us.......ponder this: the first hydrolic fracturing may get maybe 10% of the in ground gas, rework and refracing may yield an additional 8% out of the wellhead, I don't think anyone really knows how this will play out, even ECA, but take what has been said about ECT on this board and elsewhere with a grain of salt!
OK, it is too early to go to sleep. Here is the question to ponder. Can one reasonably expect the price of natural gas to stay constant for the next 17 years? What if we get increases in natural gas prices consistent with the inflation of costs for natural gas production and a concomittent increase in breakeven cost for bringing new gas production on line over the remaining life of the trust? What does that do to the NPV calculations in the aforementioned thesis?
Last thought for today! If you are really interested in the economics of Marcellus plays, type into your web browser: Economic Viability of Shale Gas Production in the Marcellus Shale, Ryan Duman. Start from his assumptions and then do some DCF sensitivity analyses for various price scenarios for natural gas over a 20 year trust life and different restimulation scenarios and workover regiments. The geolegy may be different but remember that around Fort Worth they seem to be refracing as often as every four years and find it cost effective.
Pleasant dreams to all!
"seperate pad"....I am in the field and am trying to type from a tiny keypad with cold hands and it isn't working all that well...LOL!
What I would really like to know is, how many horizontal latterals eminate from the same veritical shaft and is each of the wells on a sepeerate bad? What about it Liza, do you have that documentation? Does anyone know if all the wells are in one field and or the pad spacing?
Actually I said that wrong. The shale is nonpermeable. I don't know how to spell that word so I said nonporous, but that really is the wrong term!
These wells are all in nonporous rock. You can have a dozen horizontal shafts drilled off of one wellhead. There is no need for the trust to last more than 20 years. Given current technology, all recoverable gas will all be gone in 20 years. My gripe with ECA is that they brought all the wells on line at one time. If they had spaced them out things would be less bumpy.
Rework of the horizontal portion below the wellhead and refracing. It will be constant and rapid decline from here, but these thing are not like vertical wells, they can be reworked time and again as most of the gas is still in the ground even when the first horizontal shaft is depleted.
Yes they traded many shares, but my guess is most of those shares were arbitraged. NGT shares were purchased, traded for the ect shares the ECT were sold fast and the 8% or so premium was pocketed.
This is what I think is going on. ECA dumps after quarterly 8-Ks are issued. They don't do it earlier as they are insiders and would run the risk that the SEC would come after them for insider trading. It is easy enough to front run them and sell into the 8-Ks, knowing that that ECA has this pattern and will drive the price down with their dumping.
Things have gotten a bit more complex, as it looks like someone is going one step further and shorting big time into ECA dumps. That is where we sit as of now. My guess is that when they short cannot drive it any lower he will reverse course and cover his shorts slowly, trying to keep the price down. Slowly the price will rise and the 3 month cycle will begin again.
There is one more three month cycle left. After that production will drop sharply and that game won't work anymore. If ECA had brought the last of the wells online a little less rapidly the gas production could have been sustained another year or two, but they got greedy and now production will drop like a rock.
Just my opinion!
BTW, I expect production to drop by 85% in 5 years and income to drop by 75%, but the volatility makes these stocks a trader's dream.
If we get a cold snap on the east coast in January or February of 2014 supplies of nat gas should tighten up on the East Coast and we should get a price spike for nat gas in that region.
They sold 35,546 on 11/11, 142,647 on 11/8 and 67,647 on 11/7. They have been dumping all along at or near $10. It looks like it is over for now as they only have two days to report sales to the SEC, but someone has certainly been continuing to hit ECT I have been selling other energy trusts and buying a little ECT at these prices. It may be a dog but it has the cash flow to support the current price, at least in my opinion.