Gas set to drop YOY
YTD Avg = 63.7 Bcfpd
August 14, 2012
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Breakeven Prices
Marcellus leader
August 13, 2012
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Gas Brightening
$4.00 in 2013
August 13, 2012
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Gas Price v. Rig Count
Breaching 500 rigs
August 15, 2012 |
On behalf of Wells Fargo, Bentek Energy presents its latest data and forward views on domestic natural gas. 2012 U.S. dry gas production is forecast at 63.7 Bcfd (vs. 61.5 Bcfd in 2011). More importantly, the slide above shows from now forward monthly gas production look to be below 2011. YTD, the U.S. is 1.2 Bcfd net long on gas supply. The gas inventory surplus has shed 541 Bcf in 18 weeks. For price, Bentek expects Henry Hub to average $3.50 through 2017.
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Enercom just concluded its Denver Oil and Gas Conference. The slide above shows their version of breakeven prices for key gas shale plays. Marcellus leads ($2.88), followed by Haynesville ($3.51), Woodford ($3.93) and Fayetteville ($4.19). Also shown is the average price estimate of $4.00 in 2013. This slide regarding production by play shows how production continued to increase and demonstrates the length of the lag between supply and declining rig count. |
According to Credit Agricole, the gas horizon is brightening and gas supply growth is slowing to 4.5% in 2012. There is a 12-15 month lag between the rig count decline and supply response. The BHI gas rig count began its precipitous decline just 12 months ago (mid-August 2011) from 985 to 495 currently. The expected supply response is just now kicking in. Forecast gas prices now are $2.65 for 2012, $4.00 for 2013 (assuming a normal winter) and $5.00 long term.
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Southwestern Energy was the eighth largest U.S. gas producer in Q2 2012 (1.5 Bcfd, up 2.9% for the quarter and 11.9% YOY). Slide above clearly shows the lag between rig count and price. Also, vividly shown is the first gas price spike in late 2000 (to near $10) as the gas bubble of the 1990's burst. At the tail of the data, prices look to have bottomed. This slide shows SWN's sterling performance in its core Fayetteville and cites F&D costs of $1.13 in 2011.
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