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COPYRIGHT 2006 Hart Publications, Inc.
What is the breakeven price of a play? And what does it take into account, besides land, seismic, drilling and completion costs? What about the time value of money, and lost-opportunity costs if a company had drilled somewhere else or made that acquisition instead?
At least temporarily, the spread between profitability and not has narrowed for nearly all commodities around the world, not just oil and gas, but we think that can't last long-maybe six months at the most.
Meanwhile, Calyon Securities' E&P analyst, Carin Dehne Kiley, recently calculated the Nymex gas price needed to generate a 10% after-tax rate of return (a modest return) in three popular areas attracting lots of rigs today: the U.S. Rockies, Western Canada and the various...
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