Spot prices very low

Many people have posted about the low prices the E & Ps are reporting in their royalty statements and accusing them of ripping off the people. I will not say all companies are honest and don't doubt that some will manipulate data to their advantage.  But knowing the spot prices of various fields help explain a lot of the problem.

From the EIA Weekly Gas report;

Marcellus prices remain low. Prices in the Marcellus shale displayed a similar pattern to New York and Boston prices, falling on Friday, then rising at the end of the report week. At Tennessee Pipeline's Zone 4 Marcellus trading point, located in Northeast Pennsylvania, prices dropped from $2.10 on Wednesday to $1.79 on Friday, and ended the week at $2.16/MMBtu

http://www.eia.gov/naturalgas/weekly/

Thats right, the price for nat gas sold in NE Pa was $1.79, less than half the Henry Hub price everyone sees on this site, CNBC, and other financial sites. I have seen it even lower

This report is updated every Thursday and will be updated again today.  Great link to bookmark and visit often.

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Permalink Reply by wyalusing jim on September 4, 2014 at 3:17am

true, spot prices are low and are sometimes extremely low, but they are a small factor. most companies sell very small quantities of gas on the spot market.

pricing for royalty calculations include not just spot, but contract prices both short and long term. unfortunately without auditing we will will not know what those higher contract prices are.

the disparity in royalty amounts between companies in the Marcellus due to price differences can be striking at times, and while I'm not suggesting that all companies should be selling at the same price, it does raise red flags when a company consistently sells our gas at significantly lower prices than others from the same or adjacent wells.

wj

Permalink Reply by Bluflame on September 23, 2014 at 7:52am

WJ,

  Several, if not most of the E&P's proudly tout their hedged positions on their periodic investor reports. These prices should provide some insight to what price they actually receive for at least some hydrocarbon production.

 

BluFlame

Permalink Reply by Dexter Green on September 4, 2014 at 3:22am

Differentials are killing Marcellus producers.  That's been the story for a few years now.  Look at the stock price for Cabot (NYSE: COG).  They've got excellent economics but they've been range-bound for a while now because their price realization--even with some well-placed hedges--has been lousy. 

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