Surging Natural Gas Prices
How are the surging natural gas prices affecting drilling this year, and what about going into 2022? Are the gas companies taking advantage of these higher prices? What`s next?
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Replies to This Discussion
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Permalink Reply by farmgas on
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Attempts to get as much gas as possible from old wells seems like a significant idea for gas companies particularly shallow gas wells. I say this as a benefit to gas companies and not directed to the marketplace.
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Permalink Reply by Ralph cramdon on
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Farmgas have you noticed any uptick in your production numbers as prices rise ?
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Permalink Reply by farmgas on
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Good question, the shallow well statements I receive are not very clear with details but it appears that there is not any pattern for production. In recent months the volume has gone up and the next month it has gone down. Maybe older somewhat depleted wells are more difficult to regulate production. Maybe a talk with a well tender would clarify how this works.
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Yes , line pressure must be regulated , past my pay grade on how it all works .... Nat gas broke over $9 last week ,,, these producers that are least hedged are printing CASH ....... AR has one of the highest Beta's , NFG one of the lowest ... Where is gas headed from here ? The next weather report and the next headline are beyond my ability to predict .....
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Permalink Reply by farmgas on
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Ralph, I thought you investor types use crystal balls to look into the future :)
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Buying Nat gas operators when Gas is priced at $1.75 is easy ... Buying Outfits when gas is $8.50 can be tricky ....... We Investors are all subject to the next headline ... "Too Hot , Too Cold , Russia , Economy , etc ,etc ' ... PS . Credite Suisse like Diversified ... I do not own it .....
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WTI oil now above $119 ....... Oily Stocks basically flat today ..... CNQ Bonds get an upgrade to A .... DVN Dividend ex date next week .... Producers are wallowing in cash .....
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Permalink Reply by farmgas on
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How will investors view this surge in cash? Obviously as a source of income to shareholders but what about company wide investments in new equipment, facilities or whatever?
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There is a powerful trend towards Debt reduction , Share Buybacks and variable Dividends ..... Most Public outfits are keeping production relatively flat , and keeping CAPEX around the 50% mark to keep production flattish ... Better producers are spending less than 50% of Cash Flow to keep production flat .... In this era of ESG , banks are increasingly reluctant to finance new drilling , making it harder for those who wish to expand ,to get Bank Funding .... I am sure the private producers are going full steam ahead at todays prices , but public producers are under Investor pressure to get the best returns possible for their investment .... Better Producers are in the 15% Free Cash Flow or better range .... Those who are least hedged have a higher Beta , those who are Highly hedged have less movement .... This quarter will be a very good one for many producers...... As of this morning gas is up 4% in the $8.80 range ,,, an a amazing number for this time of year ..... The Roller Coaster ride continues with new highs being touched .....Will it continue ?? If I knew the next headline , I would have an answer ......
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Just read a stat ... N Gas production is up around 1% year over year ,,,,
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Permalink Reply by farmgas on
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I think increased gas production could be from new drilling or an increase in reported production from just opening up valves.
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Most of the increase comes from the Delaware Basin ..... Soon pipeline constraints will begin to occur in that region ....
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