Over the past nine months, the frac spread —a rough-cut measure of the value of extracting NGLs from raw gas at gas processing plants — has taken a terrifying plunge, from $9.82/MMBtu in early March to only $2.16/MMBtu on Monday. Given that the frac spread is the differential between the price of natural gas and the weighted average price of a typical barrel of NGLs on a dollars-per-MMBtu basis, a 78% nosedive like that suggests that something is seriously out of whack, and that at least some market players are taking a real hit financially. In today’s RBN blog, we discuss the frac spread, the drivers behind its recent freefall, and what it would take for gas processing margins to rebound.
There’s no perfect way to rate music. The Billboard charts — not to be confused with RBN’s NATGAS Billboard or Propane Billboard reports — measure the popularity of songs in particular categories (pop, R&B, hip hop, etc.) and Rolling Stone magazine’s list of the 500 Greatest Songs of All Time (first posted in 2004 and updated in 2021) tell you what 50 or so music critics think. But the best-selling music isn’t necessarily the best and a list compiled by a roomful of critics probably wouldn’t match your list or ours — though you’ve got to admit that Rolling Stones’ #1 songs in both the 2004 and 2021 lists (Bob Dylan’s “Like a Rolling Stone” and Aretha Franklin’s “Respect”) are hard to argue with.
There’s a similar challenge in measuring things in the energy industry. Sure, everyone can agree that a barrel is 42 gallons and a Bcf is, well, a billion cubic feet. But there’s at least some fuzziness, for lack of a better word, about what relationships between general prices — things like the crude-to-gas ratio, the crack spread, and the frac spread (the focus of today’s blog) — tell us. They sure do help, though, in setting baselines and getting the conversation started.
As we said in our introduction, the frac spread is simply a measure of the value of natural gas versus the value of a basket of NGLs. By convention at RBN, we use the front-month Henry Hub natural gas futures price versus a weighted average of Mont Belvieu NGL prices that’s converted from cents per gallon to dollars per MMBtu. We make that calculation each day and include it with our Spotcheck Indicators data, which is available to RBN Backstage Pass subscribers. This methodology is about as uncomplicated as you can get, and there are a lot of possible enhancements and refinements to the calculation that we addressed in our People Out There Turnin’ Natgas Into Gold blog series a while back.
Join Backstage Pass to Read Full Article
About the song
“Crash and Burn” was written by Nikki Sixx, John 5, Sahaj Ticotin, Tommy Lee, Mick Mars, and Vince Neil and appears as the 17th song on Mötley Crüe's soundtrack album, The Dirt Soundtrack. The songs on The Dirt Soundtrack are a collection of Mötley Crüe tunes to accompany the biographical film of the same name. “Crash and Burn” was one of two new original songs written specifically for the film and soundtrack album. It was the band’s first new release in over a decade.
The Dirt Soundtrack, released in March 2019, went to #2 on the Billboard Top Rock Albums chart and #10 on the Billboard 200 Albums chart. Production on the LP was overseen by Dave Donnelly and Bob Rock. One single, “The Dirt,” was released from the album in February 2019. It went to #8 on the Billboard Mainstream Rock singles chart. A video of the song, featuring the band and Machine Gun Kelly, who plays Tommy Lee in the film, was released at the same time as the single.
Mötley Crüe is an American heavy metal pop band formed in Los Angeles in 1981 by Nikki Sixx, Tommy Lee, Vince Neal, and Mick Mars. Six members have passed through the band since its formation. The band broke up in 2015 and reunited again in 2018. They have released nine studio albums, three live albums, eight compilation albums, three EPs and 30 singles and have sold more than 100 million records worldwide and have seven multi-Platinum albums. Mötley Crüe has won one American Music Award and have a star on the Hollywood Walk of Fame. Recently, founding member and lead guitarist Mick Mars announced his retirement from touring with the band due to health issues. Virtuoso guitarist John 5 is currently taking his place on live duties. Mötley Crüe still records and tours and will begin their Mötley Crüe World Tour 2023 in February 2023.
