June 4, 2015 – Platts Gas Daily
Low prices lead to opportunities: Braziel
By: Jim Magill
RBN analyst Rusty Braziel said low gas commodity prices might paradoxically create opportunities for gas producers and marketers. “Not only are natural gas prices down, crude oil prices are down, in fact proportionally they’re down more. And because both are down, the rig count is way down,” Braziel said in an interview.
Because the rig count is down, oil and gas producers are locked in negotiations with oilfield service providers, such as Halliburton and Schlumberger, to cut their costs. “These negotiations are requiring those companies to reduce the cost of drilling and completion for not only crude oil guys but also natural gas guys as well,” he said.
“What that means is: because drilling and completion costs go down, the price that a natural gas producer requires to make money is lower than it used to be before all this kicked in in November of last year,” Braziel said.
In addition, he said that because crude oil prices have seen a more substantial decline since the middle of last year compared with natural gas prices, “producers are making the decision to switch away from crude and to natural gas because their rates of return in natural gas are higher than their rates of return for oil,” he said.
Read the full article in the June 4, 2015 publication of Platts Gas Daily
