Production Economics Model

Did you miss our School of Energy a few weeks back in Houston? Not a problem! The entire School of Energy conference is now available online in streaming video format. The conference video, presentation slides and spreadsheet models are available for purchase as individual Modules or as a full conference package. It’s the next best thing to being there!  School of Energy is unlike other natural gas, NGL or crude oil conferences.  It combines all three!  And the curriculum includes a comprehensive analysis of current energy markets and in-depth instruction on how to use RBN spreadsheet models covering everything from production economics to gas processing.  We walk through key developments for each of the three hydrocarbons including the increasingly important links between them.  Fair warning – today’s blog is a blatant advertorial. 

With natural gas prices for CME NYMEX Henry Hub futures averaging $3.69/MMBtu so far this year, you might think that the internal rate of return (IRR) for dry natural gas wells in the Haynesville would be under water.  But in fact, wells are still being drilled with IRRs in the low teens.  Granted these wells don’t look nearly as good as liquids plays in other shale basins, but the wells are profitable.  How could this be when the cost of a typical deep, multistage horizontal well in the Haynesville can run $9 million? Today we take you through the math in our production economics model and provide a downloadable spreadsheet.