Chart Of the Month

Here is a cool chart regarding associated gas production from Permian Basin tight oil wells, where its takeaway is and how much most producers receive for the product. If the analyst is using Henry Hub or Houston Ship as a basis for well economics, they are lying to you.

Matterhorn, by the way, is 85% full at the moment; it did not nothing to increase realized gas prices at the well head and did less than nothing to increase rig counts and grow more Permian Basin tight oil production, as pundits promised. All Matterhorn did was gather some flared gas, which lowered the price of gas down stream. Kids say the damnest things.

If you are into cheerleading and like the big numbers BOE create, feel free now to use about 80 mcf: 1 BO now. The BTU thing is stoopid; its all about how the E in BOE translates to bucks.

The drill baby drill program coming down I-20 is going to increase natural gas volumes way more than to 24.1 BCF over the next four years; try close to 30 BCF.

Remember if you drill an $8MM tight oil well in the guts of the Midland Basin today, half of the hydrocarbons produced from that well are worthless. I've shown you in great detail what the current net back oil price is at $68 NYMEX WTI... about $24 after all costs are paid. So you are risking $8 MM of CAPEX in the hope of earning a little over $10.5 MM, or $2.5 MM of profit. Over 10 years. Then you have to pay to plug the well and decommission all of its production/treatment shit. Then you have to pay back all your debt with... something that, hopefully, you have been rat-holing for such an occasion.

Would you make that kind of investment with your own money, for the well being of your family?

Of course not.

Overproduction 4.0