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Higher Natural Gas Prices on the Horizon?

by Kenneth E. DuBose on September 9, 2012

Rigs continue to shift away from natural gas plays like the Haynesville to liquids-rich plays like the Eagle Ford Shale and Bakken.

Since the end of 2010, more than 100 rigs have moved out of the Haynesville in East Texas and North Louisiana. It’s likely many of those rigs are now engage in Eagle Ford drilling. More than 250 rigs are drilling in the South Texas play as of September 2012.

The takeaway is that an Eagle Ford gas well produces half the amount of gas a Haynesville well produces. Move into the oil window where 90% of rigs are drilling and Eagle Ford gas production per well drops 80% from that of a Haynesville well.

It’s just one data point, but you get the picture. Wells drilling for oil mean less gas coming to marketing. This fall doesn’t look to have much promise, but a normal winter combined with declining production in 2013 should make for a gas market that makes royalty owners happier when those monthly checks arrive.

Read more about rig movement at wsj.com

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