09/13/12 2090 205 27 72 2394 304
I reference two of the rows, Producing & Waiting on Completion (to be frac'd), that is the bolded #'s in the two rows. In the last year, ~600 wells have been completed & are Producing. These ~600 wells have come on a rates of 12-18 MMCF/day. These same wells are experiencing depletion rates of 60-75%/year, that is a reduction in daily production from an average of ~15 MMCF/day to ~5 MMCF/day. Thus 600 wells following the same published decline curve on average, each day over the year. As a median #, some time, ~3/1/'13, the current Haynesville production will decline by an additional ~3 BCF/day.
The other pair of well #'s above, Waiting on Production, is dropping by ~14-18 wells/month. These are the completions that are masking the decline, the treadmill. # wise, 15 months for the frac crews to eliminate this inventory, but I believe the market, the traders, will react before the current YOY decline of 3 BCF/day in US production grows to say 5 BCF/day. My reason, the YOY surplus of ~250 BCF will decline to YOY parity by ~ 11/24/'12, which is two months from today.
Lots of variables involved going forward, weather being variable #1. Rigs are slow to come back, that has been my experience. Crews more than evaporate. These rigs are manned by working folks & they find a new job. The last thing I want is a refurbished rig with a new (untrained ?) crew attempting to drill a 15,000' horizontal well & set pipe in a geopressured well.
Throw in E&P Operators which are already setting their 2013 Budgets. The E&P guys are cash constrained, most are 50/50 O&G. Their '13 Budgets will drill liquids where ever they can. Their staffs are working their liquid plays. Drill a poor liquid well early in '13 & the respective staff must find another liquid sweat spot to pursue with the contracted rig.
The Drillers are working on renewing LT rig contracts & signing new contracts. As for new rigs, as has been pointed out ~200 rigs are currently idle-w/o crews & receiving minimum maintenance. But few new rigs will be built, other than to replace older rigs which drill vertical (oil) wells, mostly in the Permian.
Typed much more than I wanted, as usual, AIMHO. To summarize, I trust robry's #'s & analysis. I believe his work & like most on this MB, have followed his excellent work & advise for >10 years. Wish I had recognized 8/'08, but followed robry from 10/'11 & bought back in ~2/'12 so I will ride through 4/'13 unless variable #1, the weather over rides all for '13. In closing, a ~3 BCF/day decline for a year is close enough to 1 TCF, as in less NG in storage, for a trader to notice.