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DISCLAIMER. THIS REPORT IS FURNISHED ON AN ―AS IS‖ BASIS. BENTEK DOES NOT WARRANT THE ACCURACY OR CORRECTNESS
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ICE PRICE DATA: ICE Index Data used herein is provided under BENTEK’s AGREEMENT FOR THE PROVISION OF INDEX DATA with ICE.
Recipients of this report acknowledge that the ICE Index Data and reports thereon are confidential and are proprietary trade secrets and data of
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Forward basis and price data provided by NYMEX ClearPort.
Methodological Notes
The data in this report are derived from BENTEK Energy’s proprietary Energy Data Warehouse. BENTEK collects and monitors pipeline
nominations as posted on individual pipeline electronic bulletin boards (EBBs). BENTEK has assigned geographic and usage descriptions, such as
state, province, county, production region, customer type and connected party to more than 26,000 pipeline points. The descriptions assigned to
these pipeline data points enable users to monitor and forecast U.S. production, U.S. imports, U.S. LNG sendout, demand from multiple sectors
and storage injection and withdrawal activity.
BENTEK PRODUCTIVITY INDEX (BPI)TM: In order to quantify the effects of improved drilling and completion technologies along with the transfer
of rigs to unconventional plays with higher productivity, BENTEK has developed the BENTEK Productivity Index (BPI)TM. By benchmarking the
productivity of each operating rig in the 1Q2005, BENTEK quantified the effects of both technology and gas-resource-play development.
BENTEK defines an active rig to be a rig that has commenced drilling a well (spud) until the point at which the rig has been released from the well
in order to allow completion activities.
The BPI is determined by a combination of rig proficiency and well productivity. BENTEK begins with data provided by RigData on how many rigs
are actively drilling in a basin or region and the average number of days it takes for those rigs to drill wells. The average number of days is divided
into 365 days per year to find an average number of wells drilled per year per rig. The wells-per-rig-per-year number is multiplied by the 30-day
initial production rate for the basin or region to determine the average productivity rate for the current time period. That number is then divided by
the baseline productivity rate from 2005 to get a ratio. BENTEK then multiplies the ratio by the current rig count to estimate the BPI.
Numbers from individual basins and regions are averaged to determine a national average.
BREAKEVEN PRICES: BENTEK defines breakeven gas prices as the well-head gas price at which the before-tax, cash internal rate of return
(IRR) on the project is 10% (the net present value is zero at a 10% discount rate). BENTEK collects announced production data for the key
operators in selected natural-gas plays/basins. Data sources include investor presentations, press releases, reported financials and industry
publications. Breakeven prices are determined using a representative set of assumptions for each play.
BENTEK’s breakeven prices are based on half-cycle well economics. The half-cycle breakeven price is the gas price required to earn the required
rate of return excluding previously sunk capital, such as exploration and acreage costs. The components of the breakeven analysis are Drilling and
Completion (D&C) costs, Initial Production (IP) rates, Operating costs, Production Taxes, Annual Production Declines and Royalty rates. D&C
Costs are the costs to drill, case and prepare a well for gas production. The IP rate is the amount of gas initially produced from a well. The
Operating costs include lease operating expense, and gathering and transportation costs. The Production Tax, also referred to as Severance Tax,
is the tax levied by state governments on gas production. The Annual Production Decline is the natural decline in gas production from a well. The
Royalty rate is the fraction of revenue from gas production paid to the leaseholder.
BENTEK's PRODUCTION PROJECTIONS are based on state wellhead production data provided by HPDI, LLC. Each projection starts from the
last completed dataset and then projects production into the future using type-curves for each basin based on drilling orientation and resource
target.
BENTEK does not assume a base decline rate in its production projections. Production is forecasted on a well-by-well basis based on the current
producing age of each well and where production from that well is on its current decline curve. Well counts are assumed to be flat from the previous
month's drilling level, except where noted due to basins with an inventory of wells that are awaiting pipeline expansions and/or completions
Drilling Data provided in this report provided by DataWright RigData, for more information, go to www.rigdata.com
March 2011
PARTIAL REPORT / SAMPLE – CONTACT BENTEK TO SUBSCRIBE
Haynesville Surpasses Ft. Worth Basin (Barnett Shale)
The first large shale play, the Barnett Shale, has for years
also been the largest producer. That changed last month.
After the effects of production freeze-offs lingered in the Ft.
Worth Basin, output from the Haynesville Shale play in
Louisiana grew. On Feb. 12, BENTEK’s sample of
production (which now includes both intrastate and
interstate pipelines), reached 5.32 Bcf/d. On that same day,
Ft. Worth production, correcting for sample size, was only
5.23 Bcf/d. In the 11 days to follow, Haynesville kept its
lead. The Haynesville area now has the largest production
of any shale-dominated area in the world.
It is remarkable how fast Haynesville has grown compared
to the Barnett. The latter was a proving ground for shale
development, and it took about nine years (cont’d, Pg. 9)
• Haynesville Surpasses Ft. Worth Basin (Barnett Shale) (Pg. 7)
• Haynesville Productivity Set to Increase Throughout 2011 (Pg. 8)
• Chesapeake Haynesville Rig Count Could Drop by Half by Year-end (Pg.