Friday, June 12, 2009

SandRidge: Haynesville Returns Improve

I read through a recent presentation by SandRidge Energy and spent some time comparing the summary of well economics (below) with a similar chart presented a couple of months ago.

I was interested to see that SandRidge sees economic returns improving in the Haynesville Shale (ROR increasing from 21% to 25%), but I suspect these results have much to do with a decrease in costs. Notably, the well costs have decreased from $8.5 million to $7.5 million and finding costs have decreased from $1.74 to $1.54/Mcf. What is also interesting to note is that the decline curve for the Haynesville Shale has improved (at least graphically) in the out years, surpassing the Pinedale curve. Since it's a logarithmic curve, it's hard to tell the magnitude of the change by eyeballing it, but compared to the curve from a couple of months ago, it's a definite improvement.

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