MAE 0.00% 0.0¢ marion energy limited

the gas price

  1. 2,163 Posts.
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    Missing from my post in response to Kooookaburras request for info on where the gas market is at for Marion) the item of info re just what Rockies producers selling at Opal and Cheyenne are getting is contained in the latest EIA weekly report that has just gone up on the board. The latest price is $4.11 and the price missing the previous week was $4.82. The discount to HH for Rockies producers is currently $2.20 on HHs $6.31- a bit better than the "$3" in that post. If you use the average futures price for the 12 monthly contracts starting Dec. 08 as the best guide available then the market thinks that the HH gas price for the next year is going to be of the order of a steadyish $6.50 .If the Rockies discount to HH continues to be $2 then Marion is looking at an average price of $4.50. When Rex is finished (say July but I will have to see if that has changed) the discount is confidently expected to virtually disappear. A buyer of Clear Creek would know all this(to put it mildly). I emphasise that a buyer of Clear Creek wont give a stuff whether it $4, or $6.50 (though Marion will in the near term as far as refilling its rather bare cupboard). An industry player will value the field at the average price he is likely to get over a 15 or even 20 year period while the gas comes out of the ground (Clear Creeks wells have an expected life of 20 years-a lot longer than most on-shore oil wells). What an industry player REALLY wants to know is that he can get the gas to acceptable markets at a reasonable cost when he takes over and here Rex and Ruby (even though they are uncompleted or not even started) are absolutely vital to the price he will pay. In this regard Marions position is so incredibly good compared to what it was 3 years ago, because of Rex and Ruby. And dont be put off by Marions remoteness from sizable markets - these long interstate pipelines are like superhighways,with no other vehicles on the road.
 
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