Spyglass Resources Corp SGLRF

ng prices next winter/ shale oil,gas pricing pressure

[cender]

  With all the shale gas wells in 2013 producing at record levels they could only add 2400 bcf to storage. We start this season at 800 bcf in storage,  say we have another record production year at 2600 bcf added to storage ... that leaves us with 3400 bcf going into winter 2014/2015 - an extremely low level  . This latest record winter draw of 3100 bcf most likely wont be repeated but a 2800 draw is possible . So it really comes down to the shale gas and if they can keep up record production levels ,I am starting to have my doubts .

   Very few of the  shale plays are actually making money even with huge initial production levels and the cost to drill is enormous - $7 million per horizontal well. Shale oil and gas accounts for 4 million barrels per day of u.s production , so almost half the total . Debt is starting to  drown some of these  companies as  revenue cannot keep pace ,many have debt twice the amount of yearly revenue - spyglass looks like a dream compared to many of them .  Given these dynamics, going forward  the price of natural gas and oil must rise or  many  of the shale plays will simply be forced to stop producing as the drillers run out of other peoples money. It seems much more likely that oil and gas continue the price march higher so that we dont have mass bankruptcies in the shale arena . It makes for an interesting year ahead for  SGL,LTS,BNP  that have much cheaper drilling costs . Spyglass has fixable problems at todays prices , many shale drillers do not.