RE:RE:RE:Condensate rich profit model and LNG implicationsi got your point and disagree with it. i don't need to read the book.
you are making a SERIOUS miscalculation. you are extrapolating todays
conditions well into the future. you should know from reading your fancy
book that you should not do that. there is way more demand for gas
than ASSOCIATED Gas can supply. your assumption is that nat gas
prices NEVER RISE. I would not make that bet.
saying tou has a flawed business model is well FLAWED thinking.
i stand by
pablo87 wrote: You miss the point. We are talking about an inflection point here which will swallow up even the most efficient of operators (an inflection point is an event (usually technological) that turns a sustainable business model into an unsustainable one.) Please read Clayton Christenson's various books.
POU's future (obviusly when they acquired Apache they had to take the good with the bad) is their condensate properties which they are targeting 65-70% liquids (incl. NGL). Its fair to say that they would drill those wells even if there was no gas; thus there is or should be no cost assigned to gas sales for capex and sustaining capex. These are significant costs for gassy producers (at least $7-8 per BOE) which negates most of the operating cost advantages if not all (assume that transportation and royalties would be the same or similar in both cases).
Its an inflection point because the liquids rich producers are profitable on liquids realizations alone; the gas is gravy; they are willing to sell it for anything obviously if they're willing to flare it. How does a gassy competitor compete with that? The answer: they can't. So why would LNG Canada depend on suppliers who have a now flawed (previously solid) business model?
(btw, Tourmaline is the exception rather than the rule as they are the biggest by far; even then, they are rapidly moving away from dry gas properties and increasing their liquids content so even they know the dry gas model on its own is not sustainable these days.)
YMMV