What a move!!
Some of these companies have hedges at 2.50 and missed the whole thing!
Ng up 5o cents
Re: Ng up 5o cents
Not if they are selling gas into the Northeast at $22/MMBtu today.
Remember:
> All upstream companies sell their oil, gas and NGLs in the "physical market". They get to keep the big spikes in spot market prices.
> All hedges are "paper transactions". Hedges are basically Calls and Puts settled against NYMEX futures contracts or other indexes.
Remember:
> All upstream companies sell their oil, gas and NGLs in the "physical market". They get to keep the big spikes in spot market prices.
> All hedges are "paper transactions". Hedges are basically Calls and Puts settled against NYMEX futures contracts or other indexes.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
-
CreativeEquity
- Posts: 107
- Joined: Sun Sep 05, 2021 5:06 pm
Re: Ng up 5o cents
I know this is not the case today, but I was curious in a soft market can it also be the case that the producer is forced to receive a lower price on the physical market vs nymex? IOW the opposite scenario of right now. And if yes, did this cause material issues for anyone in 2020?
Re: Ng up 5o cents
Yes, it does go both ways.
In 2020 the natural gas price differentials were so bad in West Texas that some of the Permian Basin companies had negative natural gas realized prices. Go to the EPG website and look at my forecast model for Diamondback Energy (FANG). Their realized natural gas price in Q2 2020 was $0.33/mcf.
During my time at Hess, I saw us get spot gas prices over $60/mcf into New York. The Northeast is the worst area for this because they have blocked so many pipelines. Some areas like Boston have prices close to the LNG prices of $25 to $30 per mcf TODAY.
The Permian Basin now has enough pipeline takeaway capacity, so the differentials are small. Plus, good marketing teams can get their gas transported to higher priced markets.
In 2020 the natural gas price differentials were so bad in West Texas that some of the Permian Basin companies had negative natural gas realized prices. Go to the EPG website and look at my forecast model for Diamondback Energy (FANG). Their realized natural gas price in Q2 2020 was $0.33/mcf.
During my time at Hess, I saw us get spot gas prices over $60/mcf into New York. The Northeast is the worst area for this because they have blocked so many pipelines. Some areas like Boston have prices close to the LNG prices of $25 to $30 per mcf TODAY.
The Permian Basin now has enough pipeline takeaway capacity, so the differentials are small. Plus, good marketing teams can get their gas transported to higher priced markets.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
-
CreativeEquity
- Posts: 107
- Joined: Sun Sep 05, 2021 5:06 pm
Re: Ng up 5o cents
very interesting, thank you !
Re: Ng up 5o cents
Dan, where is the best source for gas and NGL physical market pricing?dan_s wrote:Not if they are selling gas into the Northeast at $22/MMBtu today.
Remember:
> All upstream companies sell their oil, gas and NGLs in the "physical market". They get to keep the big spikes in spot market prices.
> All hedges are "paper transactions". Hedges are basically Calls and Puts settled against NYMEX futures contracts or other indexes.
Re: Ng up 5o cents
If you want it real time you have to pay for it
The EIA publishes daily cash prices about a week after the fact
The EIA publishes daily cash prices about a week after the fact