Fracking: Economic and Environmental Considerations

If the market price for natural gas in the United States remains at its current level for any length of time, can shale gas resources currently under lease be exploited economically? Given variations in lease terms and numerous other factors, the answer may well be no. To understand why this is so, an explanation of the economic facts of life in shale gas production is in order. As in most things, it all comes down to costs versus revenues.
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Curse of Crude: Higher Prices Result in Greedy Grabs

While the consumer media bemoan rising gas prices, industry insiders understand that crude oil price increases can be a blessing and a curse.

The blessing: oil companies reap greater returns on their investments in drilling, extraction and refining, providing capital for further exploration and drilling operations.
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Financing Drivers for U.S. Land-based Exploration and Production Activities

The U.S. market has experienced a strong and steady rebound in rig count from the trough witnessed in mid-2009. Ironically, the same reasons that collapsed the rig count (a decline in commodity prices and poor capital market conditions), has also facilitated the rebound. More importantly, we are seeing strong interest in the sector from lenders due to the acceptance that the current level of production activity and collateral values will be sustainable. This has the potential to allow a continued high level of drilling activity in the intermediate term.
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