Just came across an interesting comment in an Oilbarrel...

Just came across an interesting comment in an Oilbarrel newsletter which certainly underlines the sense of doing a deal with SGY over the SELH acreage.

The newsletter which came out today had this comment in it which it had actually borrowed from another source called KBC Market Services:
"It says that while crude oil prices continue to benefit from the anticipation of economic recovery, US natural gas prices have been in freefall. The Nymex Henry Hub contract hit its lowest level in more than seven years – US$ 2.72 per million Btu (British thermal unit) – although it has since recovered to US$3.20/MMBtu. This equates to around just under US$4 a thousand cubic feet by my reckoning or US$17.92 a barrel of oil equivalent versus a crude price of US$72.50 a barrel, according to KBC. The economics of lifting gas onshore the US are entirely different to bringing up oil is some frontier offshore ! region, so the price comparison is not entirely relevant."

Now obviously with the price of gas having declined over recent times having a gas well is no great money earner. I think when NEO originally struck the shallow gas at SELH the price was in the vicinity of US$8 per mmcf.

So to spend money presently on trying to find pockets of gas at SELH is not in QPN's best interests. Okay QPN will still have exposure through the shares that it has in SGY with the deal that it struck.
So better to have that arrangement than to to fronting up with money for drilling where the end result may not bring a great return for the dollars expended.

So yes QPN needs to get more exposure to oil drilling in the present climate.

Talking of climate. There was one point in the Oilbarrel newsletter about the gas price that may bring some relief. It was the meteorologists are predicting that the weather patterns seem to indicate that it will be a severe winter in North America this coming season similar to about 2002/2003. Therefore gas prices could rise as demand escalates.