There's some pretty dated information:"A review of more than...

There's some pretty dated information:

"A review of more than 9,000 wells, using data from 2003 to 2009, shows that ? based on widely used industry assumptions about the market price of gas and the cost of drilling and operating a well ? less than 10 percent of the wells had recouped their estimated costs by the time they were seven years old."

That is easy to test. If the AUT wells achieve payback within 6 - 9 months, the rest is profit.

In 2008 and 2009 both COP (in Live Oak) and TCEI were struggling to fracc successfully. Now, we are taking it all for granted. There was a learning curve.

What they say may be relevant to some areas but we are concerned only with Sugarloaf, Longhorn, Ipanema and Excelsior.

How many emails are exchanged between persons employed by oil & gas companies operating in the shale gas regions? How can anyone conduct a statistically significant survey of views?

The most relevant public reports published are the production reports on the RRC website. Alternatively, price up the 60 day figures released by AUT - net of royalty, they seem to be repaying 30 - 40 % of cost over that period.

Or look at the AUT quarterly report to 31 March - production data - page 6.

Kennedy was a mess but has produced (to then) 80,432bbls (? $5.6m net of royalty?) + 422mmcfg (?$1.3m net of royalty?) - so not a complete disaster based on expected cost of drilling and fracturing.

Morgan was a monster - 165,607bbls (?$11.5m after royalty?) + 563mmcfg (?$1.7m net of royalty?) in less than a year. Rancho was not much different.

More recent - May - 64,780bbls (?$4.5m net of royalty?) + 255mmcfg (?$0.8m net of royalty?) in less than 5 months. Luna was better by about $0.6m over a similar period.

But Turnbull 4 produced almost the same as Kennedy in 3 months.

AUT presentation 8 June 2011 page 22 "single well economics". Cost of well $6.8m (that should reduce when they start drilling multiple wells from the same pad sharing the same infrastructure).

Morgan and Rancho are considerably in profit.

Turnbull 4 was more or less paid for in 3 months.

Luna and May were 75% there in less than 5 months.

These wells are not comparable with wells in the "dry gas" window as AUT has been stressing in just about every one of its presentations. The liquids production makes the economics far more favourable because of the premium price.

Furthermore, AUT is now squeezing out additional liquids.

Even the 3,000ft Weston well drilled into the chalk has done reasonably well: 66,830 bbls + 1.2bn cfg = ?$8.2m after royalty? It's in profit compared to the current estimate for drilling cots and it's 60% of the standard length of lateral currently targeted.

The AUT report to the end of this month will contain further data.