Report Claims Associated Gas Cheaper to Produce than M-U Dry Gas

Bayou City Energy (BCE), an E&P-focused private equity firm, yesterday published a VERY INTERESTING white paper titled “Natural Gas Producers: Why Don’t You Stay?” (full copy below). The thesis of the white paper (or report) is that drillers in gas-focused plays can't produce natural gas as cheaply as oil producers who produce gas as a side benefit (called associated gas). Therefore, gas-focused drillers need to drastically, immediately change their capital allocation strategies (spend less on new drilling, for now). The author also makes the case that gas-focused drillers should look for opportunities to merge with a "liquids-rich producer."

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