With gas and oil prices down, it’s been a lot harder to make money in the oil patch.  The one good thing about this situation is that producers have had to figure out how to cut costs.  Producers have convinced suppliers to lower their prices, drillers have figured out new techniques, leasing has slowed down, lease prices have dropped, and people have been fired.

Most of the cost cutting measures end up in people getting fired.  We hate to see people get fired.  We’ve been there ourselves more than once.

The only good thing about it is that companies are now profitable at a much lower price point than they were a year ago.  They’re still in business, still employing people, and still paying out royalties.

Mark Passwaters over at snl.com (not the comedy show) thinks that most producers are capable of turning a comfortable profit with oil at $75/bbl.

While that is interesting in general for West Virginia mineral and royalty owners, the most interesting part of the article says that Utica and Marcellus producers are doing just fine at $3.00/MCF gas.

Why is that?  The success mantra for developers in the Marcellus has been “keep costs low”.  I’ve heard that from more than one small developer, and it’s true for the mid-majors like Antero and Southwestern, too.  They’ve been on the cutting edge of science in the shales from the beginnin