Unless a person has been hiding under a rock somewhere for the last thirty odd years, they know what technology can do to revamp antiquated processes or products. These processes and products, which may have been abandoned, can now be dusted off and made whole again. Oil and gas wells now fall under this description and are proving very profitable for those in the know.
First National Entertainment Corp., a natural resources company, is currently refocusing its efforts on a lease building program designed for the recovery of natural gas and oil from abandoned or dormant wells. Generally, these past wells became cost ineffective as the price of natural gas traded at significantly lower levels. In today’s marketplace, however, the price of natural gas has gone absolutely ballistic, making recovery of natural gas and oil from past inefficient wells financially viable.
The reactivation of old wells holds great profit potential in many respects. The legwork has been done and the infrastructure has been put in place. All that really needs to be done is to get the product out of the ground with new and more efficient equipment. The US system for transporting gas has grown significantly over the last many years, making it exceedingly easy to get the product to market. In some instances, the distance to market from these older wells is just a few lengths of pipe (understanding that it is not quite that easy.) It would appear that in this instance coming to the game a bit late is not such a bad thing at all. The company will be able to take advantage of being an arm chair quarterback, and reap better margins at somewhat lower capital cost. This is not to suggest that everything is rosy when coming to the table late, but from a wide angle it sure doesn’t look all that bad. There are going to be costs and barriers, but none that are insurmountable.
First National also has the advantage of hindsight. They know which regions of the country are productive and which regions are somewhat less productive. The upper Tennessee region of the Appalachian Basin is a known region of shallow depth and high productivity, making the company’s presence there a sure sign that it has done its homework. Texas and Oklahoma are two other regions where the company is setting up shop and will surely be able to take advantage of transport systems. Catching up is always a bit difficult when a market is flying so high, but with advances in technology and an environmentally aware world, the market for Natural gas will be a viable energy source for some time to come regardless of a bust or boom marketplace.
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