Let's do the math: $281 million / 6,400 acres = $44,000 / acre. Yes, I noted that the deal included producing wells, wells that do not need to be drilled, bringing the price / acre down significantly.Houston-based Linn Energy LLC announced on July 6 that it has finalized partnerships for future developments and has sold assets in Texas.According to a statement from the company, Linn Energy signed a definitive agreement to sell its remaining assets in Howard County, Texas, for $281 million to an undisclosed buyer.The property, located northeast of Midland, Texas, in the Permian Basin, includes approximately 6,400 acres for horizontal drilling and 133 gross wells.
For newbies: gross wells are all wells in which a company has an operating interest, but the operating interest could be as low as 3 to 5 percent, or as much as 90% or more. A more helpful statistic would have been the number of net wells. For example, 5% in each of 20 wells would equal one net well.
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Whining
Front page in the business section, Los Angeles Times:
Filling up at the pump is often painful in California, where drivers tend to pay more for gasoline than in most other states.
Many industry watchers attribute the high fuel costs to unique forces — chiefly California's clean-burning gasoline formula — that have isolated the market and kept it tightly balanced between supply and demand.
But some consumer advocates and politicians allege that price manipulation by oil refiners is to blame.
This year, price fluctuations were especially surprising. The price of crude oil began falling last summer, with pump prices following.
In February, Tesoro Corp. idled its Northern California refinery in Martinez after a nationwide union walkout. Next, Exxon Mobil Corp. scaled back operations at its Torrance facility when an explosion damaged an air pollution monitoring unit.
Average pump prices shot up nearly a dollar before floating back down. Last week, a gallon of regular gasoline cost an average of $3.44 in California, more than 20 cents lower than a week earlier and about 70 cents lower than a year earlier, according to AAA. But drivers in the state are still paying nearly 70 cents more than the national average. [It looks like 20 cents of that 70 cents can be attributed to California's state tax; see below.)
Whether those higher prices are a natural economic reaction or a sign of collusion between companies is up for debate.State taxes on gasoline at this site. Some selected examples:
- Alaska: 11.30 cents
- California: 42.35 cents
- Massachusetts: 26.54 cents
- Minnesota: 28.60 cents
- North Dakota: 23 cents
- South Dakota: 30 cents
- Texas: 20 cents
- California: 27 minutes (folks in Los Angeles can quit laughing, now)
- North Dakota: 16 minutes
- Texas: 25 minutes
- Williams County, North Dakota: 15 minutes
- Los Angels County, CA: 29 minutes (folks in Los Angeles can quit laughing, now)
- Time to do the math: the linked article says California's gasoline costs, on average, 70 cents more per gallon than the rest of the US.
- average annual mileage (at least what we tell our insurance companies): 12,000 miles
- average mpg: 30 mpg (anything less is a personal problem; there are plenty of great mileage cars out there)
- 12,000 / 30 mpg = 400 gallons of gasoline annually
- 0.70 X 400 = $280 extra / year that Californians pay on average
- $280 / 300 days = 93 cents/day; let's call it a dollar. Starbucks' least expensive cup of coffee: $1.75.
- $280 / 52 weeks = $5.38 / week -- less than a Big Mac meal per week.
The real issue is not that Californians are paying 70 cents more per gallon than the US average, but why is gasoline so expensive nationwide considering Bakken oil is priced as low as $40 / bbl?
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