economics · decline economics
Breakeven Gas Price
click formula to derive ↑
Inputs
$
Mscf/d
fraction
Description
Computes the gas price at which net revenue exactly covers fixed operating cost at a given production rate — the gas-stream counterpart of breakeven_oil_price, using the same break-even relationship economic_limit_rate established for oil, in gas-appropriate rate and price units.
Variables
| Symbol | Unit | Description |
|---|---|---|
| P | $/Mscf | Breakeven Gas Price |
| LOE | $ | Fixed annual cost to keep the well producing (lease operating expense), treated as independent of production rate for this calculation — same convention as economic_limit_rate. |
| q_gas | Mscf/d | Current or assumed gas production rate at which to evaluate the break-even price. |
| NRI | fraction | Net revenue interest applied to production revenue — the same ownership-interest concept as economic_limit_rate/breakeven_oil_price use, regardless of hydrocarbon stream. |
Assumptions
- Operating cost is treated as a fixed annual amount, independent of production rate — same convention as economic_limit_rate/breakeven_oil_price.
- Gas production rate and NRI are held constant at the entered values — no decline or NRI change over time is modeled.
- Pre-tax: no severance or ad valorem tax is deducted from revenue before comparing to operating cost.
- Single-stream (gas) economics — associated NGL/condensate revenue is not included unless folded into the LOE input by the user.
- Price is a plain volumetric gas price ($ per Mcf of gas), not a heating-value-adjusted price ($ per MMBtu) — a well's actual gas may be worth more or less per Mcf depending on Btu content, which this calculator does not model.
Limitations
- Real lease operating expense is rarely purely fixed — a portion typically scales with produced fluid volumes; treating all LOE as fixed will understate the true break-even price somewhat.
- Does not include the cost or timing of eventual plugging and abandonment, workover capital, or any variable per-unit costs.
- Uses a single production rate rather than a declining production schedule — as the well's actual rate declines over time, its true break-even price at that later, lower rate rises above this result.
- Does not adjust for gas heating value (Btu content) or gathering/processing shrink — a real wellhead gas price is often quoted net of these, which this calculator leaves for the user to fold into the price or LOE inputs.
Use Cases
- → Price sensitivity screening: At a gas well's current or assumed production rate, find the gas price below which it stops covering its fixed operating cost.
- → Hedging and price-floor planning: Determine the minimum gas price a hedge or price floor needs to protect against, for a well producing at a specific rate.
Related Calculations
Region Notes
General
Gas price break-even is production-rate-sensitive by definition, same as the oil case — treat this as a point-in-time result at the entered rate, not a permanent classification of the well. Regional gas price benchmarks (Henry Hub, regional basis-adjusted hubs) vary independently of this calculator's own assumptions.
References
Need geoscience support? BauerCalc is just one of the tools we build. If you're looking for independent expertise in well planning, geosteering, reservoir characterization, or opportunity evaluation, visit BauerSubsurface.com.